Kari Snyder really didn’t want to spend $62,000 on this vacant rowhouse.
She was on vacation last summer in a beach town and was supposed to be eating dinner with her family when a middleman called her. The boarded-up house in Southeast Baltimore was on the verge of collapsing, and he had the contract to sell it. Snyder couldn’t stomach another investor swooping in, buying the home, and sitting on it.
That’s how she found herself standing outside the restaurant, on her phone, haggling over a home that two years earlier was bought at auction for just $7,000. Somehow, its value had risen nearly ninefold since then. According to Snyder, the man offered a slight discount on his initial asking price, claiming he wanted to help Baltimore.
That’s when things got heated.
“You’re extracting money out of Baltimore,” she recalled telling him at one point. “I was so mad.”
Snyder runs Southeast Community Development Corp., a nonprofit trying to boost homeownership rates in Ellwood Park, a predominantly Black neighborhood where just a quarter of residents own their homes and the blocks are pockmarked with vacant houses.
Fueled by a mix of federal, state and private money, the Southeast CDC has been buying vacant homes there, completely renovating them, and selling them at a loss to new homeowners, typically for about $150,000. But the work has been slower than expected.
“We’ve been able to raise money to cover the appraisal gap — the loss. It’s the acquisition,” Snyder said. “Just getting stuff out of investors has been very, very hard. … They don’t want to sell.”
Baltimore, like other major metropolitan areas, saw a surge of investors scooping up homes during the coronavirus pandemic, when interest rates were at historic lows.
With interest rates now climbing, investors have pulled back in every major housing market in the country — except Baltimore, according to a report by the real estate company Redfin.
Redfin analyzed home sales data from the fourth quarter of 2022 and found that investor purchases of homes plummeted by half nationwide compared with the prior year. But in the Baltimore metropolitan area, they rose by 1.4%.
Redfin economist Sheharyar Bokhari dug deeper into his company’s data and found that investors are buying fewer single-family, detached homes here, but that decrease is more than eclipsed by a rise in rowhouse purchases — especially cheap rowhouses.
The overall median price for a town home in the Baltimore metropolitan area was $268,000, Bokhari said, but the median price for sales to investors was just $120,000. According to Bokhari, this suggests that investors are buying rowhouses that are vacant or in disrepair.
“There might be some particular neighborhoods they’re targeting,” Bokhari said. “My surprise was that there would be so many [investor purchases] and also the price point seemed really low. There must be some sort of distress in those neighborhoods.”
In Ellwood Park, where the Southeast CDC is renovating properties, Snyder said about 12% of homes are vacant.
Diane Russell moved to a rowhouse along North Ellwood Avenue, across from the eponymous park, in 1993 and has seen the area change for the worse. Russell, now retired, said she doesn’t feel safe walking around her neighborhood anymore, but has new hope thanks to the Southeast CDC.
“Since we’ve been here, nobody from nowhere did anything for Ellwood Park until Ali and them came. That’s the truth,” said Russell, referring to Ali Morris, senior manager for housing development at Southeast CDC.
Morris and Russell met in 2021 through the nonprofit’s porch repair project, where the nonprofit worked with 10 homeowners to rebuild porches and front steps.
As part of its mission to increase homeownership and decrease vacancies, the nonprofit is taking a holistic approach that includes street cleanings, homebuying classes, down payment assistance and help with repairs. But fully restoring the neighborhood will mean buying and rehabbing vacant homes, too.
When the Southeast CDC has tried to buy vacant homes from investors, Morris said they often ask for a “crazy amount of money.”
“They’re out-of-town investors who don’t know the market and have inflated the prices,” Morris said. “They want appreciation. So they’re holding on to these houses and they’re waiting for appreciation to kick in and so they’re trying to sell it to us at a profit.”
Sometimes the Southeast CDC identifies vacant homes owned by individuals or heirs, but before the nonprofit can make an offer, Snyder said a wholesaler has beaten them to it. That means the nonprofit is often left to negotiate with wholesalers — “middlemen who take a fee from the seller” — who only complicate the contract and increase their costs, she said.
Typically, wholesalers contact homeowners, sign a contract to buy their home, then sell that contract to an investor who actually purchases the property. It’s a largely unregulated industry in Maryland. Critics claim it allows investors to buy vacant and distressed homes for less than what they’re truly worth, then sell them for a much higher price later.
Snyder, for instance, said she had to deal with multiple middlemen when trying to buy the home on North Robinson Street, and each of them got a cut of the deal.
Del. Samuel “Sandy” Rosenberg, a Baltimore Democrat, filed House Bill 301 this General Assembly session to require anyone taking part in two such deals a year to obtain a real estate license. State regulators would then have the power to penalize or even strip wholesalers of their licenses.
Abdullah Hijazi said the legislation could have unintended consequences if it becomes law. Hijazi, an attorney at Hijazi, Zaslow & Carroll P.A. in Bowie, represents wholesalers and other real estate professionals. The bill could slow the revitalization of distressed neighborhoods, he said.
There’s little financial incentive for real estate agents to sell a vacant home for $10,000 or $20,000, Hijazi explained, but wholesalers can make money by identifying vacant homes and connecting the owner to an investor who will fix up the home.
If lawmakers wanted to protect vulnerable homeowners from dishonest actors, Hijazi said, they should require more disclosure in the wholesaling process — not regulate it out of existence.
“Are we trying to protect the little guy?” he said. “Or are we basically forcing more deals through real estate agents?”
GNR Group, a Philadelphia-based firm, has been buying and renovating vacant homes in Ellwood Park, turning them into rental properties.
“It’s better that it being vacant,” Morris said. “They actually fix up vacants, which is nice.”
But in Ellwood Park, GNR is the exception to the rule, she said.
According to Snyder, the Southeast CDC already has renovated and sold three formerly vacant homes and a fourth is under contract.
The nonprofit has enough funding to renovate about 40 homes, she said. If successful, this could have a powerful ripple effect. Reducing the vacancy rate and fixing up occupied homes could raise the property values in the neighborhood, creating millions of dollars in wealth for the predominantly Black homeowners here.
First, the nonprofit needs to acquire those vacant properties.
Back on North Robinson Street, the vacant home that Snyder negotiated for on her vacation is nearly rebuilt. The interior was worse than she had imagined, which meant a lot of work for the contractor, TCB. Tony Basta, a property manager for TCB, said the roof fell in when the renovation started.
“The guy stood on the roof when we were getting ready to gut it and took one step and the whole roof — all the way across at about 10 foot back — just collapsed,” Basta said.
All told, the acquisition and renovation of this rowhouse will cost about $285,000, including $54,000 to buy the house, Snyder said, making it the nonprofit’s most expensive rebuild yet.
Still, Snyder knows buying the home was the right call. If it had continued to sit vacant, eventually the whole house would have collapsed, she said, damaging the adjoining rowhouses and destabilizing the entire block.
“It hurts a little bit thinking about how much it’s going to cost,” she said. “But we probably saved three houses, not one.”
