Aside from the obvious — better results from city schools, fewer shootings and less crime generally — there are two efforts that, when ramped up, could keep more Baltimore families from leaving town and possibly stabilize the city’s population in the near future: Converting more vacant rowhouses to habitable homes and converting more renters to homeowners.
That might seem as obvious as schools and crime — and, as always, easier said than done — but when you consider all the factors in the city’s housing market today, it’s possible to see fresh opportunity.
Especially if you bring fresh eyes to it.
I recently met with two men from Montgomery County, Gladstone Ewing and Julio Baretto, who see such an opportunity in the vacant rowhouses along the 1600 and 1500 blocks of Edmondson Avenue, near Harlem Park in West Baltimore.
Ewing, an investor in real estate and developer of resorts, and Baretto, a former Washington lobbyist with a background in urban redevelopment, teamed up to purchase once-grand, three-story rowhouses with the intent of gutting, renovating and selling them. They’ve already converted two and sold them, and they’re nearing completion on a third, with at least a dozen more to go. They acquired the old houses, some of them with eye-catching bay fronts, through the city’s Vacants 2 Value program. Self-financed and serving as general contractors on each project, Ewing and Baretto have been in the Baltimore market, scouting properties and learning about city neighborhoods and housing programs, since 2011. What got them interested was the potential for converting renters to homeowners, especially among people with moderate incomes.
Baltimore was one of several cities that became renter majority — at 52.5 percent — in the decade after the housing bust, foreclosure crisis and recession. In Baltimore, RentCafe lists the average rent now at $1,255 a month. Many can afford that, but many others find themselves stretched to their financial limits. An Abell Foundation study, published in 2016, showed 57 percent of renters paying more than 30 percent of their income for housing, and 33 percent paying more than half. That’s not affordable without sacrifice or, for many families, sustainable.
Because Baltimore has the highest concentration of poverty in the state, the city needs more affordable housing, but developers have contributed little on that front. Voters established a housing trust fund in 2016, and last year the City Council found a source of revenue that could raise an estimated $20 million for affordable housing projects.
More affordable rent is a good thing, but owning a house is still considered a better financial choice, and better, in the long term, for families and for neighborhoods. Several organizations — St. Ambrose Housing Aid Center and Neighborhood Housing Services, for instance — have been converting renters to owners for years. And that’s close to the market that Ewing and Baretto imagined when they started investing in Baltimore properties.
“Many people pay more in rent than they would in mortgage,” says Baretto, who once lobbied for the National League of Cities and the National Association of Housing and Redevelopment Officials. “We met with a lot of community organizations and talked to a lot of people who had home-buying classes because our feeling was we needed to tap into a pipeline of people who were thinking about buying [a house]. There was a population that was lower middle-class, working class — and veterans as well — that [developers] weren’t targeting at all. And, we figured, let’s focus there.”
Ewing was affected by his visits to rowhouses offered for sale by landlords. Many of the houses were in depressingly bad shape, rented by extended families with small children. Those conditions, he says, motivated him to start fixing houses, pricing them for a middle market and working with first-time homebuyers to take advantage of incentives, starting with the big one — $10,000 off the closing costs for the purchase of a formerly vacant house.
There are other incentives offered by the city, Live Baltimore and certain employers. The savings can add up — as much as $38,500 for an eligible employee of the University of Maryland, Baltimore — and put a family in a refurbished home, paying less in mortgage than they did in rent. Plus, the property taxes on a formerly vacant property are shockingly low for the first five years. So, Baretto and Ewing point out, someone who takes advantage of the incentives and tax credits, and who makes at least $45,000 a year, could afford the first house they converted in the 1600 block of Edmondson. It recently sold for $280,000. Another sold for $260,000. Baretto and Ewing are trying to create a market where there are no comparable sales. Their conversions are impressive — four- and five-bedroom houses, with finished basements, modern kitchens and rear decks. “We are not doing it halfway,” Ewing says.
There are other programs in place to help people make the conversion from renter to homeowner. Last year, the Neighborhood Assistance Corporation of America, working with two national banks, created a rent-to-own model to help low-income Baltimoreans convert federal housing vouchers into equity-building mortgage payments. Another NACA program allowed repair and renovation costs to be built into the financing.
Starting six years ago, Wells Fargo offered 300 Baltimore homebuyers $15,000 down-payment assistance loans, forgivable if the buyer lived in the home for five years. Called CityLIFT, the program was part of a legal settlement over the bank’s discriminatory lending practices. It put $4.5 million into the market in about two years. The program is coming back to Baltimore this summer. More on that in a future column.