Great Neighborhood Or Great Hype
On July 22, 2008 the wonderful Washington Post printed a piece, entitled “Mortgage Crisis Reverses Tide of Urban Renewal” The gist of the article was that Reservoir Hill; a shining beacon of hope for urban renewal during the Real Estate Boom of the early part of this decade – is now once again just a blighted mess all due to the mortgage crisis. The 2 page article takes only three paragraphs to start blaming the White House and the FEDERAL government for this mess of a neighborhood.
Lori Montgomery of The Post writes, “TheEighteen months ago, Reservoir Hill was a prime example of the progress that cities across the country have made reclaiming blighted neighborhoods as a nationwide housing boom helped lure homeowners and chase away crime. Now the mortgage crisis threatens to reverse those gains as foreclosures multiply, house prices plunge and vacancies rise.”
The Post goes on to say, “The plight of the cities has become the focus of intense negotiations over a far-reaching housing bill pending in Congress. In exchange for their support for a Bush administration plan to rescue ailing mortgage finance giants Fannie Mae and Freddie Mac, Democratic leaders are demanding $4 billion in emergency aid to stabilize hard-hit communities by purchasing vacant and foreclosed properties.
But the White House as recently as yesterday threatened to veto the bill (to rescue Fannie and Freedie) unless the money is removed. “It is astonishing to me that the Democrats would want to say, ‘Oh, that’s great. Now that we have them over a barrel, let’s use this as an opportunity to get spending in the bill,’ ” said White House spokesman Tony Fratto. “This is a wasteful program that will not help the housing correction and will primarily serve as a bailout to those very lenders who foreclosed on homeowners.
“They don’t understand the market dynamics here at all,” said Paul Graziano, Baltimore housing commissioner. “We can let the market adjust and see the last seven or eight years of investment go down the tubes. Or we can intervene now to reclaim this inventory and protect these neighborhoods.”
Here’s the link for the entire story, but The Washington Post is a free subscription site. You have to can sign-up to read the entire story.
So what do you think? Was Reservoir Hill to be the next great resurrected Baltimore neighborhood, like Canton or Federal Hill or was it all hype? I had many opportunities to invest there over the past few years, and was almost swayed by the wonderful bones of the houses in that section of Baltimore City – but I passed on every one! Why? Because I instinctively knew that the asking prices of these humongous houses (once rehabbed) didn’t match the amenities of the neighborhood. This place, long ago, one of the poshest spots in Baltimore City, is now a dump!
The officials at Baltimore City Hall now wash their hands of the mess they’ve perpetuated and attempt to absolve themselves of any responsibility by blaming the White House for the downturn of this neighborhood rather than reaching out to investors and potential homeowners to start a real grass roots effort to make Reservoir Hill great again. Shame on Baltimore City officials like Paul Graziano who are attempting to divert the spotlight on their failed policies or lack of action and vision.
The final word here folks: Do not invest in areas where there are no grocery stores, or malls, or nice restaurants for people to dine. Why would a homeowner sign the line on a $300,000 mortgage note, only to find that his new house sits among drug dealers, and blight? This type of investing is investing in sure and certain failure. Especially in this market, you can’t simply be swayed by an area full of horrible houses with great bones and the promise of all those amenities. Why? What if those amenities never come – as has happened in Reservior Hill?