Great Neighborhood Or Great Hype
By Craig on Jul 30, 2008 in In The News
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?
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12 Comment(s)
By Allen Taylor on Jul 30, 2008 | Reply
Nice writing. You are on my RSS reader now so I can read more from you down the road.
Allen Taylor
By Craig on Jul 30, 2008 | Reply
Allen
Are you local to Maryland? Whatever the case, thanks for taking the time to read and reply. That’s very kind of you.
I’ve got a few great posts I’m working currently working on, so stay tuned!
By Vern on Aug 5, 2008 | Reply
Reservoir Hills may turn out to be a great area to buy and hold or even to rehab and resell. Why?
1)You can do worse than Reservior Hills..Alot worse. Some blocks better than others.
Very close proximity to other neighborhoods that have shown a resurgance, Bolton Hill, Druid Heights.
2)There are people (i.e. homeowners) that are already HEAVILY vested in the neighborhoods. There is pride of ownership. in 2007, I was putting up bandit signs in Reservior Hills early one early Saturday morning and I had 4 different people tell me to stop. I got the message and I stopped. Pride of ownership
3)Great location - be downtown in a jiffy or out to Baltimore county via 83
4)Favorite area among value shoppers (like who isn’t a value shopper these days?). If you want a Big A$$ house without breaking the bank and you want to be in the city, not on the outskirts, Reservoir Hills is probably where you go.
5)Character. It’s got character. It was always be on the radar of early adapters, architectural buffs, and investors. There are people waiting to pounce on the area now, and there are those that are waiting for others to pounce on the area before they make their move.
Reservoir Hills shouldn’t attempt to be the next Canton. Every renovation shouldn’t have marble. Rehabs should be done with affordability in mind
Be on the look-out for recently renovated self contained 3 unit buildings with 3 x 3 bedroom units. that can be had for the low to mid $100’s
By Craig on Aug 5, 2008 | Reply
Vern
Sounds like someone has a little money tied in up RH. As I said, I was a big fan of the area - and my gripe is not with the investors who are trying valiantly to make it better, but rather our HORRIBLE City officials who have done nothing to help.
This City owes its resurgence to investors like you (and me), and all others who put their dollars on the line.
BTW - when are we doing that lunch?
By Fred on Aug 6, 2008 | Reply
Craig,
I couldn’t agree with you more. I thought the Reservoir renaissance was all hype. I am an appraiser who appraised many homes in the area for investors and thought the prices they were paying for a gut rehab was crazy and now several of them I know are upside down. The city talked the area up but I never saw them improving the infrastructure to sustain the area. An important lesson for the future.
By Vern on Aug 10, 2008 | Reply
Craig,
I don’t have a single penny tied up into RH and I have not even wholesaled a deal in RH.
Sometime next week would great for lunch. Daycare is closed all this week and I’ll be home with the boys.
Vern
By AlexM on Aug 16, 2008 | Reply
Your blog is interesting!
Keep up the good work!
By Jack BeVier on Aug 17, 2008 | Reply
Hey Craig, love the site.
Couple thoughts on your Reservoir Hill commentary. I see that the picture you took is of the 2200 block of Callow Ave, the site of yet another stalled City RFP project. While I don’t disagree with the City’s strategy to try to help kickstart a neighborhood with a larger scale project (face it, its virtually impossible to turn a 90% boarded block 1 house at a time), they’ve done a horrible job of choosing developers and projects who actually move forward and get their projects done in transitional neighborhoods. Their underwriting is generally unrealistic and they don’t know the difficulties involved in renovating in Baltimore City. The result? - the City turns over control of a fantastic block like the 2200 of Callow to someone with an unrealistic business plan and the block remains boarded.
There are cases of this all over the
City. Go to http://www.baltimorehousing.org Developer’s section and go to Awarded Contracts. The projects in tougher neighborhoods (our favorites), just don’t get done. As a result, big blocks of transitional neighborhoods sit vacant and tied up. We little guys can’t even help these neighborhoods move forward.
Personal pet peeves:
- North Broadway Corridor (800-1800 N Broadway)
- 2200-2300 block of Callow Ave
- Johnston Square (700-900 E Preston St)
Love the forum and the renovating, Craig. Keep it up.
-jack
By Craig on Aug 17, 2008 | Reply
Great comments from Jack Bevier; a man who know knows our fine City better than me.
Thanks for your comments, Jack. Your input on my BLOG is always welcomed.
By kevin on Aug 27, 2008 | Reply
this message is to Fred. Remember Ivydale, a little white rancher on the corner, mold everywhere? I talked to you about the house and put you in touch with an investor that you sold to. I was a realtor then, but I just put you two together and you and he made the deal. I did sell that house for the investor and that got us started. He and I listed and sold several rehabs since then. Where have you been hiding? are you still investing?
Just a note though, all of the foregoing means nothing if you are not the same Fred I am thinking of. I do not want to butcher your last name, but I believe it was Nesbet. You also had a house on Bellville ave. in 21207.
Anyway I hope you are good.
By WillyB on Oct 1, 2008 | Reply
There are success stories in Reservoir Hill and still a huge amount of potential. I think people who focus on the negatives of the neighborhood, usually talk from an investors point of view… wanting hot markets, no work, and quick flips, not a city home to live in and a community to join. I’m not saying there aren’t negatives.
Yes, there is a lot of pride in Reservoir Hill and a large amount of concerned and active residents… Myself and my wife do live in ResHill and love our home.
Yes, the picture of Callow Ave is probably the most blighted, possibly holding this title along with Lakeview. That area would have been such a different place if the developer who was awarded the properties had the capacity to do all 16 homes at once, then sell around the same time. You can’t rehab 2 homes and expect to sell them with blight all around, and hinge the success and continuation of your project by monies made on the first couple being sold. I also think the failed condos on Callow are because they also thought developer of callow single properties would succeed. One of the factors which led to our decision on ResHill was the development of the two parcels on Druid Lake Park Drive, overlooking the Reservoir.. yes another failed city project..
The key to a revitalized ResHill no doubt lies at its very core. The center of the neighborhood. The Callow cooridor needs market rate home owners. The Whitelock cooridor needs to rebuild the commercial strip which was torn down in mid-90s (community is currently working on a whitelock redevelopment plan which includes firm market study and architectural studies) I have PDF concept dwgs.
Some positive aspects of ResHill development which surrounds ResHill… Revitalization of Mondawmin which includes overall facelift, addition of Target, Shoppers, and others; expansion of Coppin State; revitalization of Druid Hill Park and Maryland Zoo, new MICA expansion at North Ave, future State Center development around Eutaw, accelerating development in Station North, great access to 83, huge increase in sanitation and police presence over the last 3 years.
Yes, ResHill has its downsides, as any city neigbhorhood would have. Drug sales are diminihing but still present in blighted areas. Does this mean ALL of ResHill.. No. Just areas like pictured(Callow), which have no residents. Reservoir Hill is a huge neigbhorhood, so branding it entirely with negatives is a bit off course. Like saying don’t move into Federal Hill because of section 8 housing on Hamburg. OK, not exactly like saying that, because FeddyHill has walkable commercial, ResHill’s second downside. Third downside is low number of home owners… A well known figure of status for a ‘healthy neigbhorhood’ is at least 40% home ownership. Something ResHill has yet to achieve, but it steadily growing. Last teeny problem is a bit of underlying racism and income clash. The overall majority of people are welcoming and warm as a community goes, but there are still folks who don’t necessarily offer warm greetings to middle class or higher, especially whites. With around 90% Black (many longer time residents with many generations who never moved away, some rarely leaving the city limits) there is sometimes a feeling like Dr.King just got shot and that if your not black you caused it, even though it was nearly a half century and three generations ago. When it comes to income, many revert to color blindness. As many residents live below median income for Baltimore area, even middle class struggling to pay for their houses are ridiculed for ‘causing gentrification’, whether they are white, black, yellow, or blue… Many people living in huge delapidating victorian homes which cost 45,000$ 5 years ago, are upset that home prices have went up.
So overall, yes, it is still considered a homesteading area. But we couldn’t see where else we’d get a close to 4000 sqft house, that we could custom design from a shell, in such a great central location in the city, close to its greatest park, where we’ll take our soon to be born first child. Yes, we have to stop by the grocery on our way home from work, and can’t stagger home from the corner bar, but there are many positive stories to be told.
By Dan Jerrems on Dec 26, 2008 | Reply
I found WillyB’s comments most interesting and am glad he is there to help push for the neighborhood’s revitilization on a more realistically priced, block by block scale.
I moved to Baltimore in the 70’s (to attend graduate school at Hopkins)and remember a friend who bought a huge Victorian in Reservoir Hill from the city for one dollar ($1).
He did the renovation while living in it (what a mess to live with). It took him years, as he didn’t have any money or credit and just did what he could with what he brought home from his day job.
I lost track of him, so I don’t know how it turned out, but I always admired his courage to be an urban homesteader in a blighted neighborhood.
Reservoir Hill has always been on the cusp of a resurgance and it was exciting to see the rehabs happening a couple of years ago. I thought that the neighborhood re-birth might actually have a chance this time.
Unfortunately, speculators came in, artificially inflated prices and the area fell victim to the RE crash that other over-priced neighborhoods have suffered.
It would be good if the city would re-visit the $1 house idea again. Reservoir Hill (and a lot of other neighborhoods) would benefit from the hard work and commitment of urban homesteaders. Homeowners who care about their neighborhoods are the best asset the city has.