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'Ghost homes' haunt Baltimore's housing market. City officials think they have a creative solution

Giacomo Bologna, The Baltimore Sun on

Published in Home and Consumer News

Stepping over needles on the sidewalk, Alexander Cruz walked up to the crumbling front stoop of a West Baltimore home. He craned his neck and looked through an open third-story window to see whether the roof had caved in yet.

Cruz’s company had a deal to buy this vacant rowhouse, one of at least 15,000 in Baltimore. He wanted to renovate it, rent it to a family and remove the eyesore from a block on West Pratt Street that otherwise appeared to be occupied.

Then Cruz learned the property owner owed more than $100,000 in property taxes and water bills that had gone unpaid for years, snowballing debt until it became overwhelming. Homes saddled with such debt are called “ghost homes” because their debts are so large that no one will buy the homes, condemning them to a sort of housing purgatory. The vacant homes then become crime magnets and fire hazards.

Baltimore City is rolling out an ambitious plan to take over vast numbers of ghost homes, clear the debts and sell them to qualified developers, but city attorneys and staff have their work cut out for them. Two researchers estimated the number could easily be 5,000 vacant homes with outstanding debts — if not much higher.

“Anybody that is buying homes in Baltimore — from an investor standpoint — to fix up, they definitely encounter this situation,” Cruz said.

Cruz is a partner at CR of Maryland, a Baltimore County firm that has bought hundreds of homes in the city in recent years, primarily targeting vacants, renovating them and selling them as turnkey rentals to investors. The home on West Pratt appeared to be a perfect target for a renovation.

 

It was purchased in 2005 for $26,000. The city declared it vacant and abandoned in 2011. Today, it has an assessed valuation of just $7,000.

It was only when CR of Maryland had a contract to buy the home that Cruz said he learned the owner owed more than $100,000 in property taxes and water bills. If Cruz wanted to buy this house, his company would have to take on all that debt.

“From a business standpoint, nobody can pay $100,000 for a house that needs at least $130,000 in renovation work on top of that,” he said. “It just doesn’t work. It makes zero sense.”

Cruz said he runs into this problem twice a month in Baltimore.

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