Big home price decline predicted for Baltimore
So what are rents saying about home values today? To answer that question, Fortune worked with Moody's Economy.com to estimate adjustments needed to get prices and rents back in balance. We'll go into detail below, but the headline is gloomy: According to our calculations, prices in most markets will fall by double digits over the next five years.
Fortune says upper-end homes in the Baltimore area -- ones that sell for twice the median price -- will likely see a price decline of almost 28 percent over that period. That would be the fifth-biggest decrease, if Fortune is right, behind only Orlando, Miami, California's East Bay and Tampa in Florida. See the list here.
The average drop it predicts for upper-end homes in the 54 metro areas it looked at is about 15 percent. (Fortune's forecasts account for rents rising; otherwise, it says, the drop would have be even bigger to get home prices and rents into balance.)
Tip of the hat to Baltimore Housing Bubble for pointing this out first.All forecasts must be taken with a grain of salt, of course, if for no other reason than the fact that reasonable economists disagree. Last time I talked to Economy.com, folks there weren't predicting such a big decline for the Baltimore area.
But back in 2004, well before the slump, Dean Baker, co-director of the think-tank Center for Economic and Policy Research, was convinced by the rent-price differential that Washington was headed for trouble -- so convinced that he sold his home and switched to renting.