Every time I check the stock market these days, I see incredible buying opportunities. That is until I factor in the very real possibility that today’s depressed values may not be bargains, but tomorrow’s highs.

The same applies to real estate. It is an illiquid asset by definition. Any brave soul plunging into today’s market better have a long horizon and a lot of tolerance for losses because if you buy, you may not be able to sell. On the other hand, some lucky people will make plenty of money, if they know when and where to buy.

In times like these, window-shopping is the best many can do. With two European visitors in tow, my wife and I decided to take a look at Silo Point near Fort McHenry. The concrete 1923 structure once housed the biggest and fastest grain elevator in the world, but has been reconstructed into a 24-story residential tower. Our visitors, who used to live in New York, were impressed.

The harbor panorama was unequaled.

Silo Point’s construction seems first-rate. Soundproofing is excellent. Outside noises do not seep in, as they do in some new Fort Avenue townhouses. (The ambient noise level on the street is surprisingly high, due to the constant rumble of tunnel traffic just a few hundred yards away).

Our visitors marveled at the sleekness of a two-bedroom model that was as big as their warrenlike 2,000 square-foot condo in Helsinki. They figured out that they could afford to buy the unit, but not the monthly fees. In any case, they were going back. We all agreed that Silo Point was terrific, but required someone with  more money than we had.

It is far too early to tell how Silo Point will do in this economic free fall. It should be fine, if the Carlyle Group is in good shape. One of the world’s largest private equity groups, Carlyle is Silo Point’s co-developer with local Patrick Turner, who turned several industrial buildings into condominiums and plans to convert more. 

Our salesman said that a third of Silo Point’s 228 units had been sold and that buyers came from “all over.” Other condominiums on the harbor report a similar mix, so the harbor market may be national and distinct from ordinary waterfront properties.

Nationwide appeal has obvious advantages, but only if Baltimore’s prices compare favorably with similar niche housing in other cities.

Silo Point’s near-term problem is a glut of premium properties on the harbor. Also, at rival developments some recently settled owners are offering resales for economic, personal or professional reasons even as builders are selling new condo units. For anyone with the money who is considering buying on the harbor, this is the time to monitor prices.

These unsettled times warrant a history note. Luxury housing sold briskly in Baltimore in the Great Depression. The supply was small. Just 119 housing starts were recorded in all of 1934, compared with 4,871 in 1926. But buyers snapped the few luxury homes that were constructed, officials reported.

We know all this because Baltimore was one of 239 cities that the Home Owners Loan Corporation redlined in 1937. Therefore, bureaucrats amassed an unusual amount of documentation. There is a cardinal difference, however. Housing in the 1930s Baltimore was so scarce that despite thousands of repossessed homes, federal officials said there was no “overhang” of unsold units.

Today, the overhang is considerable at all price levels on and near the harbor. The glut will worsen because additional stock is still being constructed.
Antero Pietila is writing a book about how bigotry shaped Baltimore between 1910 and 1975. His e-mail address is hap5905@hotmail.com.