June, and downtown Baltimore is a few degrees cooler than the tropics but more stifling. There is greenery here but also more concrete and glass buildings, overheated asphalt, an endless twinkling stream of cars, and lightless parking lots. Not a bullock cart or rickshaw in sight to break the monotony.
Mornings, the sun beats down, late afternoon, a convectional shower or a muggy stillness. Near the water -- sticky dimpled thighs, sticky floral shirts, and sticky wafer cones. The Harbor is all the rage. Again. We old timers remember the past and shake our heads. Not again. But the newcomers are believers. This time it’s different. This time -- it's for real.
Mencken's tough old broad is moving on up. So they say, anyway.
“They” are quite a crew. Leading the cast -- Streuver Bros., Eccles, and Rouse, fat from earlier gentrification schemes, now churning soil relentlessly wherever you look, like that sixty million dollar rehab of a shuttered Proctor and Gamble soap factory.
From Federal Hill on up, billboards announce the opening of glittering apartment complexes under the gritty eyes of the old ones. Everywhere, streets are cordoned off and the grind of bulldozers shatters the familiar buzz of traffic. Little Italy, Bayview, Locust Point, Butcher's Hill, Brewer's Hill, even Union Square, home of the old cynic, is back in fashion again.
“You want to buy where there's building going on,” says Dave, nudging his gleaming white SUV around a grimy corner not too far from Druid Hill Park. Nearby, a couple of construction workers are swaying on a scaffold in front of the house, opposite a three-story brick row house with windows boarded up. Municipal notices are plastered like band-aids over the house fronts.
Dave is showing me a house on the outskirts of Reservoir Hill which is “hot, hot, hot,” according to the real estate web site where I first saw it. Dave is a broker officially, but actually, he tells me, he does this because it helps his own investing. He grew up in Baltimore and then spent ten years in California where he lived through the dotcom crash. Shortly after, he pulled his money out, clubbed together with some friends, and started buying property in San Francisco.
“Then I moved back here,” he smiles wolfishly. “It was dirt cheap compared to SF.”
But even the dirt is expensive now. The Housing Authority of Baltimore pimps burnt-out shells in drug-shadowed ghettos for a small fortune. A hundred grand gets you a dank, rotting hieroglyph, a skeleton with gouged out eyes and a deadline -- two years and two hundred grand more in rehab work to be completed as specified. The city is getting tough with delinquent landlords, finally. All down St. Paul Street and Calvert, near the railway station, there are notices to repair... or else. Last time round, the city sold the boarded up homes to individual investors, but it didn't work. One rehab wasn't enough to pull up a block, so the little guys gave up and became absentee landlords. It wasn't worth it to them. Then the drug gangs moved in and the middle class fled. This time around, the BHA has got wise. The houses are being offered in blocks to scare away the small fry and get in people who mean business. Eight shells on North Avenue in a package. A block near the Greenmount cemetery. Even the shadiest of neighborhoods have catchy little monikers -- Sandtown, Old Goucher, Marble Hill.
And people are buying. Greenmount Avenue, once the bright line between the drug havens and respectable Baltimore, is now porous. It's not just the city which is buying and improving housing stock either; Johns Hopkins University, bulging with massive donations, is throwing its turgid coils past Greenmount, pushing the drug line back. The Hospital area used to be a war zone. Today, North Broadway is another hot neighborhood, a future prospect for hospital employees. South, near the Bayview campus, modest row-houses are nearly two hundred thousand; further north, near the main campus, in what used to be the student ghetto of Charles Village, small row-houses are over 200, the bigger ones between 300 and 400 and on the main thoroughfare, Charles Street, half a million. Charles Village is no ghetto anymore. The old dormitories have been rebuilt stylishly, a Xando's and Ruby Tuesday at the corner, dark green awnings plump and cool in the heat. Hopkins has cleared a flourishing corridor through the city, but elsewhere? Who knows.
There is no Xando's on Druid Hill Drive for sure. Litter floats across the street. A surly looking man slumped on the steps of a house blows smoke out of the corner of his mouth and narrows his eyes at us. The SUV gleams temptingly. I give a nervous glance back. “Think it'll be okay?” “Oh yeah,” says Dave. I wonder how many times he has been down this street to show the place. In the ad it was a graceful neglected marvel, painted a delicate teal with a decorative tin roof inside and five fireplaces. Reservoir Hill and the fringes were once the home of the great merchants of Baltimore, and their streets have some of the grandest and most ornamental architecture in the city. Flourishes of woodwork, imposing marble mantels and floors, elegant spiral staircases, swirling wrought-iron work. In the 20s, Gertrude Stein once lived in a mansion here. Then things changed. The residents became absentee landlords, the mansions were chopped up into apartment blocks, drugs took over, and the neighborhood fell into the shadows.
Until the last three years. Suddenly the poor cousin of Bolton Hill is selling for half a million.
Dave fumbles with the lock box and then pushes the door in. The place is dark and there is an overpowering smell of mold. He switches on his torch. “Watch your step.” The floors are crisscrossed with planks and the walls have been stripped down to the frame. The torchlight bounces off the wood and onto a black tendril of exposed wire. Through the fragment of a door, we can see what must be the kitchen area, although there are no appliances to prove it. The torchlight gestures toward the stairs and I follow. The contours of the stairs, still gracious, sweep us upward to the next floor.
“What do you think?” he asks as I look around at the torn walls, the gaping emptiness of the roof, the piles of plaster and rubble, the broken frames that lean menacingly toward us in the gloom.
“I know it looks like a lot of work now, but seriously, you could do it for maybe, eighty, ninety.”
A hundred plus ninety.
“Across the street is selling for two fifty,” he adds. How long would it take? “Three -- four months.” He shrugs. “Maybe faster. Depends on who you know.”
Who I know.
I know Ralph, the handyman at my old condo. But Ralph is retired and likes to sleep in or play b-ball with his grandson. I wasn't certain he was the right person to turn me a profit on a broken down mansion in Druid Hill.
And if it took longer? “Then you just sell it next spring.” That wolf smile again.
Next spring? The bottom might drop out of this thing by then.
“Don't you think we might be in a bit of a bubble here?” I asked, as we gingerly picked our way through the debris and climbed down the stairs back to the front door. Outside, the sun was still beating down. “Naah. Way too much demand. This stuff goes on the market and it's gone in days. Too many people around now.”
If so, they weren't in Druid Hill. The smoker had left leaving his smoke hanging like a Cheshire smile in the hot air.
“People from DC, you mean?” Everyone was talking about them. That's why the area around the train station was so hot suddenly. A few years back, you would have risked being shot if you'd been out there in the night. Now, someone had bought up even that raggedy old Chesapeake restaurant, fixed it up, and was trying to sell it. People were talking of trendy cafes and artsy shops. A place to eat after the theater. Night life. Station North, they called it now. And even four streets away, past the drug line of Greenmount, houses were selling steadily in Greenmount West.
Live Baltimore, the housing campaign, has signs all over Union Station in DC about it. Pictures of a solitary potted plant and the caption, “If you call this a yard, you need to get out of DC.” Designed by a Baltimore ad agency, the Campbell Group, Live Baltimore has been selling the idea to Washingtonians of all stripes but especially mid-level managers, administrators, librarians, people who work in DC but don't make the big salaries that the law firms and businesses pay. A townhouse that would cost a million in DC is “only” half a million here. And with Penn Station connected at the umbilicus by the speedy little MARC train, Baltimore is now a DC suburb. Or so they say.
Too bad they forget to mention that the half-a-million dollar mansion is only a street or two away from an open-air market for drugs. Or that Patterson Park, now selling for a quarter of a million, used to be a row of flophouses. Or that the drug problem isn't going anywhere soon. Or the school problem. Or the jobs problem. Or the race problem.
The Baltimore problem.
We got into the SUV. “Look -- there's always a risk,” he said, pulling out into the street. “Nothing's guaranteed in life. But you can see this is for real. Everyone wants in on this. It's not coming down anytime soon. Maybe never.”
“Didn't they said that about the tech stocks too?”
He shook his head. “You really are pessimistic, y’know? A home isn't a piece of paper. There's value there. The people who saw that value and bought in five years ago, they had the vision.”
Five, ten, fifteen years ago, those Druid Hill houses couldn't be given away. And the landlords boarded up the windows and let them sit vacant for years, eyesores that destroyed the neighborhood. I knew an artist who fell in love with one of those beautiful ruined ghosts and sunk his savings trying to breath life back into it. After ten years of smashed windowpanes, broken steering wheels, reefers and condoms tossed into his yard, he gave up, sold for a loss, and went to France. He had vision. I wondered what he was thinking now.
“You better buy now,” said Dave, as we swung back onto North Avenue. “Look at the construction.” He was right. Right across from Penn Station, land had been cordoned off for condominiums. “Station North Town homes,” said the sign. “Starting in the two hundreds.” They'd probably all been sold and sold again, though there was not yet a brick in place. That fast commute to DC was going to lure a whole new population into the city and landlords were ready for them. Yuppie analysts driven out of New York by the prices. Californian dotcom couples hardened by million-dollar sticker tags for modest bungalows. Baltimore looked cheap to them. Baltimore was cheap for them. They weren't making Baltimore salaries. After 9/11, the federal government began hiring with a vengeance -- computer analysts, accountants, engineers. In DC's bedroom communities, in Virginia and Maryland, recession never hit. The defense giants, Northrop, Lockheed, Boeing, and the newcomers, Titan, CACI, began hiring as though their lives depended on it -- which in a way they did -- and the money was great.
The money is still great. You only have to skim the Washington Post's online ads to realize where all the housing money is coming from. Bush has created the biggest government program since FDR.
And it's all going to the middle-class and upper middle-class who want to put it someplace where it will grow, not crash and burn like the stock market. More and more money looking for a safe hideout. And what's safer than land? What's easier to understand? The primal urge to own your own dirt, to put a roof over your head. Land's the only thing that lasts, Katy Scarlett....
Dave handed me a card. A mortgage banker. “She's good,” he says confidentially. “Someone who'll give you a fair deal. Not just looking for a commission.”
Were there any fair deals left? The real estate web sites consider Baltimore “fair value” now, not overvalued but not undervalued anymore, either. But the old-timers aren't so certain. They've lived through the winds of gentrification twice before and each time things have sunk back. Of course, there's more money coming in now -- from the federal government, from private developers, from the city. But if you look closer, you begin to wonder.
SCOPE, the city program offering rehab properties, sounds like a public-spirited effort -- Selling City Owned Properties Efficiently. What could be wrong with that? But what the efficient part only hints at is the raw truth that the city makes a profit when it sells those properties through the commercial agents. The city makes money; the realtors who get to broker the deal make money. But the homeowners who buy and then put in the mandated hundred or two hundred thousand dollars worth of work are spending money and spending it on spec., because there's no guarantee that prices are going to keep going up, although that's the chorus from everyone -- the banks, the realtors, the mortgage brokers, the newspapers. And if prices fall 5%, or god forbid 20%, as they did after the last few spasms of gentrification, what happens to that two or three hundred grand you owe on a gutted shell that no one can live in but on which you still have to pay mortgage and taxes?
Shells for a shell game....
The greater fool theory is in full throttle. People trying to buy and sell before they get left holding the bag. With New York Times bestsellers salivating over an impending real estate crash, the hot potato jumps from hand to hand quicker and quicker, buyers flipping before the ink gets cold on the deal. And they're making money. Baltimore properties are up on average around 20% a year over the last few years.
“I wouldn't want to put much money down,” I say hesitantly. Not to worry, I didn't need any money down, it seemed. 100% financing -- hadn't I heard of it?
Apparently anyone with a pulse can get a loan. Appraisers boost house values -- appraisal fraud is at an all-time high -- but it keeps everyone happy; the banks make loans based on the inflated values knowing that the loans aren't any good, only it doesn't matter because they're going to get sold off in packages as securities; the buyers borrow money they don't plan to return because they're going to turn a quick profit by selling fast; the investors -- many of them foreign -- buy the packaged securities because with the dollar falling American real estate looks cheap.
An elaborate, delicate house of cards teetering on disaster.
“I don't have much of a credit history,” I falter. His eyes shift away. “But I do have savings.” They brighten.
In this intricate leveraged game, cash -- real hard cash -- is in short supply in America, even though, ironically, it's an excess of liquidity in international markets that's driving the assets boom at home.
“That helps,” he says. “The more you can put down, the more house you can buy.”
But how much house do I want to buy? A single woman, I don't really need a house, but if rents go the way prices are going, I might soon be as priced out of the rental market as I am out of the housing market. A house isn't a home to me, really, but a hedged bet on the market. Commodities are not something a novice can easily get into, and aren't commodities taking a beating this quarter anyway? Gold has been up for some time, but might be on its way down. Your average savings account isn't paying more than three percent. Bonds -- too much complicated math. Short of buying jewelry or stuffing the mattress, land’s the answer.
So, how much land does a man need? Tolstoy once asked the question and answered it. Six feet. Enough to die in.
But the American mortgage industry has no use for parsimonious solutions, however elegant. Six feet of house will not get them interested in you. You have to borrow beyond a certain amount, and in most cases you'll be slapped with a penalty if you pay back too early. Seems like they need to make the loan more than you need to borrow the money.
Having savings doesn't help either. They don't want to know you have the money to pay them back. They'd rather have proof that you're used to the drip-drip of intravenous credit. They want you brain-dead and hooked up to their monthly payments. They need you playing their lethal little game. They need you to be one more sweaty little Sisyphus, shoulder to the rock.
And with the dollar plummeting, you don't know how not to be. If you don't buy, you risk being left behind as prices thunder away, pulverizing your savings into the dust. If you buy at these inflated prices, you know you've gifted over a chunk of your savings to someone who bought before 1999 and you’d be doing it just when the market has probably topped out and is ready to fall. To those who have, more will be given; to those who lack, what little they have will also be taken away. So says the Gospel somewhere, and the Bush government is working overtime to prove it. In fact, the current housing boom is the biggest re-distributor of wealth since the New Deal, only this time it's from those who haven't homes to those who have.
Not that many homeowners, unless they're ready to retire, can directly cash in their inflated assets by selling. For a conservative minority, the housing boom has only meant another reason for the city to raise property taxes, forcing some of those on fixed incomes out of their overpriced digs. But for the vast majority of homeowners, the new boom has turned their homes into an ATM card through refinancing and home equity loans that allow them to tap the appreciation for new credit. And the creditors are lining up to give the junkies their fix.
It's predatory banking and it's no different from what sleazy credit card companies do when they mass-mail plastic purchasing to penniless immigrants, students in debt, grandmas on fixed incomes, the struggling poor, and those on the verge of bankruptcy. They want you to go under. And when you do, they want to be there to collect.
Loan sharking of the worst kind. But at least you could easily pick out the old-time loan sharks. They were the polyester-suited, gold-chained hustlers on the corner, charging you 20 percent as they forked over a billfold with their greasy pinkie-ringed paws. But today's loan shark is camouflaged as your neighborhood banker in wire-rimmed glasses and button-down shirt, ready at your elbow with a no-money down, 100% financed, adjustable rate mortgage under 4%. There's even negative amortization. That's right. They're willing to pay you to borrow money. Your monthly payment is kept artificially low because not only are you not paying the principal you borrowed, you're not even fully paying the interest. So the amount you're borrowing actually keeps rising. And the more interest rates rise, the bigger that amount becomes until at some point the bank decides to pull the cozy rug from under your feet and your monthly payment skyrockets to cover both P and I. That's when all those $30,000 wage-earners brandishing $300,000 plus homes bite the dust. All over the country, it's already beginning. Foreclosures are up dramatically this year. In Allegheny County in Pennsylvania, officials talk about a Depression era level. If it hasn't brought prices down any, it's only because these days the banks are holding back and selling through the realtors not just to recoup costs, but at profit-making prices. It's only because at swanky auction houses like Alex Cooper in Baltimore, properties that go to auction are frantically bid up by greedy speculators and their shills who want to keep the game going.
But somebody knows what everybody pretends they don't -- that someday this is all coming down. Otherwise, why have so many realtors sold their homes and begun to rent? Why have the bankruptcy laws been tightened up effective from October this year just as interest rates start the slow but inexorable climb that will make defaults cascade into an avalanche?
“You've got to believe,” says Dave, watching me finger the card slowly before I put it in my wallet. “This city is only going to get better.” He opens the door and I slide out. He smiles, the little sunbursts on his green and yellow shirt smile, even the SUV, opulently, extravagantly energy-inefficient, smiles. I feel the spoilsport I am.
I think suddenly about how the stock market “crashed” and nothing really changed -- not so many jobs maybe, but no bread lines or gas lines, people still spending and living as they've always done. I think about all the doomsday predictions before the war, and yes, it's a mess but the Middle East didn't implode, nuclear war hasn't broken out. I think about the dollar bears and how, this spring, the Euro has fallen instead. America acts and the world falls in line... for the most part, anyway. A Chavez here, a Kim Il there, a little grumbling, but no more. I remember someone saying, it doesn't pay to bet against America. I wonder with a sinking feeling if I've been wrong all along.
Dave shouts out, “You'll see!”
Then, just for a second, I do see. How it works, what it lives on, this country of perpetual optimism. As he waves to me from the car, he looks suddenly boyish, quintessentially American, puer aeternus despite the first bulge of middle age.
And it's I who feels old suddenly and somehow cheated. Not because I didn't buy a house four years ago, but because having grown up in the third world, in an old culture, I've never bought and could never buy what seems to ultimately drive this country and fuel its endless consumption, its bountiful credit -- I’ve never made a down payment on that relentless waking dream in which it sleepwalks toward the future, the brittle dream that tomorrow is always better than today.
Lila Rajiva is a freelance writer based in Baltimore, Maryland. She has taught music at the Peabody Preparatory, and English and Politics at the University of Maryland and Towson University. Her new book, The Language of Empire: Abu Ghraib and the US Media, will be published this month by Monthly Review Press. Copyright (c) 2005 by Lila Rajiva
Other Articles by Lila
Pharisee’s Fire Sermon
Other Articles by Lila Rajiva
Pharisee’s Fire Sermon