That building class will tend to be a little more resilient to economic downturn since people still need a place to live and you've got people "above" who can filter down to a more modest tier when they can't afford their class A condo anymore.

This basically means that the expected yield from a long term investment is now lower than the expected yield from a short term investment, which makes for a wonky economic environment as you might imagine.

The future demographic, economic and life style trends continue to favor these niches as well.   

I know in CO the voucher price paid was considerably lower than fair market value, but Baltimore might be different due to economics.

Specifically he relies on technical analysis of real estate prices rather than the more traditional fundamental analysis of local economic conditions.   

This compression is directly correlated with several extrinsic variables such as interest rates, demand, inventory, economic expansion etc.Even if rents were to, theoretically, stay the same, it would be the extrinsic variables that would ultimately cause the valuation of your property to increase or decrease.In the end, cap rates are simply a starting point in valuing a property because the true value of your property is set by the amount of money that someone is willing to of for it.

In other states, termites are no big deal -- just a routine problem that comes up occasionally and can be dealt with economically.

I would expect a general economic recession to come before a real estate specific downturn. 

Even taking into account economic vacancy you shouldn't be that high.Go research current rents.Taxes (from seller): $1,674 - Look at tax records. 

You cannot ignore general economic conditions in general but wise people realize that real estate is always local.