Here in our backyard, Washington DC, we are also not immune to the same mess. In fact, foreclosure homes starting to flood the market. The number of foreclosed homes or any variation of it (short-sale, pre-foreclosure or bank-owned) in Washington DC region - is not as bad as in other states, like California, Florida and Nevada - but it's creeping up.
The outer edges (read:exurbs) of Washington DC, i.e. Prince William county, got hit the hardest with foreclosures. Though, the market is getting better over there. Inventories still high at 7+ months supply. Over at Springfield, City of Alexandria, Falls Church, and Arlington, when you look at the big picture, market inventory is low. However, getting it more details you'll noticed that the number of foreclosures on the rise.
Take for example the sub-market of Fairfax county, Springfield/Franconia area. Springfield is outside the beltway. This is an area if transition to BRAC goes well according to Pentagon plan, will be the next up-and-coming neighborhood. For single family homes, the prices still affordable. Unlike Prince William county, Springfield has close proximity to DC via the Beltway, I-395, and easy access to Metro and VRE.
The total number of active listings on the market is 650 homes for all types (condo, townhouse, single home). If we pull listings of 3BR/2Ba single family homes under $400,000 - 82 out of a total 105 homes within the price range - is under some sort of 'third-party-approval' category. Third-party approval (TPA) is a 'code' for foreclosure, pre-foreclosure, or bank (lender) owned. That means, eighty percent all of 3BR/2ba homes under $400,000 is foreclosed homes. Put it this way - 4 out of every 5 homes is in foreclosure! Yes, you read it right. And those are single homes, not condos.
That's why the county has projected a budget shortfall for FY 2008-2009 due to soft housing market.
Whatever the case, the trend is an 'alarming rate' for a sub-market of metro DC. Considering the low unemployment rate around Fairfax at 2.2%, which is way below the national average of 5% in December 2007.
Sample of few foreclosures in Springfield.
8111 Birmingham Lane
Bought in Sept 2005 for $505,000
Price history: $549,900, $499,900, $479,900, $449,900, $399,900 and $379,900
Now price $349,900,
8288 Raindrop Way
Lender owned (Countrywide)
Bought in October 2004 for $435,000
Price history: $429,900, $416,900, $404,900, $398,900, and $392,900
Now price: $386,900
Over at inside-the-beltway in places like Falls Church, City of Alexandria and Arlington, foreclosure is more concentrated in certain zip codes. In Arlington, the number of foreclosure is high in zip code 22204. In Falls Church, in zipcode 22042. Foreclosure for the City of Alexandria is in some pockets, but the number is lower than Falls Church or Arlington.
The silver lining of this foreclosure thing is a boon for buyers. How else would you explain this? Two years ago, those homes were priced at $400's and higher. Now, the same property back on the market - for how much?
A couple of house keeping things based on market observation.
- Let's talk about price first. They (agent & seller) usually price the property really low to get your attention (buyers). By the time it gets the bank's attention, that is not usually the price point you're going to end up. The bank wants your offer to go higher. This is when you and your agent need to back up the offer with a thorough market study. There will be times when the bank want to see it [read: to see if you're not pulling the numbers out of thin air].
- You want to be flexible on time. It takes a long time for the bank (the third-party) to get to your offer. I put an offer for a client end of December, we haven't heard back from the listing agent (for the bank) until today. That's a month of waiting.
- To save the time of going back and forth with the bank, you want to get an 'approval' (not pre-approval) before making an offer. It makes your offer stands out.
- If the property already lender or bank owned (you can see this from tax record) and it is vacant. You are good to go. Time dealing with the bank is shorter.
- In some cases, banks don't want to pay a dime - if agent is buying or agent is related to buyer. In that case, look for other agent. Unless, your family don't mind working for you - for free.
- Be ready for 'trashy' houses that need some fix-it-up. One time my client and I were at a condo full of roaches. I am not exaggerating. I called the agent about it, and he had no clue about the condition of his listing. By his own admission, he admits that ".. he hasn't been to the property.. for 3 months!" What?
- Somehow, if the owner just getting started negotiating with the bank and still living in the place.. look else where. There are so many out there. Don't waste your time. The bank will 'sit' on it until...whenever they see the light.
- Many of the big banks is in trouble. They have a growing portfolio of non-performing assets. Banks don't make money sitting on idle investments. They need to unload their holdings quick. That's why, they're only after 'the numbers.' The bottom line. Their attitude is 'let's-get-down-to-business.'
So when buying foreclosure: 1) look for a bank-owned and 2) make sure it's vacant. The listing agent usually throws in the remarks some sort of a code, like 'seller is really motivated' or 'seller is ready to make a deal.' If that's the case, you get yourself a ready to deal seller.
Because inventory of foreclosure is on the rise (note: we haven't even gone condos!), if you want to check out pre-selected single-family houses (from hundreds of active listings) under the category, it's here: Springfield, Falls Church, Alexandria.
My disclaimer: Information is provided from MRIS. Data is current as of January 27, 2008. Status may change in the process. We'll check in some other area in Northern Virginia and the District of Columbia, next week.