Some eye-opening stats & trends from the recent report on "Foreclosures in the Washington Metropolitan Region," via Center for Regional Analysis- George Mason University.
Mortgage foreclosure rate by county by April 30, 2008 per 10,000 units:
- Arlington (68)
- Alexandria (87)
- Montgomery (88)
- Fairfax (189)
- Frederick (91)
- DC (115)
- Prince George's (219)
- Prince William (722)
Obviously, Prince William county is the ground zero for foreclosures with City of Manasass with the highest number of foreclosure among all neighborhoods in Metro DC region.
source: CRA-George Mason (click for larger image)
PAST vs. CURRENT foreclosure situations
In the past, foreclosures happened because of divorce, lost job, economic downturn, and major unexpected expenses (i.e. medical bills).
However, if the current trends is any indication, foreclosures occurred because of: 1) sub-prime loans, 2) greater new home building activity. Look at the crash and burn trends for building permits.
source: Cardinal Bank Metropolitan Economic Indices (click for larger image)
Connecting the dots. The rush in building new homes in the past few years triggered higher number of purchase by speculators and first time home buyers using sub-prime mortgages. More details from the Federal Reserve of Richmond data shows that subprime related mortgage delinquencies for the District spiked up from 13.71% in second quarter 2007 to 18.85% in 2Q 2008.
source: Federal Reserve Richmond
These days, big builders clearly have adjusted their pricing to current market conditions - to just stay afloat. They probably see their margin (of profit) shrinking.
The other day, while driving to Haymarket, VA, I saw Hovnanian's billboard advertise a new community of $200's garage townhomes. That price..am sure, two years ago, K Hov would have priced it at no less than low-$300's!
According to CRA, the City of Manasass has the highest level of concentrated activity in the region. DC, PW county, Loudoun and PG county has also high level of foreclosure with dispersed activity. While Arlington, Fairfax, Montgomery and City of Alexandria has low level, concentrated foreclosure activity.
HOT SPOTS hoods with highest foreclosures:
- City of Manasass
- Dale City
- Gainsville/ Bristow
- Woodbridge, Fredericksburg, Leesburg, Upper Marlboro, New York Avenue (DC), Columbia Pike and West End (DC).
So, foreclosures affected not only outer burbs but also close-in. New York Ave. and West End are close-in. How much closer can you not be in DC in those hoods?
UPCOMING hoods with spiked activity in foreclosures include Germantown, Centreville, Herndon, Alexandria (part of Fairfax County).
FYI. There are two Alexandria separated for tax purposes. The City of Alexandria and Alexandria with zipcodes of Alexandria, but the locality is part of Fairfax jurisdiction. The difference is in taxation. Residents of the City pays three layers of
income taxation: Federal, State and City (local). Ditto with Falls Church. (h/t nobody special).
Foreclosure Trend Watching
Other hoods that CRA seen has low foreclosure activity, however, with continue decline in housing prices these neighborhoods 'might' see higher number of foreclosures in the future.
These hoods are:
The good thing about Washington DC is: The job situation. Among 15 largest metro markets - Washington DC ranks second! after Dallas, TX, added 44,600 jobs from August '07 to '08 - which is not bad considering the U.S. economy.
With the passing of bailout bill, the job market for financial related firms should pick up? Since Treasury is on hiring mode.