From reader Vanya Wright.
What are foreclosure rates and sale prices doing in the closer-in Maryland neighborhoods -- Bethesda, Chevy Chase, Silver Spring -- and the extreme north-west neighborhoods of DC? Why would those neighborhoods behave any different from the VA neighborhoods right across the river from them?
image: CRA-GMU
Here's CRA takes on foreclosures. Data shows that foreclosure happens because of higher proportion of sub-prime loans, new homes supply and purchase by speculators, first-time home buyers using sub-prime and over-reached mortgages.
Common sense to the differences in foreclosure rates: 1) price, 2) density, 3) type of neighborhoods (established) 4) composition of type of properties (condo, single house, townhouse).
In a simplified move, let's look at the price range and number of homes on the market. Over in Montgomery county only 126 foreclosure listings. The price range of properties on the market for Bethesda-Chevy Chase corridor is between low $479,900 to high $10.75 mil for an average of $1.42 mil. How many first-time home buyers can buy homes in these price range? Not too many. So, foreclosures is low. Only two properties on the foreclosure bandwagon in Beth-CC corridor priced at $499K and $1.34 mil. Ditto for pockets of north of northwest DC hood.
Higher density of homes on the market in No. Virginia hoods. More units for sale. As of today (10/9/08), Fairfax county alone has 5000 homes (condo/townhouse/single family) on the market, 373 of those homes or 7.46% of total units on the market - is a combination of bank-owned and short-sale. While DC has a total of 2565 units for sale, 64 of those on foreclosure column.
For neighborhoods, the farther away from DC - inside vs. outside the beltway - the higher the foreclosure rates.
Think from there you can draw your own conclusion.. plus this, this, and this.
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