Foreclosures are dogging the Washington area's housing market, with even homeowners not facing the prospect of losing their houses feeling the effects of the crisis.
With more than 27,000 properties seeing foreclosure filings in the first half of the year and about 30 percent of home sales coming from foreclosures in the first quarter, the Washington area's housing market is depressed -- dragging down sale prices and forcing homeowners to think twice about putting their house up for sale.
As foreclosures saturatethe housing market and buyers hunt for bargains, "the nonforeclosure sellers are going to have to decide not to sell or bring the prices down to be able to sell the property," said Daren Blomquist, a spokesman for RealtyTrac, the foreclosure-tracking company that released the six-month numbers Thursday.
Foreclosure fallout Local foreclosure statistics for the first half of 2010: "> Jurisdiction Foreclosure filings Rate Change from Jan.-June 2009 District 1,221 1/234 -31.25 Montgomery County 3,002 1/122 -5.33 Prince George's County 7,480 1/43 18.58 Alexandria 414 1/170 2.99 Arlington County 402 1/256 -12.04 Fairfax County 4,308 1/91 -17.49 Loudoun County 1,683 1/62 -13.51 Prince William County 3,107 1/44 -30.20 Virginia 30,063 1/110 5.98 Maryland 28,293 1/82 56.21 U.S. 1.65 million 1/78 8.26 Source: RealtyTrac
There's no question foreclosures are depressing the housing market, said Anirban Basu, chairman and CEO of Sage Policy Group, a Baltimore economic consulting firm.
"From a D.C. perspective, foreclosures will remain uncomfortably high, particularly in certain jurisdictions," he said.
In Prince George's County, for example, more than one-third of home sales in the first quarter were foreclosures. While the number of sales jumped more than 60 percent in June, the median sales price dropped 17 percent to below $200,000, according to Metropolitan Regional Information Systems.
"There's simply no way when there's that magnitude of foreclosure[s] [that] the market can effectively heal," Basu said. "The impact of foreclosures is multidimensional, and includes reducing demand ... to purchase nonforeclosed properties, and also [reducing] the prices expected sellers can hope to charge."
In addition to foreclosures keeping prices low, the still-tight credit market is causing problems for buyers and sellers alike.
It's tough to find financially qualified buyers, and potential sellers are "forced to reduce the price of their home to find a buyer who can qualify for the price levels," said Ken Montville, a Re/Max real estate agent who sells in Prince George's and Montgomery counties.
"Joe Homeowner, the guy who's been responsible all his life ... he's got hardly any money left in [his house]," he said. "It's kind of a sad story."
Steven Halpert was trying to sell his home in Arlington, but gave up after about 15 months because the value of his home dropped below the total debt.
"It seemed ... to be the change in the market dynamic from giving a huge loan to anyone to giving stringent loan terms to everyone," he wrote.
Even record-low mortgage rates -- the rate for a 30-year, fixed-rate mortgage remained at an average 4.57 percent last week -- don't appear to be enough to induce a sustained recovery.
"It's really an anomaly, because we're at record-low interest rates," Montville said. "I'm not quite sure what the deal is."