The housing market in much of the Washington region may be well on the way to recovery -- but for the people who bore the brunt of the housing crisis, the scars are still fresh more than two years after values in most areas hit bottom.
And in the hardest-hit areas, where foreclosures dominated home sales for more than a year, the recovery is sluggish and the drag is widening an already stark economic gap.
For many residents, the sting didn't come from the initial mortgage taken out on the house -- it was the additional equity they took out during the market peak, which topped out in most jurisdictions five years ago in the summer of 2006.
|Speed of housing recovery depends on where you live|
|Peak month||Peak price*||Trough month||Trough price*||Value drop||June '11 price*||Price levels back to|
|District||Nov. '05||$450,000||Feb. '10||$340,000||-24%||$435,000||mid-2005|
|Arlington||June '06||$525,000||Mar. '09||$385,000||-27%||$526,500||mid-2006|
|Alexandria||Mar. '07||$475,000||Feb. '09||$320,000||-33%||$459,000||mid-2006|
|Fairfax||July '05||$515,000||Feb. 09||$310,000||-40%||$440,000||early 2005|
|Loudoun||Dec. '05||$525,000||Feb. '09||$300,000||-43%||$410,000||late 2004|
|Prince William||Dec. '05||$425,000||Feb. '09||$175,000||-59%||$272,000||early 2004|
|Montgomery||July '07||$490,000||Feb. '09||$315,000||-36%||$381,150||early 2005|
|Prince George's||June '06||$340,000||Mar. '11||$155,000||-54%||$169,000||early 2003|
|*median sales price|
Edward Potter Sr.'s Fairfax home was valued at $730,000 during the market peak, 18 months after he bought it for roughly $500,000. Like many homeowners he refinanced in 2006. Three years later, he owed $600,000 on a house valued at less than what he paid for it. Potter also lost his job during the recession and was working to start his own business but contacted the bank to fix his underwater mortgage.
"They said, 'Mr. Potter, I cannot quote-unquote officially tell you not to pay your mortgage,' " Potter said last week. "It was the most ludicrous experience I'd ever been through."
The Potters short-sold their home for $440,000 this year and moved to South Carolina.
"We were short nearly $200,000 on the sale," Potter said. "I'm not proud of that."
Although his approach to lenders is now wary at best, the experience hasn't shied him and his family away from homeownership. But the crash left many people jaded about homeownership and mortgages. A dozen other former homeowners declined to comment for this article, saying they didn't want to relive what happened.
"It was a feeding frenzy," said Boyd Campbell, a real estate agent in Prince George's County. "People used the equity in their home as a credit card."
Prince George's County today stands out as the region's one major jurisdiction that has yet to see any real recovery from the crisis because of the high foreclosure rate there.
"You have a large population of African-Americans and Hispanics, and these were the customers that were targeted by these ultrapredatory lenders," said John Heithaus, chief marketing officer at real estate technology developer Metropolitan Regional Information Systems.
But overly ambitious homeowners were just as guilty.
"They weren't [thinking] -- it was demand gone wild, everyone thought there'd be no end to the bubble," Heithaus said. "Everyone was all smiles, but sooner or later that had to come crashing down."
Home values in Prince William County took the biggest hit, plunging nearly 60 percent during the crash. But prices there have risen since 2009 and are nearing mid-2004 levels. In Prince George's, where homes lost more than half their value, housing prices have fallen for five straight years. It's still too soon to tell whether the uptick seen in recent months is seasonal or the beginning of a recovery.
Although it's one of the wealthiest black-majority counties in the nation, Prince George's has been in the shadow of wealthier neighbors Montgomery County and the District. Now that gap is widening.
Today, median home prices in Prince George's are still just half of what they were in the June 2006 peak. Helped by government spending, homes in the District, Arlington and Alexandria are nearing or have exceeded their peak prices.
Those jurisdictions had less to make up -- during the crash, prices in the close-in metro area fell by less than $150,000; homes in outlying counties lost up to $250,000 in value.
Lending is still the biggest problem as mortgage lenders are carefully scrutinizing credit applicants this time, experts say. In this region, the healthier markets are flourishing as the more expensive homes are purchased by well-qualified buyers. But markets with cheaper houses falter as shoppers on a budget struggle to get financing in a tight lending market.
"The pendulum has swung in the opposite direction," Campbell said.