County governments throughout the Washington area are jumping into the housing market to address the foreclosure crisis.
Montgomery County on Wednesday pledged about $2.5 million to nonprofit organizations that provide foreclosure relief, as well as loans to AHC Inc. to buy, renovate and resell foreclosed properties in the Germantown area.
Last month, Maryland announced $4.7 million to revitalize neighborhoods throughout the state, including $400,000 to target neighborhoods in Montgomery hit by foreclosure and $375,000 to the Housing Initiative Partnership in Prince George’s County to invest in neighborhoods rocked by foreclosures.
Loudoun County also got a shot in the arm recently, as Virginia Gov. Tim Kaine on Monday announced $2 million in funding for the county to buy and rehabilitate foreclosed homes for resale to low- and moderate income families.
The Department of Housing and Urban Development in January awarded Fairfax County $2.8 million for a similar purpose, though the targets in that case are first-time homebuyers and nonprofit organizations. Fairfax also has the Silver Lining program, which provides shared-equity loans to get vacant foreclosed homes back on the market.
Prince William County — which saw a 30 percent drop in the price of an average residential property last year — recently rolled out the Foreclosure Rehabilitation Acquisition Program, which uses federal money to provide qualified buyers deferred loans to buy foreclosed homes in the county. The county has also auctioned off vacant homes and foreclosed homes to county employees through its Home Help program.
According to the online foreclosure-tracking Web site Realtytrac, Fairfax County had more than 11,900 foreclosure filings last year, with more than 10,000 in Prince William County and just under 10,000 in Prince George’s County.
Prince William officials know the programs won’t solve the foreclosure crisis, said Elijah Johnson, the county’s director of Housing and Community Development, but the idea is to stabilize the neighborhoods and attract people who will live in the houses — rather than investors — to buy them.
“What we’re hearing in the industry is there’s a lot of activity” in the county’s real estate market, Johnson said.
Home sales in the county have started to improve, between the foreclosure programs and a median sales price of $175,000 in February, a $100,000 less than a year ago.
Peter Morici, professor at the Smith School of Business at the University of Maryland and the former chief economist at the U.S. International Trade Commission, said the programs are too small to significantly affect the market.
“We’re probably not at the bottom,” he said. “Overall, I think housing prices are going to decline nationally.”
Jill Landsman, spokeswoman for the Northern Virginia Association of Realtors, said the programs do more for rehabilitating communities than simple bank foreclosures.
“You have to remember why these programs are in place,” she said. “What our government has concluded is that it’s worse to do nothing.”
When banks take over a foreclosed property, they’re trying to get the most they can for the money, which is different from the county-sponsored programs, Landsman said.
“Basically, you’re bringing qualified buyers into the market,” she said. “It’s creating a quality demand that probably wouldn’t be there without it.”
