A strong job market and a recovering economy allow the Washington area to put its foreclosure inventory in the rearview mirror at a steady pace, experts said, unlike struggling real estate markets in California, Arizona, Nevada and Florida. Nationwide, foreclosure filings increased 7 percent in August and initial default notices rose by 33 percent, the largest increase since August 2007, RealtyTrac reported.
“A large part of the increase is due to the Bank of America coming back online with foreclosures,” said assistant research professor Lisa Sturtevant from the Center of Regional Analysis at George Mason University in Fairfax. “The moratorium on robo-signings has been lifted. It’s been months and there’s a backlog. People have been delinquent but they hadn’t been processed.”
In Northern Virginia, however, “we worked through the foreclosures earlier than suburban Maryland,” Sturtevant said. “It’s a smaller issue in Virginia than suburban Maryland. I don’t see it as a big issue for our region.”
Realtor Robyn Burdett of Re/Max Allegiance in Northern Virginia said from 2008 to 2010 buyers were focused on foreclosures and she sold a lot of them. “Now, the market has changed dramatically and I don’t get calls for them,” she said. “There was a time when they made up 80 percent of the market in Prince William County. Now, in all areas of Northern Virginia, they represent less than 5 percent of the market.”
Senior analyst Barry Merchant of the Virginia Housing Development Authority wrote in his September foreclosure update that “Virginia continues to outperform the nation on all foreclosure measures.” He cited “lower unemployment, a return to normal for-sale inventories, and a strong investor market” as key factors in the region’s recovery.
Foreclosures are not playing a significant role in the District market but they do attract investors and multiple bids.
“I am personally not seeing a lot of foreclosures on the market in Northwest D.C.,” said Suzanne Des Marais of Keller Williams Capital Properties. “When they do come up, they are still being swamped with multiple offers, often cash investors.”
Des Marais remains concerned about the impact the Federal Housing Administration’s maximum loan limit reduction from $729,750 to $625,500, which went into effect this month, will have on buyers.
“In the District, specifically, we’ve had very tight inventory in entry- and mid-level price points in many neighborhoods, so I would expect any surge in foreclosures to be absorbed, particularly in Northwest and close-in Northeast,” she said. “The biggest concern would be for neighborhoods further away from the center of the city.”
“I think it’s a good time to sell in downtown D.C. because interest rates have created another level of affordability. We are in a good position to absorb shadow inventory downtown,” she added.
Even hard-hit markets like Prince George’s County have been digging out, with foreclosure sales playing a role.
“I think this is a great time to put your home on the market,” said Joanne Darling, president of the Prince George’s County Association of Realtors. “In Prince George’s County, July saw sales increase. Most of the increase was sales of foreclosed properties.” The uptick in sales “took care of most of the lower-priced properties,” she added.
Short sales also affect the Washington area’s foreclosure picture. Burdette said sellers use that route before allowing their homes to go back to the bank. “I think that is one reason why our area has seen a decline in the foreclosure filings,” she said. “In addition, we have seen a decline in the short sales, too, which I think is a sign of a better economy. Inventory is still low and it is a great time to sell.”
