The foreclosures are coming, the foreclosures are coming…that’s all we see in newsletters, emails and hear about in real estate circles. Well, is this really the case in Northern Virginia? Here is a quick update on foreclosures and short sales in the five largest market areas in Northern Virginia and how we buck the national trend. It will be revealed why I don’t believe our foreclosure problem will be as great or as devasting as the rest of the country.
It is truly amazing how many Americans are behind in their mortgages and for how long they have been behind. The number of people who are delinquent has dropped but it is still at a phenomenal number – 6.373 million – 1.844 million are more than 90 days late. What and how does this mean to our region? Only time will tell but if you look at what, in my opinion are leading indicators, we may be more sheltered than the rest of the country. As I see it, trustee sale notices are one leading indicator as they inform the public when an auction will take place on a property where the home owner is delinquent. Second is short sale activity and as you will see, we have, as a percentage, a very low number of short sales on the market currently and as many of us know in the business, many short sales do not get approved which eventually lead to foreclosures. In addition, if waves of foreclosures were to hit the market, could they be absorbed and as you will see from our month’s supply of houses, we are in pretty good shape. And lastly, distressed property inventory makes up just over 18% of our total inventory but it makes up just over 35% of our total sales which reflects people want a perceived bargain and find distressed properties as their avenue to take advantage of this buying opportunity. So let’s take a look at the numbers.
In Arlington County there are currently 11 foreclosures, 20 short sales and there is a 2.9 month’s supply of homes. I would say that Arlington is safe from an onslaught of foreclosures as the number of distressed properties is minimal and the absorption rate of properties is extremely strong. We need more inventory of all properties in Arlington so bring on the foreclosures.
In the City of Alexandria we have 20 foreclosures, 38 short sales and a 2.9 month supply of homes. Is this market primed for more inventory, of course it is and investors love the location and amenities of Alexandria so absorbing any foreclosure inventory should not be a problem.
Now, let’s look at the Fairfax County, our most populated county in the region. The numbers are 168 foreclosures, 336 short sales and a 2.6 month’s supply of houses. Very low numbers in the overall scheme of things, don’t you agree?
Let’s wrap it up with two of the outer counties, Loudoun County and Prince William County. Loudoun has 60 foreclosures, 139 short sales and a 3.2 month supply of houses. Their month’s supply of houses is creeping a little higher but overall, it is still a seller’s market and properties are moving. Prince William has 106 foreclosures, 237 short sales and a 6.8 month’s supply. Again, all are manageable numbers except for the month’s supply of properties which indicates a buyer’s market but from a National perspective still in better shape.
Let’s review, fewer trustee sale notices + fewer short sales = less foreclosures. Until the trustee sales in Northern Virginia pick up, I don’t believe our market will have to endure a rash of foreclosures but if it does, we can absorb the inventory. The only wild card that I see is what the banks have foreclosed on that they don’t have on the market and/or are letting people live in mortgage payment free that they haven’t evicted yet. Is this number big one or a small one? Only time will tell. You have to know your numbers to paint the picture properly to your clients. Get it? Got it? Good!
Now, go sell something!