Loudoun County Foreclosure/Bank-Owned and Short-Sale Statistics - July 2008

With all the hype and talk about foreclosure/bank-owned and short-sale properties, especially in Loudoun County, you’re probably wondering what that segment of the real estate market is up to. Let’s look at the statistics to find out…

Supply/Inventory

• The number of foreclosure/bank-owned and short-sale properties that came on the market in July 2008 was 318. This is an 8 percent increase from June 2008 (318 versus 291).
• The number of foreclosure/bank-owned and short-sale properties that came on the market in July 2008 was 45 percent more than in July 2007 (218 versus 175). This statistic in itself does not look very good, but let’s continue looking at buyer demand and then look at the overall picture.
• New foreclosure/bank-owned and short-sale listings comprised 47 percent of the total new listings in Loudoun County in July 2008

Demand

• The number of foreclosure/bank-owned and short-sale properties that went under contract (aka sold) in July 2008 was 299. This is a 12 percent increase from June 2008 (299 versus 263). This is a key statistic because July is usually slower than June when it comes to buyer activity and shows that buyer demand for these types of properties is up.
• The number of foreclosure/bank-owned and short-sale properties that sold in July 2008 was 440 percent higher than in July 2007 (299 versus 68). This shows a huge year over year improvement that has been the general trend in Loudoun County so far this year.
• Foreclosure/bank-owned and short-sale properties comprised 54 percent of the total number of homes sold in Loudoun County in July 2008

Although inventory is up, buyer demand for distressed properties has risen tremendously helping to absorb these new properties/listings and stabilize the market. For example:

• In July 2007, the ratio of new listings to buyer demand was 5:2 (for every 5 new listings, 2 went under contract/sold).
• In July 2008, the ratio was almost 1:1.

Although we haven’t seen the flow of foreclosure/bank-owned and short-sale properties slow down, buyers and investors are out in full force buying them up. The fact that buyers and investors are out is great news for not only the distressed property market in Loudoun, but the overall Loudoun County real estate market.

In a nutshell, despite increased inventory, the distressed property segment of the market is showing improvement. It’ll be even better once we see new inventory start to plateau and eventually go down while buyer demand stays strong. And if Loudoun County gets involved in buying up foreclosure/bank-owned properties like Fairfax County is going to do, that’ll be even better.

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US Foreclosure Filings Up 121 Percent

The numbers aren’t great - U.S. foreclosure filings are up 121 percent over last year. They rose 14 percent in the second quarter, the eighth consecutive quarterly climb. These numbers are according to RealtyTrac and the figure is a total of default notices, auction sale notices and bank repossessions between April and June.

The government is trying to help by passing a mortgage rescue plan, which includes $4 billion in grants to local communities to buy up foreclosed properties that may be negatively affecting the communities. Fairfax County recently approved such a program, but Loudoun County is yet to do so though they’ve been discussing it for a while now.

The good news for us in Loudoun County is that most of the activity is coming from a small number of states such as Nevada, California, Florida, Ohio, Arizona and Michigan. Yes, the DC metro area including Loudoun County has been hit hard. But there are lots of investors and traditional home buyers buying up foreclosure/bank-owned properties, which is helping to keep the inventory down and softening the blow a bit around here as compared to other areas of the country.

Graph courtesy of RealtyTrac

Good and Bad News In The World Of Foreclosures

There’s good news and bad news in the national and local Loudoun County foreclosure world. You probably want to hear the bad news first, right? Ok, here goes…

Bad news

• Nationwide, foreclosure filings in June 2008 were up 53% over June 2007
• Economists project 2.5 million homes nationwide will enter the foreclosure process this year, up from 1.5 million in 2007
• Analysts say the mortgage industry’s effort to assist troubled borrowers is being overwhelmed by the magnitude of the foreclosure crisis

Good news

• Nationwide, foreclosure filings are down 3.4 percent in June over May
• The local Loudoun County foreclosure market has shown signs of stabilization over the past 6 months
• The new Virginia law that went into affect July 1 may help some financially-stressed Loudoun County homeowners moving forward

Yes, the bad news is pretty bad. But remember that the bad news is nationwide and that the Washington, DC metro area, including Loudoun County, is about 6 to 9 months ahead of the rest of the country.

Foreclosures/REO and Short-Sales Selling Like Hot Cakes

Sales of foreclosure/bank-owned and short-sale properties in Loudoun County are up…way up! So what’s "way up"? How about 378 percent!

As of a few weeks ago, distressed properties made up almost half of the total sales in Loudoun County. Investors and traditional buyers are out in full force taking advantage of the deals to be had.

Here are the numbers:

• The number of foreclosure/REO and short-sale properties that sold during the 2nd Qtr of ‘07 - 227
• The number of foreclosure/REO and short-sale properties that sold during the 2nd Qtr of ‘08 - 859
• That’s an increase of 378 percent

With the Loudoun County real estate market looking up and interest rates having jumped recently, this may be just the time to start picking up an investment property or two. And if you’re a traditional home buyer that doesn’t mind putting in some money and sweat equity into a great deal, you may want to check out some of those great deals.

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Loudoun County Top 10 Best Places To Buy Foreclosures

Forbes recently named the Washington, DC metro area including Loudoun County one of the top 10 best places to buy foreclosed homes. Part of the criteria was whether there were hints of stabilization, which is evident in the latest Loudoun County inventory/supply and buyer demand numbers.

"Our goal was to differentiate inexpensive foreclosure markets from those that are undervalued, as cheap foreclosures in flimsy markets don’t necessarily make strong investments."

Here’s are some of the figures Forbes came up with for the area:

• Median home price: $366,583
• Foreclosure savings: $56,858
• Foreclosure rate: 1.16%
• Price change 2006-2007: 0.77%

To check out how they came up with the rankings, click here.

Foreclosures, Bank-Owned Properties Make Up Almost Half of Sales In Loudoun

Buyers and investors in Loudoun County are buying up foreclosure/bank-owned and short-sale properties at a ferocious rate. Almost half (46 percent) of the properties currently under contract in Loudoun County are foreclosure/bank-owned and short-sale properties. In fact, 43 percent of the properties that have settled/closed since January 1st have been foreclosure/bank-owned or short-sale properties.

Here are the "under contract" numbers:

• 1018 - Total number of properties currently under contract in Loudoun County
• 476 - Number of dsitressed properties currently under contract

Here are the "settled"/"closed" numbers:

• 2063 - Total number of properties that have settled/closed in Loudoun County since January 1st
• 892 - Number of distressed properties that have settled/closed in Loudoun since January 1st

As you can see, foreclosure/bank-owned and short-sale properties make up almost half of the properties sold in Loudoun County this year. Buyers and investors in Loudoun County are buying up distressed properties at a very healthy rate. This has has been the case pretty much all year and is one reason why the ratio of distressed properties to total properties for sale in Loudoun County has remained steady all year.

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Loudoun County Foreclosure/Bank-Owned and Short-Sale Inventory and Buyer Demand Balance Each Other Out

Loudoun County Foreclosure/Bank-Owned and Short-Sale Inventory and Buyer Demand Balance Each Other Out

Loudoun County has seen a huge increase in the number of foreclosure/bank-owned and short-sale properties that have hit the market so far this year compared to last year during the same period. But the increase in buyer demand so far this year has been at about the same percentage rate, if not higher as the increase in inventory.

Here are the numbers:

• The number of new foreclosure/bank-owned and short-sale properties that came on the market in 2008 YTD is up 64 percent from the same time period in 2007
• The number of foreclosure/bank-owned and short-sale properties that have sold* so far this year is up 70 percent from the same time period in 2007

*by contract date

The demand for these types of properties is keeping up with the rate of new ones coming on the market. This is good news because we need the inventory to be absorbed so the market can stabilize and start recovering.

Loudoun County Foreclosure/Bank-Owned and Short-Sale Property Sales Up 300 Percent

The number of foreclosure/bank-owned and short-sale property sales in Loudoun County in 2008 is up 300 percent over 2007.

• 1134 of the total sales in Loudoun County from January 1, 2008 through May 31, 2008 were foreclosure/bank-owned or short-sale properties
• 341 of the total sales in Loudoun County from January 1, 2007 through May 31, 2007 were foreclosure/bank-owned or short-sale properties

Leading the way in sales of foreclosure/bank-owned and short-sale properties is Sterling Park due to the abundance of those types of properties.

Percentage of Foreclosures and Short-Sales Holds Steady

The percentage of total properties for sale in Loudoun County that are foreclosures/bank-owned or short-sales is holding steady around 25 percent. We’ve been seeing the percentage stay around 25 for most of this year.

Though we’d all like to see that percentage go down, it’s definitely good news that it’s not increasing. The fact that it’s not increasing is another sign that the worse is behind us.

-Danilo

Rate Of New Bank-Owned and Short-Sale Listings Steady

The rate at which new foreclosure/bank-owned and short-sale listings are entering the market in Loudoun County remains steady. Here are the numbers:

• January 2008 saw 310 new foreclosure/bank-owned and short-sale listings come on the market. That’s 10 new ones per day.
• February 2008 had 289 come on the market. That’s 10 per day.
• March 2008 had 301 come on the market. That’s 9.8 per day.
• So far this month (thru 4/22), there have been 253 new foreclosure/bank-owned and short-sale listings come on the market. That’s a slight increase to 11.5 per day, but not too far off the 10 per day average.

The trend so far this year seems to be about 10 or so new foreclosure/bank-owned and short-sale listings on the market each day. I’ll keep you posted on how April ends up and whether this trends continues or changes.

-Danilo

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