U.S. Foreclosure Statistics Show Mixed Signals

The most recent U.S. foreclosure statistics just released by RealtyTrac and CNN show mixed signals. September 2008 saw a 12 percent decline in foreclosure filings over August 2008, which is good. But it also was a 21 percent increase over September 2007, which is not so good.

Though the increase over last year is an important statistic to consider, the decline over last month is even more important because it's more relevant to how the current market is doing and where it's headed. If we see a continued decline in foreclosure filings as 2008 comes to an end, this will bode well for market in 2009. If not, the 2009 U.S. real estate market may not get off to such a great start.

What's interesting is that there's a quote in the CNN article that says,

The bad news: The housing market will be flooded with bank-owned homes. "We are estimating that by the end of this year, between one quarter and one third of all homes for sale will be bank owned properties," he said.

That could push down prices even more, perpetuating a vicious cycle, but it might also start to attract bargain hunters who may absorb some of the massive housing inventory.

Well, Loudoun County bank-owned and short-sale properties have made up one quarter to almost half of all homes for sale for almost 2 years now. And the bargain hunters and investors started coming out in packs to buy up that inventory well over a year ago and they're continuing to do so.

This just goes to show that Loudoun County and the DC metro area are ahead of the rest of the U.S. (as we usually are). Our boom market started before most of the country. The peak of our boom market (Summer of 2005) was ahead of most of the country. And the bottom of our bad market usually comes before the rest of the country's does. If they're calling for that "bad news" to happen just prior to the bottom for the U.S. housing market….well, it's already been happening here in Loudoun.

Demand For Distressed Properties Outpaces Supply For First Time

The foreclosure/bank-owned and short-sale portion of the Loudoun County real estate market has been steadily improving over the last 6 months. But last month brought some of the best news we've had in a long time - demand outpaced supply!

For the first time since the market turned, there have been more distressed properties sell than new ones come on the market in a one month period. August had 326 distressed properties sell versus 306 new ones come on the market.

Here's a graph showing new listings (supply) versus solds (buyer demand) for 2008 (click to enlarge):

 

Notice that in January, the number of new listings was more than double the amount of solds. Since then, the number of solds has been steadily increasing. The number of solds in August was more than double those in January.

As for inventory, there was a spike in new distressed property listings last spring, but it's back down to the 300 per month level.

This is very good news for not only the foreclosure/bank-owned and short-sale property market, but the Loudoun County real estate market in general. The key ingredients to a stabilization of the market is lower inventory and higher demand, which is what we're seeing across the board in Loudoun County.

Related Articles

No "Summer Slump" For Loudoun County Real Estate In 2008

Loudoun County Real Estate Market Statistics - 1st Half 2008 vs 2007

Loudoun Real Estate Inventory Levels Well Below National Average

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.

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.

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