Maryland Housing Trends Report Released | Part 2 Foreclosures
February 6th, 2008 Categories: Market Statistics
On Monday I reviewed the Maryland Housing Trends Report written by MRIS and Delta Associates.
In that post I covered the Economy as well as the Real Estate Trends and Forecast. In this post I will summarize the special section which included Foreclosures and the regional effect on the real estate market. In part three I will post about what the report has to say about the effects of BRAC in the Maryland area. Clearly the writers have identified these two subjects as ones to keep an eye on.
Foreclosures: Navigating the impact on the residential real estate market
To recap, the report starts by noting the trends for the regional market and illustrates that in some areas home prices have held steady while sales volume has decreased. The report also illustrated how days on market statistics have increased. The area is still supported by high incomes and low un-employment.
However, everywhere we turn we hear about rising foreclosures, and now, the Maryland General Assembly plans to address rising foreclosures.
So, what effect does the rising foreclosure rate have on the market?
According to the report the national Credit Crunch has had local implications on the foreclosure rate, but they don’t give specific numbers for the Baltimore area. I went looking for more information and this is what I found:
According to the Mortgage Bankers Association the number of homes that are more than 30 days past due is at it’s highest since 1986. In the Washington area, the rate of properties in foreclosure has risen from 79/10,000 at the end of the 3rd Quarter to 88/10,000 at the end of December. It’s rising, but not by much.
I went searching on my own for Maryland Foreclosure Rates and found some interesting information:
The most concise article I found breaks down foreclosure rates by State. The RealtyTrac article states that for 2007 there were 25,109 filings for foreclosure in Maryland which is a 455% increase from 2006. At first look this seems pretty scary.
“However, the total number of foreclosures in Maryland encompasses only .83% of households. Certainly an increase in foreclosures is a negative event, but clearly the majority of households are paying their mortgage on time.” Scott S.
Regardless of the “totality” of the numbers, there are still effects on the residential real estate market:
- Every newspaper, television, and radio outlet sensationalizes the rise in foreclosures. Bad news sells, and the psychological effect causes buyers to wait for “the bottom”
- Properties that have been foreclosed are vacant and un-kept, effecting sales values in the neighborhood.
- Home Owners Associations may suffer from past due fees, effecting paying residents
- Rising inventory tends to bring home values down, and certainly days on market up.
- Those that do lose their home are certainly effected negatively. Families, children, and even pets pay the price.
When purchasing a home you should take the following precautions to avoid foreclosure at a later date:
- Contact an experienced real estate agent to co-ordinate and guide you through the home buying process. I am always willing to help!
- Consult with a qualified loan officer and be conservative in the amount of money you borrow.
- Know and understand all of the terms of your new loan.
- Get a fixed rate, 30 year term loan. They are at an all time low right now.
- Put a substantial amount of money down on your property. (10-20%)
- Choose a property in an area that will hold it’s value.
- Make a budget and stick with it. Don’t eat into your equity, and leave the credit cards at home.
- If you get into trouble financially, don’t wait until it’s too late. Contact a real estate agent and find out how you can avoid foreclosure by performing a short sale. (More on that later)
As the year progresses I will keep an eye on Maryland Foreclosures and the trends that are reported. Feel free to comment on your experiences, thoughts, and opinions on the matter.
1 Comment »
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Hi Scott, your blog is evolving beautifully. Thanks for all the detailed info on thelcal market.
Hilary Shantz, Oakville Ontario
Comment by Hilary Shantz — February 9, 2008 #