Why DC Real Estate is Dead
June 19, 2008
– Comments (4)
I've been saying it for a while. All the arguments that people have used to try and claim that DC real estate would be immune are bogus, and they're the same pile of junk people have used everywhere else: Job Growth (BS) Wage Growth (BS) Strong Local Economy (BS because it can't support thousands of million-dollar homes).
Well, prices here have been tanking at a 12% YOY rate, and now another shoe drops. The foreclosure rate here has finally taken a huge jump.
The Washington region now has one of the fastest-growing foreclosure rates in the nation, as 15,613 homes went into foreclosure during the one-year period ending in February, an analysis to be released today has found.
Although communities have felt the effects of the housing crisis for months, the report reveals that foreclosures in the Washington region have been increasing at a surprisingly quick pace, outstripping those of most major metropolitan areas. Over the past year, the number of foreclosures per 10,000 homes jumped from 23 to 131 locally, while the national average increased from 58 to 87.
"While foreclosures were practically nonexistent in the Washington area 18 months ago, it's now very prevalent, and we're above the national average," said the report's author, John McClain, deputy director of George Mason University's Center for Regional Analysis.
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And it's not just in the poor communities. It's in the "rich" ones, where legions of 50K millionaires paid millions for houses that weren't worth it. And they're still building like crazy in places like Vienna. I passed half a dozen enormous spec homes on a drive to Vienna yesterday. And it's even in the city itself. So much for the theory that the urban center itself is different.
Nothing is different when prices are that far out of whack due to stupid lending policies.
Although Prince William and Prince George's counties have experienced the most home foreclosures, the report identifies several communities as potential "hot spots" for future foreclosures, including Centreville, Falls Church, Herndon and Vienna in Fairfax County, Germantown and Olney in Montgomery County and Adams Morgan in the District.
This means, of course, that home and condo prices will continue to tank, as not only will this new inventory depress prices, the scores of still-developing condos are coming onto the market soon. Here, near Fool HQ, there are 2 or 3 huge Condo buildings still being put up, in skeleton stage.
There are going to be a lot of unhappy RE bagholders around here.
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