Foreclosures In Loudoun County Up 1000 Percent

"Foreclosure" is becoming a more commonly used term in Loudoun County and the DC metro by the minute. It’s front page news (today’s edition of The Washington Post) and the topic of conversation during many weekend bbq’s throughout Loudoun County. Why? Because foreclosures are up 1000 percent in Loudoun County; 400 percent in Fairfax County; 300 percent in Montgomery County and the list goes on… The effect can be seen and felt by all that live in the county as well as the entire region.

So what is the effect on you as an individual/consumer? Well here’s a short list to start off with:

1. Your neighbor’s home which is being foreclosed on looks awful, needs maintenance and TLC and is making your entire neighborhood less desireable.
2. Your property value is threatened because not all potential buyers realize that foreclosures don’t get the full/same weight as a "comp" as non-foreclosure sales.
3. Your ability as a buyer to obtain financing has just decreased and the types of loans available to you has diminished while the necessary credit scores to obtain a loan and interest rates have risen.
4. Your future tax rate is potentially threatened because the county loses money on taxes and utilities for every house that is in foreclosure and the county has to make the money up somehow (or cut services).

Though the number of foreclosures has risen tenfold, it’s a small number when compared to the number of overall sales in the county. And there are some many active ones still on the market because banks aren’t beat up enough to negotiate much on the sales prics.

Historically, foreclosures are associated with job losses, high unemployment and recessions. But this time around, it’s primarily (sub-prime) financing. But this wave of sub-prime financing will not last forever. Lenders have already become much more stringent when it comes to loan options and approvals. This will diminish the potential for situations like we’re in in the future. Once we get through this (probably another 12 months), we’ll see the foreclosure rate get back down to "normal".

Once this wave of foreclosures ends and we get back to normal, you’ll be able to

• celebrate because the "abandoned house" was finally bought and renovated by the new owner
• not worry as much about buyers trying to use foreclosures as "comps" like they used to
• obtain better financing options as lenders breathe a sigh of relief and the wounds start to heal
• have a leg to stand on when arguing with the county about using foreclosures as a scapegoat for "losing revenue" and raising taxes and/or cutting services

About a year to go - anyone have a time machine handy?

Related Reading:

Loudoun County Foreclosure Update - April 2007

Foreclosures, Pre-Foreclosures, Bank Owned and Short Sales in Eastern Loudoun County

Are You In Over Your Head?