Foreclosure Belt Of North Virginia

Foreclosure Belt Of North Virginia – The Ring Of Fire

March 24th, 2008

Foreclosure specialist John Thompson looking at the map of Northern Virginia refers to the ring of fire engulfing large stretches. It is following a geographical pattern. The foreclosure tornado continues to blow, banks continue with repossessions and real estate continues to tumble. But the foreclosure concentration varies from one pocket to another – there is no uniformity.

There is no crisis in places like McLean, Great Falls, Vienna, Fairfax Station or Oakton. These areas are mostly in northern Virginia. Here the prices have gone down slightly but otherwise it is more or less stable. In some instances there have been increases.

The worst affected is Prince William County where price of properties have taken a drastic tumble. Everywhere in Manassas and Manassas Park there are signs of ravages done by foreclosures – pasted notices and fluttering unopened newspapers. In some localities every third or fourth house is eerie and abandoned. In 2007 there were 3,344 foreclosure posting in Prince William. In 2006 and 2005 the numbers were 282 and 52 respectively. 5.5% of the houses here were in some stage of foreclosure – according economist Stephen Fuller from George Mason University even in Detroit the percentage was not quite this bad.

In terms of cash the loss is enormous. One house worth $253,900 is now being offered for $94,900, even after being appraised for $253,900. There were dozens of bank repossessed units going for less than $150,000. Every time a bank devalues a property the value of the neighbouring units also go down.

Most of the foreclosed houses were in the low priced localities where many immigrants had recently bought houses through sub-prime mortgages. These immigrants were largely Hispanics. In the last few years they had gone through an economic resurgence but recently there have been a number of job losses. Many are just walking away from adjustable rate mortgage agreements. In Northern Virginia 70% to 80% foreclosure cases came from the Hispanics. They had reasoned that to be part of the great American dream they would have to own houses and so they bought – but bought at the wrong time at the end of the housing boom. Now the dreams have turned into nightmares. The interest rates are rising while job opportunities are falling together with house prices. The cracking down on illegal immigrants by over zealous officials has further aggravated the problem. The people seem to have lost the fight in them.

Via