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An analysis of the housing market in the Washington region shows the area has one of the fastest-growing foreclosure rates in the nation.
The report commissioned by the Metropolitan Washington Council of Governments and Freddie Mac shows more than 15,000 homes in the region went into foreclosure during a 12-month period, which ended in February.
The report was authored by John McClain, the deputy director of George Mason University's Center for Regional Analysis. McClain says foreclosures were almost nonexistent in the region just 18 months ago, but now exceed the national average.
Prince William and Prince George's counties have had the most foreclosures, but the report says communities in Fairfax and Montgomery counties could soon be "hot spots."
The findings stunned some economists who believed the federal government combined with a stable workforce protected the core of the region from the growing housing crisis.
The burst in foreclosures in Prince William County (web|news) shaved more than $100,000 off the average home cost in just a year. At the same time, though, seemed to rise slightly in D.C. and in nearby suburbs.
Aside from a drop in prices, Realtor Mina Sultani, now sees foreclosures in D.C. Neighborhoods that were formerly considered safe from the mortgage crisis; even trendy Adams Morgan.
In fact, the average for the Washington region jumped to 131 per 10,000 homes; well above the national median of 87 per 10,000.
"[In] Adams Morgan we don't see a lot of foreclosures at the moment, but we see perhaps the beginnings of a bigger drop in housing prices," said McClain.
Independent developer, Paul Robertson has 45 condo units on the market. He is confident he'll find buyers, but he acknowledges concern because he says, "The absorption has been slower [and] people are taking longer to look."
Robertson is building along U Street, an area which has seen an influx of new residents. He knows the spike in development in the recent past may not bode well for the near future. "The areas which have the most units sold in the past three years are most likely to have the higher number of foreclosures," said Robertson.
Despite the sharp increase, the Washington area still has fewer total forclosures than Miami or Phoenix. And on the positive side, with prices dropping in D.C. it's a good time to buy.
McClain unveiled Adams Morgan as a potential hot spot for spikes in defaulting on mortgages, because foreclosures usually follow a decline in prices.
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