Just about every day passes with another statistic about area foreclosures. News snippets rarely provide a good perspective on our local market, so we took a detailed look at the total number of bank-owned and distress listings on the market in Montgomery County. As posted in December, we saw signs of an improving market with an increase in the number of contracts the 2nd half of 2008 compared to 2007. However, until distress and bank properties are reduced to a smaller percentage of available inventory, we’ll continue to see downward pricing pressure.
What is a Distress Sale?
A distress sale is one that requires approval from a homeowner’s mortgage provider(s) for a payoff smaller than the outstanding mortgage balance. These listings are commonly noted to require “third party approval”. No single source provides an accurate count of distress sales, so in mid-January we worked with our home search technology company to obtain counts of all listings in Montgomery County that have descriptions that likely indicate a distress sale or are bank-owned. These numbers will not be exact, but they are pretty close.
Distress and Bank Sales by Area
Looking at all listings, about 25% of all homes available in Montgomery County are bank-owned or distress sales. This is a big number. Some areas in the county are affected much more than others as shown in the graph below.
The percentage of distress listings within each area is summarized in the table below. Also, the area’s distress listings as a percentage of the total for the County is shown. 59% of all available listings are located in Silver Spring, Gaithersburg and Germantown areas, yet these areas contain 76% of all distress listings for Montgomery County.
|Area||% in Area||% of County|
|Bethesda, Chevy Chase, Kensington
Gaithersburg, Derwood, Mont. Village
Olney, Ashton, Brinklow, Sandy Spring
Poolesville, Dickerson, Barnesville
Rockville, North Bethesda
Silver Spring, Burtsonsville, Takoma Park
Over the coming months I’ll revisit these metrics hoping to see a reduction in the inventory of distress listings. Declining inventory of distress listings will be a clear sign that our local real estate market is stabilizing. Contact us anytime with questions about how these sales have an impact on your areas of interest.
How do you feel about the market? Make a comment and let us know.