MoCoRealEstate

Distress Sales in Montgomery County – How bad is it?

January 18th, 2009 Categories: Foreclosures, Market Updates

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 Clarksburg, Damascus Gaithersburg, Derwood, Mont. Village Germantown, Boyds North Potomac Olney, Ashton, Brinklow, Sandy Spring Poolesville, Dickerson, Barnesville Potomac Rockville, North Bethesda Silver Spring, Burtsonsville, Takoma Park	4% 29% 43% 42% 25% 13% 8% 5% 24% 29%	2% 7% 25% 13% 4% 1% 0% 1% 8% 39%

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.

Posted by Bruce Lemieux

This entry was posted on Sunday, January 18th, 2009 at 8:00 am and is filed under Foreclosures, Market Updates. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

1. Chad Lariscy said at January 25th, 2009 at 12:12 am

   Bruce,

   Awesome Post hand down. You have done an incredible job with your graphics, great information with great advice. I would love to know how you created the overlay on your very wise usage of Google Maps.

   Great Job!

2. Bruce Lemieux said at January 27th, 2009 at 2:25 pm

   Thanks Chad – I sent over the details. Hopefully it’s useful.

Leave a Reply

Name (required)

Email (will not be published) (required)

Website