Two years ago, Northern Virginia’s real estate market was leading the nation. Now, we’re leading the nation in foreclosures:
The number of recent home foreclosure filings in Loudoun, Fairfax and Prince William counties is up more than 600 percent from a year ago, a much higher increase than in the United States as a whole, according to a national real estate company.
Loudoun had the sharpest increase among the three counties, with 1,073 foreclosure filings in July, August and September, compared with 125 filings during the same period in 2006, a jump of 758 percent, according to RealtyTrac. The California-based company said those numbers represent filings in all phases of the foreclosure process, from the initial default notice sent to a borrower to the repossession by a bank.
Northern Virginia has been hit hard by the foreclosure crisis gripping the nation, largely because it once had one of the hottest real estate markets, experts say.
Borrowers with weak credit bought houses with risky high-interest, adjustable-rate loans. Now, with rates rising, some no longer can afford payments on those subprime loans. And with housing prices down across the Washington region, many cannot sell properties at a price that would enable them to even cover closing costs.
“Quite simply, the foreclosure issue is tied very closely to first-time home buyers who got in over their heads,” said Jeanette G. Newton, chief executive of the Dulles Area Association of Realtors, a Leesburg-based trade group. “The [higher] variable rates have now kicked in, and they just can’t afford the mortgage payments.”
In other words, the market is working itself out and people who probably shouldn’t have bought that $ 600,000 house they couldn’t afford are learning a lesson in financial responsibility.
This is not a crisis.
