Is Washington, D.C. Immune To The Foreclosure Crisis?

The current real estate industry has some big problems. Subprime lenders are going bankrupt because they made risky loans to people who could not afford them. Huge numbers of those loans are either in foreclosure or are heading in that direction. Across the United States, foreclosure rates increase monthly, and it’s anyone’s guess where it will all end.

Many real estate investors in the Washington, D.C. metropolitan area are now asking themselves: How will the rising tide of foreclosures affect the local Washington real estate market?

It’s no secret that foreclosures are on the rise in the Washington metropolitan area. According to RealtyTrac’s latest figures, there are 3361 more foreclosures in the Virginia-Maryland-D.C. region than there were just one year ago. Recent figures obtained from the Metropolitan Regional Information System (MRIS) indicate that in the counties closest to Washington, D.C., home sales are off by more than 14% over one year ago.

Will area foreclosures keep pace with those in the rest of the country? Or, will the presence of the federal government provide a built-in immunity?

As a local Washington, D.C. area investor, I have seen the region weather some tough times. The last big market correction started in 1989 and lasted several years. Over one thousand savings and loan institutions across the nation went bankrupt from mismanagement and greed. As a result, the federal government, who insured them, ended up with thousands of properties on its hands.

The situation was so bad that the government stepped in and created the Resolution Trust Corporation to sell the houses it had accumulated from the S&L disaster. Thousands of houses were dumped into an already stagnant real estate market. During much of the 1990′s, the Washington region, like many areas of the country, saw very little appreciation in home values. Are we in a similar situation today? Although the circumstances may seem familiar, only time will tell what the long-term effects will be.
What Is The Government Doing?

According, in part, to an August 31 Administration press release, President George W. Bush announced that HUD’s Federal Housing Administration (FHA) will enhance its refinancing program to help an estimated 240,000 families avoid foreclosure.

“FHASecure,” a plan at the federal level, was created for people who have good credit but who have not made timely mortgage payments because of re-setting adjustable rate mortgages. It will give them an opportunity to refinance their existing mortgages so that they can keep their homes. Using traditional underwriting standards, FHA will charge mortgage insurance premiums based on the individual risk of each loan, so that it can expand access and help more families. The government’s hope is that FHASecure will prevent the problems that now plague the real estate industry from ever happening again.

The government’s FHASecure program will definitely help the overall real estate market in the U.S., and, to some extent, the Washington, D.C. area. The market has a long way to go, however, before it returns to anything approaching “normal.”

It’s no secret that foreclosures are on the rise in the Washington metropolitan area. According to RealtyTrac’s latest figures, there are 3361 more foreclosures in the Virginia-Maryland-D.C. region than there were just one year ago. Recent figures obtained from the Metropolitan Regional Information System (MRIS) indicate that in the counties closest to Washington, D.C., home sales are off by more than 14% over one year ago.

Will area foreclosures keep pace with those in the rest of the country? Or, will the presence of the federal government provide a built-in immunity?

As a local Washington, D.C. area investor, I have seen the region weather some tough times. The last big market correction started in 1989 and lasted several years. Over one thousand savings and loan institutions across the nation went bankrupt from mismanagement and greed. As a result, the federal government, who insured them, ended up with thousands of properties on its hands.

The situation was so bad that the government stepped in and created the Resolution Trust Corporation to sell the houses it had accumulated from the S&L disaster. Thousands of houses were dumped into an already stagnant real estate market. During much of the 1990′s, the Washington region, like many areas of the country, saw very little appreciation in home values. Are we in a similar situation today? Although the circumstances may seem familiar, only time will tell what the long-term effects will be.

What Is The Government Doing?

According, in part, to an August 31 Administration press release, President George W. Bush announced that HUD’s Federal Housing Administration (FHA) will enhance its refinancing program to help an estimated 240,000 families avoid foreclosure.

“FHASecure,” a plan at the federal level, was created for people who have good credit but who have not made timely mortgage payments because of re-setting adjustable rate mortgages. It will give them an opportunity to refinance their existing mortgages so that they can keep their homes. Using traditional underwriting standards, FHA will charge mortgage insurance premiums based on the individual risk of each loan, so that it can expand access and help more families. The government’s hope is that FHASecure will prevent the problems that now plague the real estate industry from ever happening again.

The government’s FHASecure program will definitely help the overall real estate market in the U.S., and, to some extent, the Washington, D.C. area. The market has a long way to go, however, before it returns to anything approaching “normal.”

FHASecure is not designed for the thousands of real estate speculators who purchased properties hoping to make a quick buck. In reality, FHASecure will only help a relatively small percentage of people – those facing foreclosure due to re-setting of adjustable rate mortgages.

How do I see the Washington, D.C. area real estate market in the near future? In any metropolitan area, a strong economic base is critical to a healthy real estate market. The number of available jobs is a key factor. Here in the Washington, D.C. area, we have a very strong job market. Not only does the federal government supply thousands of local jobs, it rarely lays off its workers, thus, giving them job stability. To make a strong job market even stronger, there is a huge need for a steady supply of government contractors for the war in Iraq, as well as professionals to assist in the development of Homeland Security. With an exceptionally strong economic base, Washington, D.C. will weather the current market correction better than most metropolitan areas.

How to Get Your Foreclosure Houses Sold in Today’s Market

So, how does an investor adapt to the present trends in real estate? I’ve invested in foreclosures for over twenty years in Washington’s metropolitan area and today I’m still buying and selling houses. In fact, I’m on my third house deal this year, and I’m making good profits with each house.

How am I doing it in such a buyer’s market? First, think about what sells a house. There are two factors you must consider when buying an investment house that you plan to fix up and resell. These two factors are price and condition. In today’s market, in order to attract buyers, you must address both of these factors.

A couple of years ago, when there weren’t so many homes on the market, you could more easily sell a house that was not in top condition. Now that the real estate market has turned and there are so many houses for sale, it’s not enough to have a house in “move in” condition. Your houses must be in “top-notch” condition. They also must be offered at a price below their current fair market value.

In the Washington, D.C. metropolitan area, “top notch” means that you must go the extra mile and anticipate what today’s homebuyers want. For example, is your investment property in a middle-class neighborhood full of four bedrooms, two and one-half bathroom single family homes? Then, buyers want extra value – like granite countertops and stainless steel appliances in the kitchen, not to mention a ceramic tile kitchen floor. Making stand-out improvements like these to the most important room in the house, the kitchen, is one of the ways I’m getting my houses sold in today’s market, and how you will get yours sold, too.

Of course, the list doesn’t stop at the kitchen. Don’t overlook those bathrooms! Neglecting bathrooms – the second most important rooms in the house – is a big mistake. You don’t need to spend as much to get the bathrooms in top condition, but don’t forget them or your property will sit on the market unsold.

Some key low-cost improvements can also make a big impact. Replacing worn carpet,

applying a fresh coat of paint, and replacing light fixtures inside and outside can make a house look great. When you think about it, how could it be anything but irresistible to potential buyers when they walk into a house where everything has been updated?

A great-looking house still won’t sell quickly these days, however, if the price isn’t right. This past year, I’ve watched other investors set high prices and turn down offers – and not sell houses. By setting my asking price carefully and accepting reasonable offers, I’ve been able to sell properties, make profits and be ready when the next opportunity presents itself.

This is what it takes to sell a property in today’s Washington, D.C. market. I don’t invest in other areas of the country, but I am 100% sure that offering a house at an exceptionally good price and in top notch condition are the two things that will get your houses sold when all the others are sitting on the market indefinitely.

About Lance

Lance Young's expertise in real estate investing is grounded in more than 19 years of independent real estate deals and mentoring of novice investors. His first success came with buying and selling preforeclosure houses. Later, he made tremendous profits in the probate house market. In 1996, Lance wrote down what he had learned in a one-of-a-kind, step-by-step program for beginners and seasoned investors that shows how to make money buying preforeclosure and probate houses. The programs are updated frequently to fit the changing real estate market. His investing techniques require just a $10 contract deposit and 10 hours a week finding the most profitable opportunities. Testimonials from his students show that with no experience, people have made first-time profits of $11,000, $31,000 and even $80,000 just by following his simple guidelines. Through his web site, PropertyForeclosure.com, Lance Young has shared his simple, yet powerful investing methods with thousands of students while continuing as an active investor himself. His motto is: To teach others to become successful, you must keep your hand in and practice what you preach.
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