N.Va. Foreclosures Form 'Ring of Fire'
Sunday, March 23, 2008
When foreclosure specialist John Thompson looks at a map of Northern Virginia, he sees a flaming archipelago that stretches from Dumfries to Sterling. Parts of Dale City, Woodbridge and Herndon are engulfed; Manassas and Manassas Park are "a volcano."
Thompson calls this the "ring of fire," Northern Virginia's foreclosure belt. And although hardly a scientific model, it illustrates the geographic pattern of the region's housing distress.
As the surge in foreclosures continues and banks repossess more and more houses, property values are declining -- but not everywhere, and not by equal measure, Thompson and other real estate agents said. No part of the region is untouched, but most foreclosures are clustered in certain neighborhoods and several troubled Zip codes. Rather than a sea of slumping housing, Northern Virginia has an island chain of hot spots.
"It's really limited to the ring of fire," said Thompson, an agent with Samson Realty who specializes in REO, or "real estate owned," properties. "There is no foreclosure crisis in McLean, Great Falls, Vienna, Oakton, Fairfax Station and most postal areas of Northern Virginia," he said.
In those areas, prices have dipped slightly, remained stable or, in some cases, increased. Average sale prices in some Arlington County neighborhoods have risen 7 percent in the past year, and one McLean neighborhood's average price has increased 13 percent.
But drive with Thompson through the hardest-hit areas of Prince William County -- the epicenter of the region's foreclosure trouble -- and the loss of value has been precipitous.
"That one's listed at $125,000," Thompson said one recent afternoon, sizing up a dowdy green rambler in Manassas Park that had been foreclosed on. It wasn't the fanciest house on the block, but it wasn't a shack. Two years ago, homes in the neighborhood were selling for $300,000 to $400,000, Thompson said.
On a tour of Manassas and Manassas Park, Thompson pointed to telltale signs of foreclosure: utility notices posted on windows, newspapers yellowing in the driveway, realty signs staked in the lawn. On some blocks, every third or fourth house sat empty.
The losses in value have been extreme. A townhouse in Manassas was being offered at $94,900 even though it was assessed at $253,900. Dozens of bank-owned properties were listed for less than $150,000, far below their assessed worth.
"Banks are slashing prices, and that's causing value of properties to go down with every sale," Thompson said, noting that every time a bank unloads a house at a steep discount, it further devalues other houses in the area that it might also own, fueling the downward spiral.
Still, only a small portion of Prince William homes are in foreclosure, he and others said. There were 3,344 foreclosures in Prince William last year, according to county data, up from 282 in 2006 and 52 in 2005.
A report by economist Stephen Fuller of the George Mason University Center for Regional Analysis found that 5.5 percent of Prince William housing units were in some state of foreclosure by mid-February, a rate twice that of Loudoun County's, Northern Virginia's second-highest. No major metropolitan area in the country had a foreclosure rate that high in the last quarter of 2007 -- not even Detroit -- according to Fuller's data.