A Struggle for Stability
Saturday, March 29, 2008
Even people who avoided the exotic loans and unrealistic budgets that brought on a wave of foreclosures can lose out -- if there are enough of the other folks living nearby.
That's the story of the Kettering subdivision, a well-kept neighborhood in Prince George's County with a large townhouse section and 35- to 40-year-old split-levels and ramblers. And situations similar to that in Kettering are unfolding in other pockets of the region where mounting foreclosures have also become a concern.
More than 20 percent of the townhouses and almost 18 percent of the detached houses on the market in Kettering are listed as short sales, bank-owned or bankruptcy trustee sales. Short sales occur when the sellers have asked the bank to forgive part of the mortgage because they cannot find a buyer at a price that would pay off the balance.
Because there are so many distressed properties, other sellers are frequently matching, or even undercutting, those prices. Still other sellers have withdrawn their homes from the market and are staying put because they don't want to compete with fire-sale prices.
According to RealtyTrac, Zip code 20774 in Upper Marlboro was third-highest in Prince George's County in the number of defaults and foreclosures for 2007 but was second in January, with 24 mortgages in early stages of default, 58 auctions scheduled and four bank-owned properties.
In Kettering, which according to census figures has 2,140 single-family houses and 1,779 townhouses, the asking price for a three-bedroom townhouse ranged from $220,000 to $339,000 two weeks ago. For single-family houses, which vary more in size and style, prices ranged from $299,000 to $425,000.
Michelle Vessels, a Long & Foster agent, said that such a wide range of asking prices for similar townhouses shows that agents don't know where to set prices so properties will sell promptly.
Or they're in the shoes of Akil Walker, an agent at Exit Premier Realty. He said one client bought a home for $249,990 in Kettering last year and wants to sell now at $265,000 because the payment on his adjustable-rate mortgage increased and he can't afford it. "He's trying to get enough to break even. I did tell him he probably can't. He wants to test the waters."
Vessels said: "In some communities, the prices are all over the place. I don't think anybody has a handle on it. You put something out there and hope something sticks."
Should sellers who have not run into trouble with their mortgages set a price comparable to those of distressed properties?
No, she said. "But if you've got enough short sales and foreclosures in the neighborhood, you may not have any choice . . . if you want to get them sold in a timely fashion," she said.
This real estate climate has emboldened buyers to bargain for deep discounts, even on non-distressed properties, agents reported.