There are still plenty of foreclosure homes available within the Washington, D.C. housing market, and they represent a money-saving opportunity for buyers willing to jump through some hoops.
We are all (painfully) familiar with the spike in home foreclosures that occurred toward the end of the previous decade. Risky mortgage loans, rapidly declining home prices, and rising unemployment forced many Washington, D.C. homeowners into foreclosure during the late 2000s.
Related content: 2016 housing forecast for D.C. metro area
The foreclosure rate across the Washington, D.C. metro area has dropped considerably since those days. But it still remains higher than the national average. This is based on new research conducted by CoreLogic and published in December.
The “hidden” message here is that savvy investors and open-minded home buyers can still find bargains in the Washington, D.C. real estate market, in the form of distressed properties.
Today, the nationwide foreclosure inventory (the share of home loans that are in some state of foreclosure) is a fraction of what it was during the height of the housing crisis. It was a mere 1.2% when last measured a couple of months ago. Call it a return to normalcy. But there are still some areas with a relatively high level of foreclosures.
According to CoreLogic, the bulk of the nation’s foreclosed home inventory is concentrated in a handful of states and the District of Columbia.
Washington, D.C. Among Areas With High Foreclosure Inventory
The states with highest foreclosure levels — relative to the total number of homes with mortgages — were New Jersey (4.5%), New York (3.6%), Hawaii (2.5%), and Florida (2.5%). Washington, D.C. rounded out the top five with a 2.3% foreclosure rate.
It bears repeating: This is a big improvement from where we were a few years ago. The Washington, D.C. housing market has improved in many ways since the Great Recession, and that includes a gradual reduction in foreclosure inventory. The same can be said for the nation as a whole.
Anand Nallathambi, president and CEO of CoreLogic, acknowledged these housing market improvements in a statement accompanying the foreclosure report:
“We are heading into 2016 with the lowest foreclosure inventory [nationwide] in eight years thanks to escalating home values and progressive improvement in the U.S. economy … Equally encouraging is the drop in mortgage delinquency rates.”
An Opportunity for Bargain-Minded Home Buyers
Foreclosures are often regarded as the dark underbelly of the Washington, D.C. housing market. But they also represent opportunity for home buyers. Distressed properties are often listed and sold below their true market values, in order to ensure a quick sale. Bank-owned homes (REOs) and short sales, in particular, can be bargains for market-savvy buyers who are willing to consider them — but not all buyers are.
Granted, buying a foreclosure home in the Washington, D.C. metro area can be tricky, and the purchase process could take longer when compared to a traditional real estate transaction. That’s because the bank is often involved. In a regular transaction, the buyer presents the offer directly to the homeowner, who can then accept or reject it. But when it comes to distressed properties, the bank usually has to give the green light.
Additionally, foreclosure homes have a somewhat deserved reputation for being neglected, and sometimes even vandalized. But for those brave enough to face these obstacles, the Washington, D.C. foreclosure market can be a world of opportunity.