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September 30, 2011

How Have Home Prices Fared in Washington, D.C. Metro Area Jurisdictions With Significant High-Cost Lending?

September 30, 2011

When the number of subprime loans peaked in 2005 (see NeighborhoodInfo DC’s 2007 analysis of Home Mortgage Disclosure Act data), several jurisdictions in the Washington, D.C. metro had noteworthy shares of new conventional home purchase and refinance mortgages classified with high-cost interest rates. Topping the list were Prince George’s County, MD (44.0%), Manassas Park City, VA (36.9%), Manassas City, VA (35.5%), and Charles County, MD (33.6%).

Easy credit helped drive the housing boom that drove median single-family home and condominium sales prices in these four jurisdictions up an average of more than 130% from $164,000 in March 2000 to $379,000 in March 2006.

So did any of these gains survive the foreclosure crisis? The chart below tells the story.

Adjusted Median Sales Price: Three-Month Averages for High Subprime Jurisdictions in the Washington, D.C. Metro Area

Metro_housing_prices

Across the entire metro area, prices are down 36% between March 2006 and March 2011. But in the four jurisdictions named above, sales prices have plunged an average of 53%.  Prices fell more rapidly at the foreclosure crisis’ beginning in the three Northern Virginia (NOVA) jurisdictions, but have increased slightly since their lowest point in 2009.  The two counties in Maryland have steadily fallen throughout the crisis, in fact Prince George’s County median sales prices in March 2011 are now 11% below March 2000 levels. The other three areas are holding on to part of the price gain since 2000, with Manassas City and Charles County prices appreciating 10-11%, and Manassas Park City 23%.

Why the difference in price trends? For one, the foreclosure crisis hit Maryland harder than NOVA. Mortgage delinquency of 90 or more days peaked around the end of 2009 and is still falling in Manassas. Even though it peaked in Charles and Prince George’s Counties at roughly the same time, it dropped only a little in early 2010 and has leveled off since.

In the Washington, D.C. region, the foreclosure crisis was lower on the Richter scale than it was in Miami or Las Vegas. But that doesn’t mean there weren’t consequences here. The price declines spell a huge loss of wealth for homeowners, a large share of which were black and Latino borrowers. Beyond that, falling prices also mean that property assessments will fall, reducing local property tax revenues at a time when these governments should be investing more to stabilize neighborhoods and prevent more foreclosures.

For more details about how the housing markets in jurisdictions in the Washington D.C. region have fared in the foreclosure crisis, visit NeighborhoodInfo DC to see the Washington, D.C. Metropolitan Area Foreclosure Monitor and its county profiles, which provide a snapshot of the latest trends in foreclosure, delinquency, and the broader sales market.

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