(MONTGOMERY COUNTY REAL ESTATE) Foreclosures continue to be a hot topic in our region, though in Montgomery County we are still not so deeply affected as those states where economic decline or rampant speculation took place. Of the 4451 active homes for sale in Montgomery County, 406 of them have some distress words attached to their listing: foreclosure, short sale, REO, bank owned, or third party approval needed. About 11%.
In late October when I ran this data last, I didn't use the term third party approval in my original data so the numbers reported were a bit lower. The actual was 5000 homes for sale and 498 homes for sale with some sort of distress terms in the listing. About 10%.
- Since the beginning of October 2007 there have been 86 sales and 65 homes have gone under contract. They were on the market for 148 days on average and ended up with only 88% of their asking price (lower than the county average for "healthier" real estate).
- The average price of these homes for sale is in the lower range of the market at $358,826 and they've already discounted to about 93% of their original asking price.
- Those that sold averaged $324,956, which was 88% of their original asking price. So with the above info, it looks like the current inventory might have another 5% or so reduction before it's priced to sell.
What does this mean?
- To a current seller first and foremost it means reduce the prices! By a lot. It means getting below the highest sale or pending sale by enough of a margin to be in the game. As more of the foreclosures come on it continues to push price down even for well presented properties because buyers wait to engage out of fear or because they know the prices will go lower and lower. It means constant vigilance on price and condition if you truly want to sell your property. If there are clusters of foreclosures, more sales will need to occur to increase confidence back in the neighborhood and prices will have to be in line with the economic needs of that demographic.
- To a future seller it means fully understanding how any foreclosures or distressed sales play into the pricing of your real estate before you bring it on the market. If your agent has this much information on your area,listen to it! If you don't have the same motivation some of the distressed property owners have, it's perhaps a wise choice to rent for the next few years.
- To a buyer it means you better do your homework and understand what this means to your future investment in the property. If you are planning to live in the community understand the market and demographic factors at play. If you are buying as an investment and plan to rent it, will the rents sustain your investment and are there enough renters to cover your costs? A bargain can very quickly turn into a dud unless you've done a complete analysis of the property. You don't want to be the next seller in this cycle just looking to get out the property at any price because the alligator is eating you alive. Make sure your agent knows how to give you this depth of information.
- To the investor: are therebargains? Sure, for the savvy investor. What do you intend to do with the property? Rent it? If so, the next analysis will be on the rental incomes the area has been supporting (and expect that those who are being displaced in this round will need housing afterwards) as well as the types of housing this average home sale price will bring. There are many townhouses and condos in Germantown, Gaithersburg and Silver Spring in this list. As with last month's report, many of the foreclosures are clustered into certain zip codes as the chart above shows. The demographics of the neighborhoods will need to be studied to ensure there will be a stable rental base that can afford the price as well as enough amenities as to draw renters in the first place. Germantown in particular already has a fairly high number of rental apartment complexes.
There are many factors to consider before making an investment purchase. I can help you get the rest of the story...
Data current as of 1/3/2008 Source MRIS deemed reliable but not guaranteed.
Disclaimer: The opinions expressed by The Activerain Network and its members and those providing comments are theirs alone, and do not reflect the opinions of Josette Skilling or Long & Foster Real Estate, Inc. Josette Skilling and Long & Foster Real Estate, Inc. are not responsible for the accuracy nor the content provided by the community.