America's Post-Subprime Boomtowns - Matt Woolsey, 12.11.08, 4:30 PM ET
Woodbridge, Va., a 40,000-person, Washington D.C., suburb called "the outer beltway" by locals and real estate brokers, is a perfect model of that region's housing boom and bust. The city's population grew by 27% from 2000 to 2007, as residents flocked to the affordable housing, quiet tree lined neighborhoods and local parks available there. Home sales then spiked, and transactions doubled between 2003 and 2005--to 2,000 a year, according to Trulia.com.
But what was done quickly just as rapidly came undone. Prices are now down 40%, and transactions have halved from peak levels. It seemed Woodbridge was destined to host vacant, foreclosed properties. Only that hasn't happened. The local housing market is bouncing back as buyers search for deals. In fact, its transaction rate has returned to 2005 levels. The swell of adjustable-rate-mortgages and subprime, adjustable-rate loans in Virginia defaulted at 23%, one of the higher rates in the country, according to the Mortgage Bankers Association. That landed towns like Woodbridge in trouble, but it's now showing positive signs of correction, even if the average price of foreclosed homes--currently $213,416, down from a high of $333,900 a year ago--are still depressed.
More..Forbes.com - Magazine Article
