Regardless of the area of Maryland from Baltimore to Hagerstown, from Frederick to Annapolis or from Silver Spring to Bowie or anywhere in between, Maryland has seen a dramatic increase in the number of foreclosure homes in the state. This increase in defaulting mortgages has been caused in large part by the mortgage meltdown and the global financial collapse that followed it.
MD foreclosure listings are disproportionately high compared to other states for a number of different reasons. Most of these foreclosures are HUD homes; that is homes currently owned by the Department of Housing and Urban Development. Foreclosures in Maryland have risen by 455% percent from only a couple of years ago with the vast majority being HUD houses. Maryland ranks #1 in the country in median household income at $70,545, nearly twice the national average and nearly triple the lowest.
The major reason for this is connected to the fact that Maryland is so densely populated. Weather pay is higher because of the dense population or the population so dense because pay is so high, is a subject for another time. For now we need only appreciate that these two facts exist.
With the higher than average household income and an unemployment figure currently resting at 9% the adage of "location, location, location" has never been more important to follow as an absolute rule. Metropolitan areas have a somewhat higher percentage of unemployment but for real estate and foreclosure home buyers this is more than made up for by the overall population count. Resale is an important variable when investing in a home for resale or rental purposes as carrying costs can run as high as 10% of the foreclosure homes value.
You should be buying homes that have gone to foreclosure. Buying as many homes below market as your credit can withstand. Why buy in a down market? Buying in a down market instead of timing the market at its lowest point will allow smart investors to buy more foreclosed homes and rent them out or reselling before buying additional foreclosure homes and repeating the process. The thousands of people that lost their homes and those yet to lose their homes will require a home to live in and provide their family shelter. This new real estate market is where the greatest boom in recent history in Maryland will come from. The greatest wealth opportunities are also in this time in our history. If you are not in the foreclosures home buying game, get in the game.
Buying foreclosed homes in communities outside of metropolitan areas may require a degree of additional patience in order to locate a MD foreclosure listing with an adequate degree of equity. Once purchased the foreclosure home will again require patience as resell buyers and tenants are more easily found in the more metropolitan areas and more difficult the more rural the area.
With high pay and density of population both in the highest among all states there exists a dynamic which is ripe with the ingredients required for a foreclosure rate spike with just one more variable being introduced. In the most recent case, a mortgage crisis that was built on faulty loans given to people with either no credit history or poor credit was that added variable that took down the house of cards.
Prince Georges and Baltimore County each rank among the country's largest per household foreclosure rate. PG County is populated by government workers. Baltimore County is populated by blue-collar workers, government employees and health workers.
Q. Why would these two counties see such an increase in the foreclosure rate?
Q. Where predatory lending practices more prominent in these two areas over any other?
Q. Why don't we read about Wicomico County and their foreclosure problems? Is the eastern shore immune to the foreclosure debacle?
The answer to all of these questions is "Population". Where the population is dense and incomes are high the foreclosure rate will reflect it. Foreclosures are not a matter of landmass. Foreclosures are matter of people massing together because foreclosures are a people problem not a housing problem.
Q. Does anyone think a house cares who lives in it?
Foreclosures are a people problem. It is the people that lost their homes to a bank. A bank is not a bunch of bricks and mortar, occupied with computers and calculators. A bank is a collection of people that work together to lend money to other people with the promise of repayment with interest. No repayment equals no business, no business means no jobs for their people. Foreclosures are a people problem.
Because people are the main reason for Foreclosures we can benefit from this potentially negative by understanding people and working with them to improve our situation individually and as a community.
Firstly people need a roof over their family's heads. It is one of the basics of life...shelter. Just because they were foreclosed on doesn't mean that this very basic need no longer needs to be met. These people are great candidates as tenants for your rental properties.
Secondly the bank that now has a glut of foreclosures in their inventory is also made up of people. These people have their own problems. If the properties stay on their books too long they can not lend more money. If they don't lend money they can't make money. If they don't make money, they loose their jobs and they are looking at getting foreclosed on themselves.
Anyone can see the solution is to buy foreclosures from banks and rent them to the millions of additional families that have a need for shelter. Find out more about how to make money by solving these very real people problems by going to UsHud.com or Mimian.com.