Yes, and it appears that Washington might pass measures to stem foreclosures in the coming months, delaying our market correction even further.

It's amazing how many people in Washington just don't "get it". It's not that difficult, really. There is no correction in the housing market or the economy until prices fall back in line with incomes. That's the primary constraint right now. We are deleveraging and attempting to stop it is futile and only prolongs our anguish.

It's just like in Japan in the early 90's. Their real estate market and economy suffered a "lost decade" because they propped up "zombie banks" and threw billions into worthless infrastructure programs. They tried to fight deleveraging. They lost. We will, too.

People tend to "move up" to larger houses as their family grows, but they cannot right now because the entire chain upon which this process relies has been severed. People in townhomes buy houses from people in split levels who buy from people in McMansions, etc. In order to purchase their new house, however, they must sell the one in which they currently live in order to have any equity to put down. The problem is that potential first time homeowners do not have sufficient savings to make a down payment on a $250,000 townhouse. Therefore, the townhouse owner cannot move up to the split level without selling to the first time home buyer, the split level owner cannot move up to the McMansion without selling to the split level owner, etc.

Moreover, since so much discretionary income is being absorbed in people's mortgages, retail, automakers, and other industries are suffering? How does it make sense, then, to take people who cannot afford their house and to modify their mortgage such that they can barely afford their house? They're still not spending money elsewhere, so the economy suffers. It's better to allow the natural foreclosure process to play itself out. I'm willing to wager that these people would find it a relief in the long run.

Well, at any rate, it seems that Washington is again more interested in accumulating political capital rather than actual capital.

the last post sums it up well. Washington wants to keep the bar open way past 'last call', rather than close the doors & turn off the lights, and 1- let those who didn't drink drive home 2-let those who did but with money left afford the taxi take on home, 3- let the rest of the drunkards stumble home - or not make it home

The Maryland and Northern Virginia rivalry goes back for decades. In general NVA thinks Marylanders are lower class. This is something I am all too familiar with, since I grew up in the Maryland 'burbs, lived in DC and Alexandria. In general folks in NVA think we are less cultured and sophisticated, especially true if you are from the Baltimore area.

There is a visible difference and it starts in DC. The western (VA) side of the city is beautiful. This is the posh and monumental side, it is the grand DC most people think of. However, the eastern (MD) side of DC is the low rent district with industrial areas and often less than pretty. When you approach DC from Virginia it looks like the shining city on the hill, but coming from Maryland you almost want to make a U-turn.

The Potomac River, though very small in physical separation is a huge divide socially and politically. Virginia is a Southern State, Red, and a Common Wealth - this strong independence can be felt. Maryland is a dependent State that historically has had an identity crisis.

Virginia has much lower taxes than Maryland. The Corporate tax rate is almost half, since O'Malley just increased it substantially. This makes NVA much more attractive to businesses that bring thousands of high paying jobs to the area. While Maryland struggles to keep the businesses it has.

The contrast is most clearly seen in the areas surrounding Columbia, MD and Reston, VA. Both of these planned communities sprouted at the same time. They are both about equal distance to DC and Airports, BWI is nicer. Columbia has the advantage of being located on the 95 corridor and closer to other major east coast cities. Overall all it has a much better geographical location. Yet, businesses almost always choose the Reston area over Columbia due to taxes. Reston continues to develop, attract high paying jobs, brain power, and increases its tax base. While at times the Columbia area has slowed to almost stagnation. It may come as no surprise that the Northern Virginia Real Estate market is now beginning to stabilize.

*The other visible contrast is in the nearby suburbs on either side of DC.

Economists have warned that these negative trends will continue in Maryland, even with the promise of BRAC, unless the State does more to attract business by re-thinking tax policy.

Ultimately real estate is about jobs. If an area is attracting high paying jobs, you can bet that real estate prices and demand will be high.

Northern Virginia has already attracted two Big Corporate Headquarters this year. Hilton and Volkswagen USA.
http://baltimore.bizjournals.com/baltimore/stories/2009/02/02/daily27.html?surround=lfn

Good for Virginia, bad for Maryland. I'd love to live in Northern Virginia if the commute to work wasn't so bad. Instead, I still live and shop in PA while waiting for Maryland to face the realities of the real estate bubble. It's too bad Maryland isn't more like Northern Virginia. I couldn't imagine living in PG county especially with the real estate tax hike.

I'm not sure what's keeping back the tide of price declines in Maryland suburbs, but it's going to happen sooner or later. Relying on the BRAC is like living in a fantasy world. It's unsustainable. At some point a price war is going to break out between new home developers, resales, and foreclosures. The sooner the price declines happen, the sooner things start to stabilize. Holding declines back is just going to cause an over-corrective flood.

Although most of these posts are old as we move into the final days of July 2010 it is apparent that there are fewer foreclosures in the Northern Virginia Real Estate market. As you move south down I-95 that also appears to be true. I work closely with an appraiser, she has 25 years in the business, and she has been updating me daily on the current market changes in Northern Virginia, Prince William and Stafford Counties. Still on the lookout for the "shadow inventory of foreclosures" but it has yet to appear.....