Analysts Debate Upper Marlboro's Foreclosure Crisis

The foreclosure rate in Upper Marlboro is one of the highest in Maryland, as homeowners and investors are struggling to sell homes worth less than their mortgages, according to housing analysts and RealtyTrac information.

In March, about one in every 214 Upper Marlboro households filed for foreclosure, according to RealtyTrac. Meanwhile, Prince George’s County’s rate was about one foreclosure filing for every 333 households. Overall, Maryland received one foreclosure filing for every 1,089 households.

Soon after developers built multiple single-family homes in Upper Marlboro between 2004 and early 2007, home values tumbled considerably, said Joanne Darling, president of the Prince George’s County Association of Realtors. As a result, many homeowners and investors recently have filed for foreclosure to cut their losses.

"In the Greater Upper Marlboro area, a lot of larger, more expensive homes were built," Darling said. "Unfortunately, the prices on the very newest homes decreased at a greater percentage than they did in other places. Because they’re new developments, everyone was upside-down between their loan amount and their property values."

While the average sales price of all homes in Upper Marlboro is about $267,000, the average foreclosure sales price is about $227,000, according to RealtyTrac. Darling said that she expects foreclosure prices to rise because many filings have been for properties originally worth $500,000 to $750,000.

On the other hand, Sellstate Dominion Realty broker Chuck Ottley said he expects foreclosure prices to fall about 10 percent for the next two to four years, but noted that exact figures can be difficult to predict for a diverse housing market like Upper Marlboro’s, which includes rural areas and mansions.

“The recovery will be slow and incremental,” Ottley said. “Each property is individual, and [foreclosure prices] will depend on each individual market.”

But Exit Realty broker Ed Haraway said Upper Marlboro foreclosure prices are stabilizing.

"It appears that the prices have leveled out," Haraway said. "I don’t [expect] any depreciation for the next three to five years."

Haraway said that investors have returned to the market hoping to earn profits through renting out properties, "whereas before, they were just looking to buy homes and flip them."

"We’ve reached a price point now where investors are buying for the purpose of renting," Haraway said. "There’s less buyers and more renters."

There is also a high proportion of real estate-owned properties on the Upper Marlboro foreclosure market, according to RealtyTrac data. In March, banks appropriated 300 percent more foreclosed homes than in February.

Ottley said banks are beginning to improve more homes, instead of merely selling them in the condition that former homeowners left them in.

"The banks are starting to put in new carpeting and tighten the homes up a bit, so that they can go with regular financing," Ottley said. "They’re realizing that if they do that they’ll make more money than if they passed the burden [of rehabilitation] on to homebuyers."

It doesn't matter, as long as families get into the houses, said Brian Sullivan, spokesman for the county's Department of Housing and Urban Development. "Whatever gets a family into houses soonest provides the best benefit to the community," Sullivan said. "An empty house can drag down the property values of the surrounding homes. Even if you pay your mortgage on time and mow your yard, you could still be victimized by the foreclosure crisis."