While there is a clear difference between residential real estate market trends and commercial real estate market trends, they are not entirely unrelated. Businesses like to be near their workforces and their customers. Workers and their families choose to settle based in part on their proximity to employers and services. You (usually) can't have one without the other.
The connection is one reason Maryland's foreclosure woes have troubled the commercial real estate market. Businesses lost workers and customers when homeowners were forced out of their homes. During the financial crisis, too, businesses lost investors, which led to job cuts, which, in turn, led to workers falling behind on their mortgage payments. It isn't exactly an "identical cousins" relationship, but neither are residential and commercial real estate second cousins twice removed.
It was with interest, then, that we read October's RealtyTrac Inc. results for short sales and foreclosures. The real estate market research company reported that Maryland came in third in the nation for short sales -- 8.2 percent of all residential real estate transactions -- while the number of foreclosure sales was fairly low. Baltimore reported just 2.4 percent of home sales were foreclosures.
Maryland's foreclosure rate was third highest in the nation in October at 1 in 516 homes. The national average for the same period was 1 in 978. The number of new filings rose quite a bit over October 2012, a spike that analysts attribute to Maryland's judicial foreclosure process as well as filing and processing delays caused by the state's participation in legal actions against lenders.
So what exactly is a short sale? We'll explain in our next post.
Baltimore Business Journal, "Short sales in October made up 8.2 percent of Maryland home sales," Kevin Litten, Nov. 26, 2013
RealtyTrac Inc., Maryland Real Estate Trends & Market Info - October 2013, accessed Dec. 11, 2013