Like other jurisdictions across the county, the city of Alexandria has been gripped by the foreclosure crisis that has taken the financial world by storm over the last few years. Yet a number of factors have insulated the city from the harshest aspects of trends that have plagued outer suburban areas such as Prince William County. Between March 1, 2007 and Feb. 29, 2008, according to a recent report from the Metropolitan Washington Council of Governments, the city of Alexandria had 205 foreclosures. That was more than Arlington, Fairfax City or Fredericksburg during the same timeframe. Alexandria foreclosures spiked earlier this year, with 63 in January alone.

"From everything I’ve seen, we are going to see this trend continue for a while," said Mildrilyn Davis, director of the Alexandria Office of Housing. "It’s a very difficult problem that all jurisdictions are facing right now."

The Council of Governments’ report, titled "Foreclosures in the Washington D.C. Region: Evaluating the Scope of the Crisis," argues that the United States is "in the midst of the largest foreclosure crisis in recent times." Although the Washington region remained relatively unscathed at the beginning of the national crisis, data collected by Council of Government researches indicates that late 2007 marked a turning point for the region. The Washington region now has one of the fastest growing foreclosure rates in the nation, according to the report.

"Prices have fallen off most dramatically in the suburbs where, not coincidentally, the rate of foreclosure has been the highest," according to the Council of Governments report. "Foreclosure activity currently is concentrated in several ‘hot spots’ across the COG region, primarily in Prince William County. However, several other neighborhoods across the region are ‘impending hot spots,’ with foreclosure rates on the rise."

THE REPORT identified two U.S. Census tracts in Alexandria where foreclosures are clustered, both of which are located on the West End. In the year examined by the report, 24 percent of the city’s foreclosures happened in the Landmark area, including the part of Alexandria known as "condo canyon." Because condominiums are less expensive than single-family houses, many first-time buyers purchase them as a way to get a piece of the so-called "American Dream." Yet since 2000, many people who bought condominiums on the West End of Alexandria found themselves in the midst of a national nightmare with loans that were impossible to manage.

"There was a lot of pressure put on financial institutions to help people live the American Dream of homeownership," said Mark Ellmore, a mortgage banker who is running a Republican campaign to unseat Rep. Jim Moran (D-8). "So the financial institutions came up with a way to meet that demand. The problem is that people were buying houses without making any investment in it."

Between 2001 and 2005, the housing market in Washington experienced double-digit appreciation as local jurisdictions experienced windfall profits from rising property tax bills. But the housing market began cooling in 2006, and prices began falling just as the number of foreclosures began picking up. By the middle of 2007, lenders that had provided millions to borrowers unable to document their incomes or job status were filing for bankruptcy. Delinquencies and loan defaults skyrocketed to levels not seen in more than a decade.

"The argument was that the property would go up in value and the homeowner could refinance," said Joyce Woodson, a former member of the City Council member who has sold real estate for the past 20 years. "But the property values didn’t go up and so the people who took out the loans became stuck. But the interest rate kept going up."

THE COUNCIL’S REPORT documented 15,613 homes that went into foreclosure between the period of March 1, 2007 and Feb. 29, 2008. The region’s outers suburbs were hit the hardest, particularly Prince William County. By contrast, inner suburban areas such as Alexandria experienced a relatively modest number of foreclosures. According to a recent opinion issued by Moody’s Investors Service, Alexandria’s economy is predicted to be resilient because of a number of factors: the city’s diverse tax base, above-average wealth levels, economic suability derived from proximity to the nation’s capital, sound financial operations, conservative budgeting and strong debt position.

"In my experience, the people who went for the subprime loans are marginal buyers," said Kate Patterson, a Realtor with McEnearney Associates. "Most people in Alexandria are saavy, and they aren’t first-time home-buyers."