A new report from the Center for Responsible Lending details how one foreclosure in a neighborhood can affect surrounding residences:
In this report, we estimate how many homes - including families who are paying their mortgage on time - will suffer a decline in property values because of foreclosures in their neighborhoods. We also estimate the monetary value of these losses in terms of lower property value and a reduced tax base for communities.
On their website is a handy-dandy map of the 50 states over which you can scroll your cursor to see how badly your state is affected.
For instance, as the NY Times points out:
More than 44 million homeowners could experience a decline in the value of their properties of about $5,000 on average over the next two years because of foreclosures in their neighborhoods.
Among other things, however, foreclosed homes can depress neighborhood values because lenders often sell the homes at a discount to recoup their investments, and vacant homes can also attract crime, according to real estate professionals.
In Suffolk and Nassau, the counties in the New York City region facing the most subprime-related foreclosures, 9,450 homes are expected to be lost to foreclosure, and 549,000 surrounding homeowners would be affected. In Nassau, those living within one-eighth of a mile of a foreclosed home would face decreases in value of nearly $7,100, while in Suffolk, they would lose $4,200 on paper.
It's very clear that this sub-prime implosion will take a few years to work through.
In case you haven't been following this mess, the folks at Responsible Lending have created a tutorial and summation of what's been going on.
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