Many areas of Atlanta are experiencing the same issues with foreclosures and distressed properties as others around the country. Distressed homes (foreclosures – short sales – loan mods) and bank owned homes obviously hurt neighborhood value and appeal. Now a study conducted in Cleveland seems to assign tangible impact levels; while far from definitive, it does show some evidence of a pattern. The highlights:
Living near an occupied property in foreclosure can bring down home prices nearly twice as much than just living next door to a vacant home, according to a new study by the Federal Reserve Bank of Cleveland, which analyzed sales data of nearly 10,000 homes in the Cleveland area.
“The impacts of homes with multiple indicators of distress are larger than the impacts of homes that are only vacant, delinquent, or recently foreclosed,” the researchers found.
Some findings from the study:
- Homes within 500 feet of at least one vacancy sold 0.8 percent lower.
- Occupied home that had recently entered the foreclosure process lowered the sales price of nearby homes by 1.8 percent.
- Sales within 500 feet of a home where a delinquent borrower abandoned the home saw, on average, a 3.1 percent drop to home values.
- The largest drop was from homes that were tax delinquent, vacant, and foreclosed: Home sales prices within 500 feet were found to be 9.6 percent lower.
The findings of occupied foreclosures hurting prices more than vacant homes spotlights the underwhelming performance of private and public programs to assist homeowners before foreclosure and the need to more strongly enforce improvements in these initiatives.
See the full report HERE