Foreclosures Costly for Your Neighborhood & Community
You might think that a foreclosure or short sale of a home in your
neighborhood doesn’t affect you. It is a shame for those people but what
does it have to do with you? Plenty, it turns out, if you plan on moving
in the next few years. According to the U.S. government’s website about
the National Mortgage Settlement with major banks, it can affect your
bottom line tremendously.
When a house is subject to foreclosure, it creates a ripple effect
that lowers the value of nearby single-family homes and other properties.
In 2009 the Center for Responsible Lending projected that homeowners
living near foreclosed properties, on average, would lose $7,200 in property
value, and projected a four-year increase in losses to $20,300 per household.
No one who owns a home is safe from this reversal of real estate values.
We have seen this play out in wealthy suburbia and lower priced homes, where
it hits financially vulnerable households. Homes that were selling for $100,000
a few years ago are now priced at $80,000 – $60,000, or considerably less.
We have heard that investors are being offered homes grouped in tens in some
areas, that are priced below $10,000 each. The effect on neighborhoods is
sobering. In fact, it traps homeowners in homes that they can’t sell. Their only
options are short sales or foreclosure to get out from under their mortgage on
a home that isn’t worth what they are paying for it.
Because we have been watching this train wreck in our local neighborhoods
for awhile now, we are optimistically awaiting the outcome of the National Mortgage
Settlement. This could bring financial relief to millions of homeowners
by lowering their monthly payments. Many Michigan households that teeter on
the edge of a financial precipice are waiting for relief……….Will they get it?
Originally published at Grand Rapids Real Estate.com