The International Herald Tribune published an interesting article about the ripple effect of foreclosures. It is something I haven't thought about but found really interesting. What does it mean for your property values? The ability to refinance? The health of your neighborhood in general.
Property Values: They will go down – hindering the ability to refi & get lines of equity. "Two earlier reports released by the Center for Responsible Lending examined the spillover effects of the mortgage crisis. But this year it relied on new research about how a foreclosure affects neighborhood home values — specifically, a 2008 study that includes researchers at Fannie Mae, the government-sponsored agency, and the University of Connecticut.
This study found that homeowners who lived within 300 feet of a foreclosed residential property experienced a drop of 1.3 percent in home value; those living 300 to 500 feet of the foreclosed home typically see a drop in value of 0.6 percent. "
As for the health of your neighborhood – long term – it will be fine and back to where it was prior to this mess. (Whenever that is) Short term – home values will be lower. There is some good news; foreclosures are down 7% from last month!! My advice – don't panic – ride it out – you will be fine. BUT – in this case – it pays to be a nosey neighbor!
