The Center for Responsible Lending has issued a new report on equity loss by homeowners who live in close proximity to foreclosed homes — this is a must-read if you want to better understand why your home is suddenly worth less than you paid (besides the fact that you perhaps overpaid).

Some highlights from the report:

  • $1.95 trillion in property value has been lost or will be lost by residents who live close to foreclosed properties.
  • Spillover costs will drain $1 trillion in home equity from minority neighborhoods.
  • This represents a huge setback for homeowners of color who had previously made economic progress.
  • Overall, the average spillover cost per family is or will be $21,000 lost in household wealth, representing 7% of their home value.
  • In minority neighborhoods, the average loss is or will be $37,000, or $13% of their home value.
  • This estimate does not include the total loss in home equity resulting from the foreclosure crisis (est. $7 trillion)
  • Also doesn’t include losses in tax revenue, the increased costs of managing vacant properties and non-financial spillover costs, such as increased crime, lower school performance by children and neighborhood blight.

You can read their press release here or download and read the full report here. The link will open a PDF file.