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.