Neighborhood Foreclosures Hurt Home Values

Neighbors of Individuals who have lost their homes may have serious consequences if they try to refinance or sell their home.

Even if you have good credit, what is happening with your neighbors is important when it comes to having the ability to get rid of your home. Comparable sales information calculates your home value. Lenders need this information in order to consider refinancing and selling. If a home owner cannot refinance at low rates, that my cause additional foreclosures.

The amount of homes in the United States that have been faced with foreclosure has increase by fifty-seven percent and two hundred and thirty thousand homes across the nation have gotten default notices from their banks.

Out of the way suburbs that are popular with people buying their first home have been hit hard by the current foreclosure problem. In the northern part of California, home owners bought homes that they could not afford. They were forced to borrow one hundred percent of the value of their homes.

Currently some of these same homeowners are returning their homes over to the banks and are going away from their mortgages.

In an upscale town in Florida, homes sold for about 780 thousand dollars. This is a drop from the usual price of over one million dollars. Because of this, homeowners that live in the surrounding area who want to sell or refinance are in trouble because they owe more money than the actual home value. Homeowners need to have money on hand to put on a down payment or they will not be able to close of their home. Many people do not have these kinds of resources.

Those who appraise homes usually come up with their calculations by looking at sales of property in the neighborhood over a six month period. A poor market can make that calculation very hard, especially if there have been no current sales and there is an exorbitant amount of properties in the immediate area that have been foreclosed on, and are currently on the market. It is hard to determine the value of homes in a poor market. The process of appraisal has become a lot harder.

A list of foreclosures does not show the real value of the properties in the neighborhood since they have often suffered damage. In frustration, some home owners actually trash their own property before they vacate the premises. It is better to look for sales of older properties that have not been foreclosed on and understand the affect of the market decline will have on the value of the home.

In the southern part of California, the problem is serious in areas with a very large and dense population, especially in neighborhoods where there are condominiums. Mortgage brokers are overwhelmed with homeowners trying to escape from this serious problem.

A home that was once worth eight hundred thousand dollars in 2007 can easily be worth only four hundred fifty thousand in 2008.

Consumer groups say that the number of foreclosures will continue to bring down property values and decrease the tax profit for local and state governments.

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