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  • Your Neighbor's Home Foreclosure Does Affect You!

    7 posts, 5 voices, 830 views, started Jun 15, 2009

    Posted on Monday, June 15, 2009 by Cynthia Cavoto

    •  



    • Aquamarine
      Offline

      This year it is estimated that 69.5 million nearby homes will suffer prices declines as a result of a "neighborhood" foreclosure.  The total loss in property value could total $500 billion.  The result in financial flexibility is very significant.  Any homeowner who has counted on using their home equity to finance their retirement, cover tuition costs, start a small business or pay medical bills may no longer have this option.  As the foreclosure crisis continues to worsen, this situation is spreading throughout the country.  According to  Mortgage Bankers Association, an industry trade group, about 1.4 percent of all first mortgages entered forecosure in the first quarter of 2009, a 20% jump from fourth quarter of 2008 and a historic high.  

      A recent study from researchers at Fannie Mae and the University of Connecticut found that homeowners who lived 300 feet from a residential property saw a drop of 1.3% in home value, those living 300 to 500 feet of the foreclosed home typicaly see a drop of 0.6%.  In condominiums and coops this figure is significantly higher.  Job loss is the biggest cause of mortgage default and unemployment continues to adversely affect our entire economy, particularly home prices.  

      The home value typically bottoms out around the time when the bank actually sells the home.  

      What is happening in your community with home prices and/or foreclosures?



      •  


        • 0 votes vote up vote up

          Jenni0811 wrote Jun 15, 2009
        • This is not news to me. We have had 2 forclosures in our subdivision. My home is on the market now and they are directly affecting my home’s value. My home value today is 27% below cost to build. frown
          I will try to stay until the market corrects itself back in the upward direction.



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        • 0 votes vote up vote up

          UK Girl wrote Jun 15, 2009
        • It’s true anywhere not just the US - plus it deeply affects commercial property.

          I know a gated development near here and only 12% of the apartments were sold and now they are offering huge discounts almost half price against the peak of the market - now is the time to buy



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        • 0 votes vote up vote up

          Cynthia Cavoto wrote Jun 16, 2009
        • Ellen,

          Yes, it is unfortunate that this is happening.  It is also important to stay on top of home repairs and updating wherever possible.  Homes that stay in good condition and are updated still have real appeal.   One foreclosed property is not a real problem for home price reductions, but if they are more than one that is a real problem.



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        • 0 votes vote up vote up

          Cynthia Cavoto wrote Jun 16, 2009
        • JJ,

          Unfortunately that is the best approach for now - if you do not have to sell just ride it out.



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        • 0 votes vote up vote up

          Cynthia Cavoto wrote Jun 16, 2009
        • Vicki,

          Yes it does affect all properties for sure.   Now is a great time to buy if you have the cash, solid credit and time to hold onto the property.  I have heard of unbelievable bargains out there (like Las Vegas and Florida) but the problem is if this is a second home, the rental market is flooded with properties and you need to be prepared to carry the mortgage, assuming that this is not your primary home.



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