Your Neighbors’ Foreclosure Can Devalue Your Home
March 11th, 2009 categories: Economic Recovery, FSBO's, For Homeowners, For Sellers, Foreclosures, Housing Market, Mortgage Info
There’s a lot of frustration right now among homeowners who work hard to make their mortgage payments every month. And when Pres. Barack Obama last month announced a new $75 billion housing rescue plan to help reduce the monthly mortgage payments of as many as 4 million struggling homeowners, that frustration only grew.
I can understand this. It’s not easy to make monthly mortgage payments when the economy is bad. Yet the vast majority of U.S. homeowners save and scrimp to make sure they keep up with their house payments.
These hard-working homeowners don’t want to see their tax dollars used to support people who may have unwisely purchased homes that cost too much.
But there is a reason why we should all want to see foreclosures drop. There’s a reason we should all support anything that can help others keep their homes: When a home falls into foreclosure, it has a negative impact on nearby homes. That means that when your neighbor’s home is foreclosed, it could lower the value of your home.
U.S. News & World Report recently wrote a story about this issue. The feature cites a chilling statistic: A study in Chicago found that a foreclosed home reduces the value of nearby homes by as much as 9 percent.
That figure there should be enough to convince homeowners that the government needs to do whatever it can to keep people from losing their homes. Foreclosures help no one. Not only do they lower the value of nearby homes, foreclosed homes can quickly deteriorate into eyesores.
It’s reasonable for homeowners who pay their bills on time to be frustrated when others who don’t seem to escape serious consequences. But remember, preventing foreclosures benefits everyone.
