The foreclosure crisis has become a national problem, one that reaches far beyond the boundaries of a neighborhood. Although people assume that a foreclosure isn’t their problem unless it is their house that is under threat, many are learning the hard way that this simply isn’t true. A single foreclosure on a street can negatively impact the entire community. Not only does the family living in the home experience poor outcomes, but the neighborhood also stands to take a hit from the far reaching effects of a foreclosure.
One Bad Apple
As they say one bad apple can spoil the whole bunch. This is definitely true in many of the hardest hit housing markets around the United States. When one home enters foreclosure, it is likely that others will either follow suit or experience the fallout from the foreclosed home.
Foreclosures can drastically impact the property values of a neighborhood. Even though the remaining homes have not changed or suffered any direct problems, their location near a foreclosure can bring property values down by several percentage points. Further, a foreclosure can lessen the neighborhood’s tax base, causing a reduction in vital services funded by taxpayer dollars. Fewer services can quickly lead to a downturn in the quality and safety of a neighborhood.
It isn’t uncommon for foreclosure homes to become targeted by criminals. Abandoned or vacant properties may become the focus for neighborhood trouble and encourage criminal activity. Even worse is the damage done to these homes by those using the homes to support their activities. Buyers of foreclosed homes are often scared away by the home’s appeal and surrounding damage. A single foreclosure can easily tarnish a neighborhood to potential buyers.