Foreclosures drive nearby home prices down

June 17, 2009
Author: Bob Tedschi /Source; The New York Times

Foreclosures drive down the value of neighboring homes an average of $7,200 per home with the total loss in property values totaling $500 billion, says a recent report from the Center for Responsible Lending, a consumer advocacy group.

The study calculated that homeowners living within 300 feet of a foreclosed residential property experienced a drop of 1.3 percent in home value; those living 300 to 500 feet of the foreclosed home see a drop in value of 0.6 percent.

Ellen Schloemer, the executive vice president of the Center for Responsible Lending, estimates that foreclosures would affect an estimated 91.5 million neighboring homes over the next four years.

“As the foreclosure crisis continues to worsen, the contagion is spreading,” Schloemer says. “You can’t just say those foreclosures are hurting someone else.”