In times when ‘For Sale’ boards and foreclosed homes are rampant, one often thinks of the expression ‘one rotten apple spoils the whole barrel’. Is it really true in the case of housing market? Well, according to a study conducted by economists from MIT and Harvard, in 2009, found that “foreclosures tend to bring down prices of other homes for sale in close proximity, specifically with each foreclosure that takes place within 0.05 mile, it lowers the price of a house by about 1 percent.” So it would take more than just one house to bring a neighbourhood down.
Foreclosures, though, are not the only reason for the fall of prices. It often results from a customer’s perception of the area and their unwillingness to buy a house in a neighborhood which has, maybe, a series of foreclosed houses. Another factor that impacts the buyer’s mind is the dilapidated condition of some of the foreclosed houses. Many a times, these houses are on the market without a buyer and are neglected by the owner.
Apart from affecting home prices, foreclosures have another drastic side effect: an increase in crime rate due to the abandoned houses. A 2010 Federal Deposit Insurance Corporation (FDIC) showed “the cost of foreclosure-related crime at more than $17 billion.”
“Is there a solution,” you may ask, “for keeping that one apple from rotting?” Yes, one of the simplest ways would be to organize a neighborhood watch. The local community should gather together and keep tabs on what is happening in the neighborhood: who is moving in, who is vacating, which houses are vacant, etc. Having this information can prevent unwanted criminal activity in an empty home. Neighborhoods can also come together to help keep a foreclosed home clean and looking occupied at all times; this would include keeping the lawn manicured and the exterior clean from any kind of garbage. Another tip is to always leave a car parked on the driveway, to show that the house is occupied. Keep in mind, though, that all these initiatives should be taken only with the permission of the owner or the financial agency that has control over the property.