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Foreclosures - the wrong answer
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Photo courtesy Associated Press
It’s almost spring. The weather is starting to get nice. I invite you to take a stroll through your neighborhood. Pay close attention. How do your neighbors’ houses look? Are their yards looking shabby? Do their houses need painting? Is there clutter? If so, you might get a little angry. If you have a neighborhood home owner’s association, you might consider calling them. You might even consider confronting your neighbors. After all, one bad house can bring down the property values of an entire block, right? Every homeowner knows this.
Somehow, this bit of common knowledge is often forgotten when it comes to foreclosures. Every day, I hear, “Why should I pay because someone got greedy and couldn’t pay their bills?” Okay…maybe you shouldn’t, but the fact is, like it or not, you will.
- Foreclosures cost a lot of money. An analysis of foreclosure costs to the lender has shown that the cost of foreclosing on a home can cost the lender about $50,000, or between 30% and 60% of the outstanding balance of the home. Any self-respecting free marketer knows these costs have to be passed on to consumers somewhere along the line.
- Foreclosures lower property values. Studies have shown that one foreclosure can lower the property values from 0.6% to 1.8% within a 1/8 mile radius. The more foreclosures in your neighborhood, the more your property values are lowered.
- Foreclosures increase crime. Empty houses are prime targets for squatters and meth dealers. High foreclosure areas have 3 times the violent crime rates as low foreclosure areas.
- Foreclosures will leave your neighborhood in general disrepair. Cities are struggling as it is. Every foreclosed property is one less source of tax revenue for your city. City services will be cut. These services could include road maintenance, trash collection, emergency services and even schools.
- Foreclosures are costing tax payers. Of course, you already knew that.
Maybe it’s not right that you should pay for your neighbor’s misfortunes or mistakes, but as a part of society, you are paying. In fact, you might be better off trying to help your neighbor out of their bad situation than complaining about the government trying to help.
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