Yes, verifiably, according to researchers in a recent working paper, “Forced Sales and House Prices”.
An MIT economist and two Harvard researchers analyzed 1.8 million home sales in Massachusetts (1987 to 2009), finding that “foreclosure reduces the value of a house by 27 percent, on average.”
Combine this with with their statistic that foreclosed homes make up roughly one in 12 houses with under $1 million left on the mortgage. Then consider a US Treasury statement that foreclosures can reduce surrounding home values up to 9 percent. This exposes the dramatic effect foreclosures are having on home prices−all home prices−across the country.
Is this really shocking? Perhaps the size of the decrease in value of foreclosures is shocking, but certainly not that it happens. Short sales, a transaction in which the property can avoid becoming vacant, is increasingly sought after as a solution not only for homeowners facing foreclosure, but lenders looking to recoup more of their investment. Today, CDPE-designated agents like Jeffrey Chubb of RE/MAX Unlimited are helping to facilitate hundreds of thousands of these transactions nationwide. Already this is helping communities recover and prices stabilize. This is a movement that will continue to make a difference.
Do you live in the Boston Metro Market and need assistance? Give Jeff Chubb of RE/MAX Unlimited a call or contact him at www.MoveWithChubb.com or find out more information on ways to avoid foreclosure at www.MAAvoidForeclosure.com.
