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What Are The Hidden Costs of Foreclosures?
It’s been widely quoted (on NBC News and other sources) that each foreclosure costs every neighboring homeowner 1% in home value and 2% increase in crime. There are even more costs. In Arizona Republic, Edythe Jensen’s article focused on Homeowner’s Associations and their budgetary woes. HOAs and their management companies are unable to perform many of their customary services, i.e., inspection and weed removal, because of the lack of HOA fees. This is a trickle down effect of short sales and foreclosures and delinquent HOA fees.
A 2% increase in crime is subsequently borne by cities and counties who also have shrinking resources, because of a non-performing tax base. Each foreclosure and short sale depletes the tax base, and when the house is sold at a reduced price, the tax base is lowered.
This is particularly gloomy and in view of Ben Bernanke’s ‘shrinking’ first half prediction, it’s time for Congress to get into this act.
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