Bank Foreclosure for Sale and Its Impact on Neighborhoods

by on Foreclosure Crisis

Bank foreclosure for sale has both positive and negative effects on neighborhoods in Marion County, Indiana. According to a study of over 8,400 home sales in the county from January last year to June 2009, 47 percent of properties sold during the period are considered repossessed homes. They include properties foreclosed on by banks and lenders, auctioned at sheriff’s sale or by federal agencies such as Veterans Affairs and Federal Housing Administration.

The study noted that several listed sellers of foreclosure houses are lawyers who work on behalf or for mortgage companies. Industry experts said that foreclosed houses are important because they pull down home prices and values, adding that a typical foreclosed home is selling with as much as 20 percent discount.

On a negative aspect, bank foreclosure for sale pull down prices and values of neighboring properties. Experts pointed out that foreclosed houses pushed down the national median house price by 24 percent from its peak in July 2006.

The hardest hit neighborhood in Marion County is the Lawrence Township where for the past 18 months, 75 percent of houses sold in the area were distressed properties. Industry experts said that many foreclosed properties are sold at almost for nothing. The home values have dropped to the point where getting a fair price is almost impossible.

In Marion County, the number of foreclosed homes accounted for almost 30 percent of the total home sales in the area for a fiscal year ending in June. However, the figures do not include foreclosures sold at auctions.

In other counties, the study showed that almost one-third of the total home sales involved foreclosure homes. The counties of Hamilton and Boone have the highest home values and income levels. It follows that they have the lowest number of distressed sales.

Similarly, in the counties of Johnson and Hancock, repossessed homes accounted for 38 percent and 36 percent sales, respectively.

Industry experts said that sales figures released by the study do not represent the real condition of the housing market because some sales are difficult to monitor. They said that what is happening in the market is just a tip of the iceberg and bank foreclosure for sale will continue to increase in numbers.