Neighbor’s Lose Money Over Foreclosures

April 22nd, 2008

The recent rise in foreclosures are not only making homeowners lose their homes, but is causing losses to neighbor’s as well. For example, let us take the case of Valerie Guerra’s home in Liverpool. The value of her home as depreciated by more than $100,000 due to falling real estate prices, even though her husband and her have been clearing all their mortgage payments on time. Even though she had nothing to do with it, she suddenly finds herself $100,000 poorer, with a large chunk of her home value gone.

Valerie says “I certainly believe my house is worth less than what we paid, but we’re here for the long haul.” The Guerras are hardly alone. They are lucky that they are not looking to sell their home in a hurry. Even people who want to get out of neighborhoods where there have been a lot of foreclosures, are stuck because they are facing a massive drop in the price of their homes. As it is, lenders have taken over hundreds of lots in many neighborhoods in East Bay that were foreclosed, and this is now taking its toll on the rest of the neighborhood that continues to live in the same vicinity.

Though buyers tend to get some good deals from foreclosed homes being auctioned, the hard reality is that falling property prices have erased years of gains for many people who had bought homes many years back just because they live next to a bank-possessed property.

A Fremont citizen, Mary Ann McFadden, who has two foreclosures on her block adds “I’m sure the foreclosures have affected our property values. I feel sorry for the people who lost their homes.”

The McFaddens and the Guerras form a dwindling circle of homeowners that are suffering in the aftermath of a crashing real estate market that was in the middle of a so-called ‘boom’ till the middle of last year in East Bay.

A resident of Brentwood, Kareen Bell says “Our values have dropped dramatically,” Having bought their home for around $865,000 a couple of years ago, they have seen their house drop in value to roughly $600,000. There are those in Brentwood who have seen their property values fall by $250,000 in a short period of time.

You can tell from overgrown weeds, and unkempt gardens that you are in the midst of a neighborhood overridden with foreclosure. Homes all around are empty, many vandalized and used for parties, most featuring auction notices.

Kareen Bells adds “It’s scary to see people moving out all the time. The house across the street from us is foreclosed. So is the one behind our home. So is the one down the street. At least six houses near us have been foreclosed.” Things have taken a turn for the worse for these people who have religiously paid all their mortgage payments.