Foreclosure Crisis Lessons: How Foreclosures Affected One Neighborhood

When your neighbors don’t pay their mortgage, it not only affects your property values; there is collateral damage beyond that that is even more damaging, like the following, all of which are clearly illuminated in one USA Today article from 2002, Rising foreclosures reshaping communities. 

4 Problems Neighborhoods Face When Foreclosures Run Rampant

Fragmented Neighborhoods: Do you know who your neighbor is? Does it comfort yo to know who’s sleeping in the house next to you? In the article mentioned above, the journalist uses teh phrase, ”fragmented community,” to refer to communities where this is not the case, ie: 

As homes fall into foreclosure, a neighborhood frequently turns more transient. Investors often buy homes in foreclosure and rent them out if they can’t sell them. “You end up with a very fragmented community,” . . . When investors buy them and turn them into rental property, it can be Section 8 (a government rental assistance program). Not that there’s anything wrong with that, but folks come in from a different background with different expectations and don’t have the means to keep up the place.

This leads directly to the next problem neighborhoods plagued by foreclosure face . . .

Feeling Unsafe: One of the comforting things about living in a neighborhoods where people who own stay put is that you know who your neighbor is; most likely, you become friends with them. But, if a home is constantly being inhabited by new people, you don’t get a chance to forge that neighborly bond. And, you can start to feel unsafe, especially if you feel that your neighbors are cut from a different cloth.

Actual Crime: While the article above was written in 2007, it could have been written today as actual crime has gone up in many counties with a high rate of foreclosure. In fact, the piece mentions that one resident of the community profiled was dragged behind a vacant home and raped; and a heroin addict had moved into another vacant home.

School Deterioration: Schools are affected as well when foreclosures happen. Property taxes are one of the main ways counties raise taxes for their school systems. When homes are foreclosed on, that’s lost revenue. That means less money for after school programs, hiring (additional) teachers; and a host of other programs financed by taxpayer dollars.

Additionally, there’s the trauma of students coming into the schools. Many have a home life that’s so disrupted that it spills over into the kind of students they become at school. Many fall behind, which means teachers have to teach differently; this disrupts the entire classroom — and the curriculum at large.

There are many lessons to be learned from the foreclosure crisis. And as it continues to drag on, we may be in for a few more.

© 2009 Foreclosure Business News