Thernauthors looked at loans that entered foreclosure between 2007 and 2011 usingrndata collected by the federal government under the Home Mortgage Disclosure Actrn(HMDA) and a second data set from Lender Processing Services (LPS).  They calculated the number of foreclosurernstarts for each census track then calculated the loss of value of neighboringrnhomes within 1/8 mile of the foreclosed property.</p

Thernauthors found that $1.95 trillion in property value has been or will be lost byrnresidents who live in close proximity to a property that has beenrnforeclosed.   This figure includes thernspillover impact of homes that have been foreclosed as well as future lossesrnfrom foreclosures that are in process.  </p

Overrnone-half of this loss has been experienced in communities of color.  Minority neighborhoods have lost or will losern$1 trillion in home equity largely because of a high concentration ofrnforeclosures in these neighborhoods.</p

Inrnall neighborhoods these losses average out to $21,077 in household wealth orrnabout 7.2 percent of the home’s value. rnHowever, in neighborhoods of color the average loss is $37,084 or 13.1rnpercent of the home’s value.</p

Despiternthe magnitude of these losses the authors caution that they represent only the wealth that has been lost or will be lost as a direct result of being in close proximity to homes that have begun the foreclosure process. “We do not include in our estimate the total loss in home equity that has resulted from the crisis (estimated at $7 trillion),” they state, “the negative impact on local governments (from lost tax revenue and increased costs of managing vacant properties) or the non-financial spilloverrncosts, such as increased crime, reduced school performance and neighborhood blight.

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