New Report: Examining the Disparate Impacts of Vacant Lender-Owned Properties in Chicago
Posted by on October 5, 2009
Chicago’s communities of color face slower recovery from foreclosure crisis, says new report
Lender-owned properties take 25% longer to sell than those in predominantly white communities
Vacant, lender-owned properties are concentrated in African American communities, go unsold longer, and incur greater losses to the lender, says a new report from Woodstock Institute entitled Roadblock to Recovery: Examining the Disparate Impacts of Vacant Lender-Owned Properties in Chicago (http://tinyurl.com/ybrybgt). As preliminary signs of stabilization in the housing market begin to appear, there are clear indicators that African American communities will have to address the negative effects of foreclosure, such as property value declines and increases in violent crime, far longer than predominantly white communities.
The report, which looks at foreclosure auction results and subsequent real estate transactions, found that 60 percent of vacant lender-owned properties from 2007 and the first half of 2008 were located in African American communities. These properties also sat unsold much longer, taking 25 percent longer to be absorbed into the market than vacant, lender-owned properties located in predominantly white communities.
As these properties sit unsold, they also lose significant value. When comparing the amount owed to the lender to the price at which a vacant, lender-owned property ultimately sold, lenders experienced greater
losses on properties located in African American communities than losses in predominantly white communities. In African-American communities, the average loss per property was 35 percent, compared to an average loss of 17 percent in predominantly white communities.
“In Chicago, communities of color are shouldering the brunt of the foreclosure crisis,” says Woodstock Institute Vice President Geoff Smith. “Interventions targeted at these communities, such as keeping borrowers in their homes and properties in continuous productive use, can potentially limit the impact of concentrated foreclosures and help stabilize communities.”
The longer a property remains vacant, the longer the community is exposed to the negative effects of vacant properties. Previous Woodstock Institute research has demonstrated that high concentrations of foreclosures lead to declining property values of surrounding homes and increases in violent crime.
The report also found:
* Vacant, lender-owned properties are concentrated in African American communities. African American communities have 12.0 unsold single-family vacant lender-owned properties per 1,000 properties. This
number is twice the city average and 7.5 times greater than that found in communities that were predominantly white
* Vacant, lender-owned properties are taking longer to return to productive use. For vacant, lender-owned properties that sold by the end of 2008, the average time on market increased by 46 percent, from 172 days in 2005 to 251 days in 2007.
* In communities of color, properties are being absorbed a much slower rate. In the first quarter of 2008, communities that are 80 percent or greater African American and communities that are at least 50 percent minority with mixed minority groups had the slowest rates of absorption at 5.5 quarters (or 16.5 months) and 5.6 quarters (or 16.8 months), respectively. In contrast, predominantly white communities had an absorption rate of 4.4 quarters (or 13.2 months).
Please contact Geoff Smith at 312-368-0310 or [email protected] or Sarah Duda at 312-368-0310 or [email protected] for more information.
Roadblock to Recovery: Examining the Disparate Impacts of Vacant Lender-Owned Properties in Chicago http://tinyurl.com/ybrybgt
Related:
Foreclosure Fallout: An Analysis of Foreclosure Auctions in the Chicago Region
http://tinyurl.com/yexea9g
There Goes the Neighborhood: The Effect of Single-Family Mortgage Foreclosures on Property Values:
http://tinyurl.com/y9ylyr4
The Impact of Single Family Mortgage Foreclosures on Neighborhood Crime
http://tinyurl.com/ycdju7e
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