Chris Proffitt/Eyewitness News
Hamilton County - The foreclosure crisis is digging into the equity of homeowners who are on track in paying the monthly mortgage.
Those who live near foreclosed homes are finding out it's hurting the market value of their neighborhood. Indianapolis leads the state in the number of homes in foreclosure and Indiana is ranked 12th nationally. That comes on top of falling existing home sales and a glut of inventory on the market. Foreclosed homes are found in the poorest and wealthiest neighborhoods, where once-manicured lawns and tidy homes are now bank-owned and often neglected.
"It's like an eyesore to the neighborhood," said Allan Carlson about a foreclosed home in his Carmel neighborhood.
The home, near Crooked Stick Golf Course, has been vacant for more than three years. The grass is overgrown and the home is in disrepair. Carlson wants the home demolished or remodeled.
"I'm not sure what to say, but it's not right," Carlson said.
It's a common complaint. Foreclosed homes, vacant and unattended, devalue a neighborhood. Experts say that foreclosed homes have an impact when it comes time to sell a home.
The nation's foreclosure crisis is affecting the market values of neighborhoods across Indiana. Whether it's foreclosure that becomes a eyesore, or banks unloading houses for less than a third of their market value, the impact is driving down the value of neighboring properties. Ronald Dow of the University of Indianapolis calls this "the ripple effect."
"So not only are neighbors going to be affected but the other issue is, what about the neighborhood next to that neighborhood? So now you're getting into almost a township issue," Dow said.
According to the Center for Responsible Lending, such defaults will cause 44.5 million homes to lose a total of $223 billion in wealth over the next few years, most of it in 2008 and 2009. That amounts to $5,000 per nearby household.
Lower property values mean less money for schools and other county funded agencies. Foreclosures that aren't merely an eyesore, but a drain on property owners paying the mortgage each month and watching the value of their homes shrink.