Foreclosures a barrier to reselling homes.
Planning to buy a home?
Here's a new twist on location, location, location.
In neighborhoods with large numbers of foreclosures, it can be hard to resell your home for a profit, according to an Observer analysis.
Average sales prices have barely budged since 1999 in Mecklenburg County neighborhoods with high foreclosure rates, the Observer found. The average increase in the price per square foot was 0.07 percent, compared to 10 percent for all neighborhoods.
Since 2003, four in five foreclosures occurred in neighborhoods with average prices below $150,000. Many of these are new subdivisions of ''starter homes,'' priced for first-time buyers. Local real estate experts caution these homes can be risky investments.
''We have two real estate markets in Charlotte,'' said longtime real estate broker Bobby Spivey. While prices in higher-income neighborhoods are rising, he said, prices in lower-income neighborhoods are flat or dropping.
Average prices actually declined in 39 of 73 neighborhoods with high foreclosure rates, most of them low-priced.
The findings, consistent with research in other cities, show the consequences of foreclosures extend beyond the families that lose their homes.
A study of property values in Chicago found each foreclosed home within a city block decreased the value of a home by 1 percent. The 2005 study by the Woodstock Institute examined the impact of almost 4,000 foreclosures in 1997 and 1998.
Foreclosed homes often are resold at steep discounts, undermining the market for neighboring homes. Such homes also can stay vacant for months or years before resale, creating eyesores that may deter potential buyers of neighboring properties.
''If there are multiple foreclosures on a street, people know it,'' said Dan Immergluck, a professor at Georgia Tech University who co-authored the Chicago study.
The best advice for home shoppers?
Make sure you know it, too.
The Study
About 2.3 percent of single-family homes in Mecklenburg County foreclosed from January 2003 to early 2005, according to county records. The Observer compared sales prices per square foot during that period with prices in 1999 and 2000. The analysis did not include the sales of foreclosed homes.In neighborhoods with a foreclosure rate of less than 1.15 percent, or half the county average, prices increased an average of 16 percent. By comparison, prices were flat in neighborhoods where the foreclosure rate was more than twice the county average. Average prices declined in 20 of the 299 neighborhoods with low foreclosure rates, and in 43 of the 79 neighborhoods with high foreclosure rates.
Staying Out of Trouble
Study your neighborhood:: Your home is probably your largest investment. If it's in a neighborhood with a lot of foreclosures, it may be a bad investment. You can check the history of neighboring homes on Mecklenburg County's real estate Web site, http://meckcama.co.mecklenburg.nc.us/relookup/. Click on ''street name lookup'' to retrieve sales records for all homes on a particular street.
