RI Loses $5.6 Billion to Foreclosures
Wednesday, March 02, 2011
Rhode Island has lost an estimated $5.6 billion in wealth as a result of foreclosures, according to a report released yesterday by HousingWorks RI.
According to the report, there were a total of 4,738 foreclosures in Rhode Island between January 2009 and December 2010. Furthermore, with over 13,300 mortgages either in the foreclosure process or more than 90 days delinquent, Rhode Island has the highest rate of foreclosures in all New England.
Among the report’s other findings:
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• In 2009 there were 2,852 residential foreclosure deeds filed, averaging 157 per month.
• The top three communities for single-family foreclosures were Warwick (486), Providence (351), and Cranston (216).
• Single-family homes accounted for 57.7% of all Rhode Island foreclosures, for a total of 2,732.
Impact on surrounding homes
One of the most striking findings of the report is the fact that homes within a 300-foot radius of a foreclosed property tend to lose up to 1% of their value. Nellie Gorbea, the executive director of HousingWorks RI, said this can have a devastating effect this can have on all homeowners, even those who aren’t facing immediate foreclosure.
“Declines in property values effectively trap many current owners in homes that are worth less than their mortgages,” Gorbea said. “It is estimated that 1 in 5 homeowners are currently ‘underwater’ with their mortgages, meaning they owe more than the value of their home.”
Impact on local city and town revenues
The report also detailed the detrimental effect foreclosures have on municipal revenue. Not only do they detract from the tax base, foreclosures also require increased expenditures due to the need for additional services. Certain studies have shown that a single foreclosure can cost anywhere from $430 to $34,000 in additional municipal expenditures annually.
In response to these findings, HousingWorks RI recommends increased public investment in affordable homes through programs like Building Homes Rhode Island and the Neighborhood Opportunities Program, which it believes will help guarantee a long-term supply of affordable homes.
“Unfortunately, the glut of foreclosures does not mean there are more quality, affordable homes available in Rhode Island, but with a public investment in affordable housing…we can simultaneously stabilize our communities from the negative impact of foreclosures, grow our affordable housing stock, and boost our economy,” Gorbea said.
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