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Foreclosed Home Prices Booming
Homes that were foreclosed during the housing crisis have gained almost twice as much value as other homes, reported Zillow, Seattle.
But the report noted that the original homeowners haven’t benefited from that recovery. Many continue to have financial issues related to the foreclosure and few have bought new homes.
Foreclosed homes gained value faster than other homes, Zillow said. In many markets, foreclosed homes are more valuable now than they’ve ever been. Since the lowest point in the housing bust, the average U.S. home has risen 22 percent in value, while the average foreclosed home has risen by 39 percent.
Zillow said in many cases, investors bought foreclosed homes and converted them into rental properties, benefiting from the recovery as home values bounced back. The percentage of single-family homes being rented out rose from 13 to 19 percent over the past decade.
“Income inequality is an important topic in the U.S. right now, because the gap between the richest and poorest Americans is growing,” said Zillow Chief Economist Svenja Gudell. “Many lower-income Americans lost their homes during the foreclosure crisis, forcing them to pay ever-increasing rents and locking them out of the benefits of the housing market recovery.”
The report said during the run-up to the housing bubble, many low-income earners bought homes, pushing the homeownership rate rose from nearly 65 percent in the mid-1990s to nearly 70 percent in 2006.
“When home values crashed in 2007, millions of homeowners had to walk away–abandoning their initial investment and missing the opportunity to gain equity as home values recovered,” Zillow said.
Today, Zillow said the rich-poor divide is growing in the U.S. In 2000, high-income households made an average of six times as much income as the lowest third of households. In 2015, the top third made nearly seven times as much as the lowest third.
The report said of all foreclosed homes, 46.7 percent were among the least expensive third of homes. Only 16.6 percent were among the most expensive third.