Foreclosures in your neighborhood don't just cost homeowners their homes -- as if that wasn't bad enough -- they also depress nearby home values and rob the tax base for as long as two years.

The Center For Responsible Lending (CRL), which reported in "Losing Ground" that more than 2 million households will face foreclosure due to risky loans, now says the story doesn't stop there.

CRL's latest report, "Subprime Spillover" says for each of the millions of foreclosures on home loans originated in 2005 and 2006, the home values of more than 22 homes will suffer.

The study comes on the heels of a RealtyTimes.Com report "Foreclosures Undercutting Social Benefits of Homeownership" which reveals an increase in social turmoil due to foreclosures.

Studies have long associated homeownership with reduced crime, better educated kids, higher incomes, less reliance upon welfare, more politically active residents and even reduced teen pregnancy, among other benefits.

It's not surprising then that the positive effects of homeownership are vanishing with growing declines in homeownership, especially where there are concentrations of lost homes.

The CRT study, which focuses on some of the financials cost of foreclosures says:

• 44.5 million neighboring homes will experience devaluation because of subprime foreclosures that take place nearby.

• The total decline in house values and tax base from nearby foreclosures will be $223 billion.

• Homeowners living near foreclosed properties will see their property values decrease $5,000 on average.

The financial damage is probably going to be worse.

CRL concedes it used conservative estimates in both "Losing Ground" and "Subprime Spillover."

The center based its findings on research that says a single foreclosure decreases nearby home values by an average 0.9 percent, but additional foreclosures have a cumulative effect. Each additional foreclosure on the same block strips home values by an additional 0.9 percent. And the impact is higher in lower-income neighborhoods, where a foreclosure reduces nearby home values by 1.44 percent.

Despite economic forecasts that insist the housing market's woes haven't or won't impact the general economy, CRL's report isn't the first to reveal economic fallout will indeed occur.

In October, ACORN released (Association of Community Organizations for Reform Now) released "Foreclosure Exposure 2: The Cost to our Cities and Neighborhoods," an analysis of data from private and federal sources predicting the potential economic impact of foreclosures on just 96 metropolitan areas.

The report says property owners, local governments, lenders and investors alike in the 96 areas stand to lose more than a combined total of $25 billion.

The dollar cost includes the economic impact as well as the cost of social degradation stemming from lost social services, under-funded education, and increased crime, among other social factors.

Property tax revenues, bolstered by homeownership, help provide city services but foreclosed properties shrink city and regional tax revenues, making it harder to provide good schools, police protection, code enforcement and other services.

"Foreclosures don't just hurt individuals and families, they hurt entire neighborhoods and communities, leaving homes abandoned and vulnerable to vagrancy and crime," ACORN reports.

Without breaking out the data by race, CRL says the foreclosure spillover effect will hit African American and Latino communities harder.

"We note that communities of color will be especially harmed, since these communities receive a disproportionate share of subprime home loans," CRL's report says.

In a "Foreclosure Exposure", a study of 172 cities, ACORN quantified the disparity.

CRL says, in general, 24 states and 42 counties will bear the brunt of foreclosure spillover, experiencing declines of more than $1 billion each in local house prices and tax bases.

States hit hardest will be California, New York, Florida, Illinois, New Jersey, Maryland, Arizona, Massachusetts, Virginia, and Pennsylvania. Counties to be hit hardest will include Los Angeles County, CA; Cook County, IL; Kings County, NY; Miami-Dade County, FL; Queens, NY; Orange County, CA; Bronx County, NY; Broward County, FL; Maricopa County, AZ and New York, NY.

Published: November 15, 2007

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Broderick Perkins parlayed a career in old-school journalism into a contemporary digital news service that really hits home. The award-winning consumer journalist, originally from Wilmington, DE, is founder, publisher and executive editor of the bootstrap DeadlineNews Group, a Silicon Valley-based editorial content and consulting service specializing in residential real estate, consumer news and related editorial consulting services. The DeadlineNews Group includes the website, DeadlineNews.com, offering real estate editorial content and consulting services, and its back shop, the Deadline Newsroom, an open house on news that really hits home. Perkins obtained his formal journalism education from University of Delaware and a journalism boot camp, the Institute of Journalism Education at the University of California-Berkeley. He went on to 20 years of service as a daily newspaper journalist at the Wilmington, DE News Journal and San Jose, CA Mercury News. Perkins covered housing on the San Jose Mercury News reporting team which earned a General News Reporting Pulitzer Prize in 1989 for coverage of the Loma Prieta earthquake. He has also produced real estate, consumer and small business content for the Wall Street Journal, Los Angeles Times, RealtyTimes.com, Nolo.com, Better Homes and Gardens, the National Association of Realtors, Homestore/Move and Intuit/Quicken among more than three dozen publications. In addition to managing the DeadlineNews Group, Perkins most recently served as chief editorial consultant for Nolo's Essential Guide To Buying Your First Home, Nolo, and writes real estate television scripts for RealtyTimes.com.