Foreclosed home values bounce back
Investors reap housing recovery’s rewards according to Zillow analysis
Less than a decade after the housing bubble crisis, foreclosed homes have gained almost twice as much value as other homes, but the recovery comes too little too late for many homeowners, according to an analysis from Zillow.
In fact, since low-end homes were much more likely to be foreclosed, the analysis shows how the housing crisis worsened the gap between rich and poor in the U.S., according to Zillow.
In 2006, the homeownership rate rose to almost 70 percent, up from 65 percent in the mid-1990s. When home values crashed in 2007, millions of homeowners were forced to walk away – abandoning their initial investment and missing the opportunity to gain equity as home values recovered, said the analysis.
Almost half, 46.7 percent, of foreclosed homes were among the least expensive third, versus just 16.6 percent in the top third most expensive housing.
"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,” said Zillow’s chief economist, Dr. Svenja Gudell.
However, 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 has risen from 13 to 19 percent over the past decade.
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 39 percent in value.