 “If there is a foreclosure within an eighth of a mile of your home, your home decreased in value by an average of about 2.5 percent per foreclosed home," said Hurst. "We found that middleclass neighborhoods were the most impacted by foreclosures. The poorer neighborhoods were less so, maybe because there were more renters, not as much home ownership.
“In the Frogtown and Rondo neighborhoods foreclosures caused aggregate home values to go down by about $85 million, or 15.7 percent. We did a similar analysis in [more affluent] Highland Park, which lost only about 1.2 percent of the total value of the neighborhood. The difference was really dramatic. The average home in Frogtown/Rondo lost $28,000 due to foreclosures from 2007 to 2008. The comparable figure for the Highland Park neighborhood was $3413.”
Figure 8. Foreclosures and average sales value of homes within the Frogtown and Rondo neighborhoods by year.
Other factors added to the decline. According to Hurst, overall the average home value in the Frogtown/Rondo neighborhoods plummeted an estimated 57 percent, from over $190,000 to $80,664, a destabilizing force from which it will take years to recover.
This summer Hurst pursues his interest from a different angle as an intern with St. Paul’s University Bank, a specialized bank focused on development in the urban community.
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