Unfortunately, foreclosures on such a large scale also do serious harm to completely innocent people who played no part in the transaction between borrower and lender, according to Dan Immergluck, an associate professor of city and regional planning at Georgia Tech.<\/p>\n
Together with co-author Geoff Smith, Immergluck has conducted research on the social impact of foreclosures, based on a database of more than 9,600 property transactions in Chicago. That research found that as foreclosures increase, violent crime jumps significantly. An annual increase of 2.8 foreclosures per 100 homes “corresponds to an increase in neighborhood violent crime of approximately 6.7 percent,” their study found.<\/p>\n
“It’s probably something related to the stigma of boarded-up buildings \u201d\u201d the ‘broken windows’ theory of crime and the psychological impact of all that on the community,” Immergluck says.<\/p>\n
Another study by Immergluck and Smith, using that same database, documented the impact of foreclosures on property values, a phenomenon already visible in many metro Atlanta communities. According to what they call a conservative estimate, a single foreclosure devalues every home within an eighth of a mile by an average of almost 1 percent. In Chicago in the late ’90s, a foreclosure would lower the value of surrounding homes by an average total of $159,000.<\/p>\n
Multiply that number by the thousands of foreclosures occuring in Georgia, and you have a real problem. Among other things, as property values fall, tax revenue falls with it, forcing government to raise millage rates to stay even.<\/p>\n