The Real Deal New York

Northeast U.S. steers clear of top foreclosure rate list

January 23, 2012 03:00PM

Think the foreclosure crisis is taking its toll on New York City housing? Imagine what it’s doing out west.

According to an analysis of the 100 U.S. zip codes hit hardest by foreclosures prepared for CNN by RealtyTrac, 82 of the worst hit neighborhoods are in Western states, with Nevada and California together comprising 66 of them. Meanwhile not a single zip code in the entire Northeast claims a spot on the list.

CNN noted that this is a stark contrast from 2007, the last time the list was compiled, when working-class, urban, Rust Belt neighborhoods, like Detroit, Cleveland and Indianapolis, topped the list. Today, many of the hardest hit zip codes are relatively new communities built around growing Sun Belt metro areas. The five zip codes with the highest foreclosure rates are all in Nevada, including one representing a neighborhood in North Las Vegas.

The high concentration of foreclosures in those areas is bringing local home prices down. Once they’re foreclosed upon, the homes are sold by lenders at a discount to clear them off the books. When the share of distressed sales reaches a certain threshold it forces non-distressed sellers to lower prices to compete, especially since many of the foreclosed homes are so new. [CNN]