How Vacant Homes Can Hurt the Market

Over the past few years, the foreclosure rate all across the nation has continued to steadily increase, leaving many neighborhoods with several vacant/REO homes. While there are still many homes for sale that are owner-occupied and in great condition, the number of distressed properties for sale have had a significantly negative impact on the housing market for several reasons:

It creates very stiff competition. Having so many homes for sale increase buyer’s options, which puts pricing pressure on sellers.

Vacant homes can generate a poor impression for the area. Some homes in a short sale situation and a majority of bank owned properties have been terribly neglected, abandoned and even boarded up. Having a few in a neighborhood brings down the perceived character of the neighborhood.

They are not good comparables when real estate professionals are conducting research to complete a comparative market analysis (CMA). Eventually these distressed properties sell and then become comparables for appraisers and future buyers. Though the condition may be terrible, that isn’t readily apparent in most MLS reports and therefore the appraiser, agent or buyer may believe the home was in better condition than it actually was, thus pulling down the value of homes it is compared against.