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Foreclosed homes appreciating faster than typical properties, report finds

Buying Fall House Hunt News Boston
Home-Foreclosure-Sign-Bank-Owned
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SEATTLE — The value of homes that were foreclosed on during the Great Recession are appreciating rapidly, up 10.3 percent over the past year, according to a new Zillow analysis, while the typical US home is appreciating 6.5 percent annually.

Throughout the recovery, foreclosed homes have gained 74.5 percent in value, compared with about 46 percent for all homes. This means that homes that were foreclosed on during the housing crisis have made far greater gains in value than the typical US home.

In metro Boston, the current median value of a previously foreclosed home is $336,500, compared with the overall median value of $451,500. Homes that were foreclosed on during the bust are appreciating 7.9 percent year-over-year, compared with 5.2 percent for all homes, and 62.1 percent of previously foreclosed homes were in the bottom-third of the market. The Boston metro area, according to Zillow, includes Suffolk, Middlesex, Plymouth, and Norfolk counties, in addition to Strafford and Rockingham counties in southern New Hampshire.

While the value of foreclosed homes is quickly appreciating — they finally passed their prerecession peak 10 months earlier than all homes — the people who lost their homes to foreclosure during the housing bust have not benefited from these gains. And because nearly half of all homes foreclosed on during the bust were low-end, the housing bust widened the gap between the rich and poor in the United States.

During the run-up to the housing bubble, many low-income earners were able to qualify for a mortgage and buy a home. Because of this, the homeownership rate rose from about 65 percent in the mid-1990s to almost 70 percent in 2006. When the housing market crashed in 2007, millions of American homeowners had to walk away from their properties, missing out on the opportunity to gain equity as home values recovered in the years to come.

‘‘When the housing market tripped up a decade ago, homes that went into foreclosure fell hard — their value dropping substantially more than homes that didn’t experience a foreclosure. But markets will never overlook a deal, and for much of the economic recovery, homes with a history of foreclosure have been a deal. This remains so today, although somewhat less so than a year ago,’’ said Aaron Terrazas, Zillow senior economist. ‘‘While the overall market is facing growing headwinds, homes that were foreclosed upon during the bust are picking up steam, speaking to the enduring appeal of affordability. For families who lost their homes during the housing bust and were locked out of the market for several years thereafter, this was a critical lost opportunity.’’

 

Metropolitan Area

Share of
Foreclosed
Homes in the
Bottom Third,
by Value

   Median Home Value
Among Foreclosed
Homes

   YoY Median
Home Value
Change
Among
Foreclosed
Homes

   Median Home Value
Among All Homes

   YoY Median
Home Value
Change
Among All
Homes

United States

45.4%

$207,000 10.3% $216,700

6.5%

New York-Newark-Jersey City, NY

66.0%

$281,800 11.1% $426,300

4.4%

Los Angeles-Long Beach-Anaheim, CA

58.0%

$501,200 7.1% $641,800

5.2%

Chicago-Naperville-Elgin, IL

48.5%

$175,600 6.2% $219,100

4.2%

Dallas-Fort Worth-Arlington, TX

41.2%

$197,500 10.5% $229,400

9.7%

Philadelphia-Camden-Wilmington, PA

56.6%

$153,100 8.8% $227,200 4.2%
Houston-The Woodlands-Sugar Land, TX

41.3%

$170,800 8.6% $198,500

5.3%

Washington-Arlington-Alexandria, VA

54.2%

$317,800 5.3% $397,800

3.2%

Miami-Fort Lauderdale-West Palm Beach, FL

47.8%

$235,200 10.7% $274,000

7.0%

Atlanta-Sandy Springs-Roswell, GA

47.2%

$168,700 12.2% $204,600

10.4%

Boston-Cambridge-Newton, MA

62.1%

$336,500 7.9% $451,500

5.2%

San Francisco-Oakland-Hayward, CA

70.2%

$582,800 8.8% $947,700

9.0%

Detroit-Warren-Dearborn, MI

44.4%

$111,200 18.2% $153,900

7.4%

Riverside-San Bernardino-Ontario, CA

38.9%

$331,100 7.8% $356,600

5.5%

Phoenix-Mesa-Scottsdale, AZ

45.3%

$224,600 9.1% $254,400

6.3%

Seattle-Tacoma-Bellevue, WA

55.7%

$369,400 8.1% $486,800

8.2%

Minneapolis-St. Paul-Bloomington, MN

49.9%

$228,700 8.7% $258,900

5.4%

San Diego-Carlsbad, CA

52.9%

$477,700 5.3% $ 580,500

4.9%

St. Louis, MO

51.5%

$114,700 6.9% $161,200 4.6%
Tampa-St. Petersburg-Clearwater, FL

45.2%

$181,400 10.7% $205,000

8.9%

Baltimore-Columbia-Towson, MD

49.4% $207,100 8.0% $263,300

3.9%

Denver-Aurora-Lakewood, CO

54.8%

$337,500 9.3% $ 396,200

6.2%

Pittsburgh, PA

52.4%

$101,000 11.5% $140,200

6.1%

Portland-Vancouver-Hillsboro, OR

47.8%

$344,200 6.8% $387,900

4.2%

Charlotte-Concord-Gastonia, NC

37.4%

$173,200 11.1% $ 195,000

8.8%

Sacramento–Roseville–Arden-Arcade, CA

50.8%

$340,000 6.0% $397,100

4.3%

San Antonio-New Braunfels, TX

43.1%

$163,900 8.1% $184,600

4.4%

Orlando-Kissimmee-Sanford, FL

42.7%

$204,700 10.8% $226,300

7.9%

Cincinnati, OH

56.5%

$123,000 9.1% $161,000

5.4%

Cleveland-Elyria, OH

58.9% $88,000 6.9% $140,400

5.2%

Kansas City, MO

50.0%

$138,000 11.0% $181,300

7.5%

Las Vegas-Henderson-Paradise, NV

37.8%

$252,700 15.9% $ 263,300

12.0%

Columbus, OH

50.6%

$142,800 10.2% $180,700

6.5%

Indianapolis-Carmel-Anderson, IN

46.2%

$130,100 12.3% $152,700

8.1%

San Jose-Sunnyvale-Santa Clara, CA

67.4%

$837,100 17.5% $1,281,100

22.7%

Austin-Round Rock, TX

56.9% $ 235,200 7.9% $296,300

5.3%

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