Foreclosed Homes, And Homes In General, Surpass Pre-Housing Crisis Peaks

Houses on the low-end were more likely to be foreclosed on than higher-end homes after the housing market crashed in 2008.

In Southampton Town, homes on the high-end made up more than 20 percent of foreclosed homes, according to a recent study by Zillow Group. In East Hampton Town and statewide, only 8 percent of foreclosures were on the high-end, compared to 70 percent and 66 percent at the entry-level, respectively.

A Zillow spokesperson said lower-end communities felt the impact the most.

“Foreclosed homes in both of these areas experienced a less dramatic boom and bust than all homes did for these areas, and in [East Hampton and Southampton] foreclosed homes and all homes have surpassed their pre-crisis peaks,” the spokesperson said.

According to the Zillow report, homes that were foreclosed on during the housing crisis have risen in value from their pre-crisis peaks more than 10 percent nationwide—faster than the typical home.

In East Hampton, foreclosed homes are worth 23.3 percent more today than they were at the height of the housing bubble, while all homes are up 10.9 percent. In Southampton, foreclosed homes are worth 13.7 percent more today than in 2008, while all homes are up 22.8 percent today.

Across the state, the value of foreclosed homes passed pre-recession peaks 10 months earlier than all homes.

“Homes that went into foreclosure fell hard,” Zillow senior economist Aaron Terrazas said in a statement. “But markets will never overlook a deal, and for much of the economic recovery, homes with a history of foreclosure have been a deal.

“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,” he continued.

Who did benefit are the investors who bought foreclosed homes and converted them into rental properties, benefiting from the recovery as home values bounced back. The percentage of single-family homes being rented is up since the housing market bust.