Lenders improved about a third of their foreclosed properties prior to sale, spending $6,500 per home, on average, according to a recent study by the Harvard Joint Center for Housing Studies.
Lenders allocated more per property in improving its distressed properties in higher-priced markets prior to sale, according to the report.
In 2011—the data most recently studied—lenders invested considerably more per property in higher-priced markets like Denver, Los Angeles, Portland, Raleigh, and Washington, D.C., than lower-priced housing markets. The disparity is believed to be because the properties in higher priced markets often need to be in better condition to sell at a competitive price within a reasonable amount of time.
Lenders spent $1.7 billion in 2011 on improving distressed properties, according to estimates by the Joint Center. Atlanta, Las Vegas, Orlando, Phoenix, and Riverside, Calif., posted the highest shares of spending.
Meanwhile, improvement spending per REO property in markets like Cleveland, Detroit, Milwaukee, and Pittsburgh, was less than a third compared to the more competitive markets.
“Renovating foreclosed or abandoned homes benefits the entire neighborhood,” according to the study. “Joint Center research has shown that home prices in neighborhoods with higher levels of improvement spending appreciate more rapidly, explaining why investing in blighted neighborhoods has been a national priority in dealing with the foreclosure crisis.”
Source: “Harvard Study Reports on Recent Trends in Home Equity and Housing Stock,” RISMedia (Jan. 28, 2013)