Business & Economy

LA home values down $80 billion, report says

A foreclosure sign hangs on a fence in front of a foreclosed home in California.
A foreclosure sign hangs on a fence in front of a foreclosed home in California.
Justin Sullivan/Getty Images

The meltdown in the housing industry resulted in a nearly $80 billion drop in Los Angeles home values since 2008, according to a report released Thursday.

The report - titled "The Wall Street Wrecking Ball: What Foreclosures Are Costing Los Angeles Neighborhoods" - was commissioned by two nonprofits that advocate for low income communities - the Alliance of Californians for Community Empowerment, or ACCE, formerly ACORN, and the California Reinvestment Coalition, or CRC.

The 10-page report comes the same day new data showed California leading the nation in a surge of new foreclosures in August. New filings were up 55 percent over July across the state, but down from the same time last year.

California is second to Nevada in the overall rate of foreclosures, according to RealtyTrac.

The two nonprofits were scheduled to hold a news conference in Watts to announce the report, followed by a door-to-door effort to publicize a week of protesting scheduled for the first week in October.

The report's central finding is that property values have declines by $78.8 billion since 2008. The number is based on estimates that foreclosed homes decline in value by 22 percent and the value of homes within one-eighth of a mile of a foreclosed home dip 0.9 percent.

The report found increased foreclosures are costing the city lost property tax revenue and increased costs for securing and maintaining foreclosed properties. The report estimated each foreclosure costs the city about $19,229 for increased police and fire calls, trash removal and other maintenance. The city has expended about $1.2 billion on these costs since 2008, the study found.

"This report quantifies what people in California have been feeling for years - banks' practices are financially devastating to our neighborhoods and cities," Peggy Mears with the Alliance of Californians for Community
Empowerment said.

Researchers placed the blame for the housing crisis on big banks, including Bank of America, JP Morgan Chase, Wells Fargo Bank and Citigroup.

The report states that fixing the housing crisis is a central component of getting the economy back on track. More than 79,000 homeowners in the city owe about $7.3 billion more on their mortgages than their homes are worth, the report found.

"If banks wrote down those mortgages, it could pump about $768 million into the local economy," the authors wrote.

According to Irvine-based RealtyTrac, one in every 226 housing units in the state had a foreclosure filing last month, more than twice the national average.