Are foreclosures contagious?

High schools try to get pregnant teens out of the main student population. Pregnancy can be contagious among teen girls.

People that get the flu are told to stay home, and away from other people. The Flu is contagious.

When there is group of people clamoring around a sales rack, grabbing an item quickly and decisively, other shoppers can be influenced to do the same. Like when there is a hurricane warning and people start hording items. Shopping can be contagious.

I think that foreclosures are also contagious. One family on a street runs into hard times, gets late on their mortgage payments, and decides to give up the home either as a short sale or foreclosure. Soon neighbors are starting to do the same whether they have a hardship or not.

I have seen concrete examples doing short sales here in Bradenton, FL. One of my last meetings with a home owner is distress revealed that on their street there were 6 other homes adjacent that were in some phase of foreclosure. What was interesting to me was the neighborhood was one that was perceived as stable, with less than a 3% annual turn over, developed "pre-boom", and historically very little active inventory. After looking at the tax records it looked like that cul-de-sac got hit with the plague.

After my meeting with the homeowners, I found out that they had known of 2 of the other families losing their homes, they too were surprised by the news of the other 4 homes being lost to the banks.

I have seen clumps of foreclosures, and short sales in other areas but they were usually neighborhoods that were 1. Built during the boom years (2004-2006) 2. Bought by investors and flippers 3. Had high turnover rates, and high inventory.

Could foreclosures be contagious? My opinion is YES, when a home owner learns that a neighbor, or friend is giving up their home I think that it lessens the negative perception to others about how bad foreclosures are. Just like most people today are much less "showy" with their lifestyles. Facing economic hardship, especially as it relates to home-ownership is viewed as much less of a taboo today, then it was just a few years ago.