Earlier tonight I presented a report to the city council housing subcommittee on foreclosures in Lowell from 2007 to 2010. The full report is available on the registry of deeds website HERE. The report scrutinized foreclosures conducted in 2008 and 2009 and calculated the time that passed between the various events in the foreclosure process and the reduction in value of foreclosed properties.

There are four steps in a typical foreclosure: (1) the Order of Notice is recorded; (2) the auction is conducted; (3) the foreclosure deed is recorded; and (4) the property is sold to a third party (this last step is because at the vast majority of foreclosure auctions, the property is purchased by the foreclosing lender). For “neighborhood stability” purposes, the two important events are the auction and the sale to the third party. It is at the auction that the original owner is most likely to move out and it is not until the sale to the third party that a new full-time resident occupies the home. In 2008, the average gap between the auction and the subsequent sale was 268 days; in 2009, it dropped to 187. The price drop was significant, as well. When the FY08 city of Lowell assessed value was compared to the subsequent sale to a third party of the 2008 foreclosures, the average price drop was 44%. The average drop for 2009 foreclosures was 45%.

The report contains many other details about the impact of foreclosures. Hopefully, it will be of some assistance in understanding what happened during the collapse of the city’s housing market.