Effects

• In the housing market, foreclosures affect sellers by increasing the stock of available houses that are competing for buyers. Foreclosed houses can negatively affect the perceived value of neighboring homes.
  
  

Considerations

• The rise in foreclosures also lowers new home construction, meaning reduced spending and jobs in the construction industry.
  
  

Significance

• Overall consumer spending declines as well, which lowers the nation's Gross Domestic Product (GDP), the total output of goods and services in the economy. This has a multiplier effect, as reduced consumer demand contributes to decreased production and rising unemployment.
  
  

Features

• Foreclosures affect government finances. This is especially true of local governments, which rely heavily on property tax revenue. Governments must then raise taxes or reduce services to balance their budgets.
  
  

Potential

• Increased foreclosures can affect existing homeowners, especially if banks become less willing to refinance existing mortgages.