The housing crisis will claim nearly 200,000 Los Angeles homes to foreclosure through next year - more than 80,000 of them in the San Fernando Valley - a report released last Thursday predicts.
"The Wall Street Wrecking Ball," Get Entire Report a report authored by two nonprofit housing advocates, estimates the mortgage meltdown has eroded almost $80 billion from the region's property values.
"We are all feeling the effects of foreclosures and we need strong solutions to the crisis - not just for families losing their homes but for all of us," said Kevin Stein, associate director of the California Reinvestment Coalition, which collaborated on the study with the Alliance of Californians for Community Empowerment.
The report breaks down foreclosures by ZIP code, along with the decline in value of each property, the financial impact on the surrounding neighborhood and the total impact on property values. The study uses foreclosure information beginning in 2008 - when millions of homeowners begin defaulting on escalating variable-rate loans - and uses current trends to project activity through 2012.
An analysis shows that 80,654 homes in Valley ZIP codes are expected to be lost to foreclosure by the end of next year. The value of those homes is estimated at roughly $10.5 billion.
Citywide, a total of 199,894 homes, with a value of $25.9 billion, will be foreclosed on by the end of 2012.
Sylmar - ZIP code 91342 - is projected to be the hardest-hit area of Los Angeles, with 7,009 foreclosures, followed by Pacoima with 6,049. Van Nuys, which spans three ZIP codes, is expected to have 5,784 homes seized by lenders.
The report also assesses the collateral damage of the foreclosure crisis, with plummeting home values eroding $481 million from the city's property tax revenue.
Local governments in Los Angeles will also spend an estimated $1.2 billion on services like safety inspections, police and fire calls, trash removal and maintenance resulting from foreclosure activity.
"We are still grappling with the economic anchor of our lifetime," Sarah Sheahan, spokeswoman for Mayor Antonio Villaraigosa, said in an email.
"This is not just today's problem. The impact of this massive number of foreclosures and sinking housing market will be felt by families across the Southland for years to come."
Sheahan noted that Los Angeles received $143 million in federal stimulus funds to buy and renovate foreclosed and abandoned properties in blighted neighborhoods. The properties will then be sold or rented to low- and moderate-income residents.The program is generating about 2,000 jobs, she said. The coalition blamed four big banks - Bank of America, Wells Fargo, CitiGroup and JPMorgan Chase - for most of the problem. Representatives of the banks did not return requests for comment.
Both the Mayor's Office and the coalition want more help from state and federal officials in solving the problem.
In addition to the foreclosure crisis, the report's authors estimated that about 80,000 Los Angeles homeowners are under water on their mortgages - owing more than the property is worth. If the banks wrote down the principal on those loans, the authors said, $780 million would be available to pump back into the local economy.
"We need to stop every foreclosure we can," Stein said. "We need to have better solutions in place to deal with the big costs that foreclosures have already imposed."
John Karevoll, an analyst at market tracker DataQuick, said the number of foreclosures is moderating, although the crisis is not over.
"I think that just about everybody will agree that the worst is behind us, but things are still grim and will stay grim for the next year or two," he said.