It isn’t just the homeowners that suffer when mortgage debts become unbearable. Families are forced to move out, relocate and try to find their way back to a sense of normalcy. But the trouble doesn’t stop there. Mortgage debt problems cause a ripple effect that can negatively neighbors, communities and entire housing markets.

Dropping Home Values

Although mortgage debt troubles can affect a single home within miles, this isn’t always the case. There are plenty of homes around the country that have fallen into mortgage trouble and brought entire neighborhoods down with them. When one home defaults on a mortgage, the home value can drop and even bring down the value of homes nearby. This is becoming an epidemic at the height of the housing crisis and many homes that have managed to stay out of default are being impacted through no fault of their own. However, a recent report suggests that 2012 should see a decrease in mortgage default rates, which is hoped to stabilize the housing prices around the nation.

Foreclosure Waves

Just like a drop in one home’s value can bring down the entire neighborhood values, so does a foreclosure. A single foreclosure has the potential to drop home prices by 5 percent and even make a neighborhood unmarketable for buyers. Most buyers avoid foreclosures at all costs, having heard about some of the negative associations they carry. In fact, the average buyer will label a neighborhood undesirable simply due to the presence of a single foreclosed home. This makes it challenging for non-foreclosure homes to sell and even maintain their appeal.

Further problems associated with foreclosures are an increase in criminal and suspicious activity. Not can a foreclosure suffer intentional damage by the previous homeowner upon eviction, but an empty or abandoned home can invite trouble into the neighborhood. Criminal activity, loitering, squatting and other unwanted behaviors are common among foreclosed homes. Once a home has been marked as a potential spot for criminals, the entire neighborhood could be at risk of becoming targeted or victimized.

Housing Market Shifts

There is also recent evidence to suggest that mortgage debt troubles have spurred an influx in renters and sparked the interest of rental investors. As more families are forced out of owning their home, they must face renting in order to secure a place to live. More renters bring an increase in the demand for rental properties, yet another problem for the housing market. As owning becomes a thing of the past, or out of reach for so many, the housing market will continue to suffer.