Collateral Analytics (CA) has created new definitions for more than 300,000 neighborhoods throughout the U.S. along with their corresponding names and shapefiles.
These have been used to create neighborhood-level home valuation and mortgage risk measures which can provide significant insight to making better mortgage lending decisions.
Recent CA research has shown that advanced neighborhood analysis of price and property characteristics dispersion coupled with average mortgage loan-to-value ratios and liquidity measures can provide an array of useful metrics for those concerned about both home valuation and mortgage default risks.
“We have found that these neighborhood metrics have considerable influence over the direction of home prices, the uncertainty behind value estimates of price and mortgage default rates,” Collateral Analytics CEO and President Michael Sklarz said in the press release. “These new neighborhood-level risk ratings are a result of our proprietary research and unique data sources.”
The study finds neighborhoods with more variability by age or size tend to be more difficult to value, which typically leads to higher appraisal costs and longer turn times. In addition, default rates tend to be higher in neighborhoods with a propensity for more debt as a percentage of value which makes foreclosure contagion a real risk.