Abstract
Lawmakers take steps to address the subprime mortgage crisis, only to face criticism. In many cases, people focus on tax dollars going to prevent foreclosures and are not aware of the level of benefits they would retain by preventing foreclosures. The goal of this thesis is to quantify the effects of foreclosures on surrounding property values in Sacramento County, California between January 2008 and July 2009. The data used in this thesis comes from the Multiple List Service (MLS) database and the 2000 U.S. Census. The thesis uses an Ordinary Least Squares regression. This thesis found that homes in foreclosure experience a selling price decrease of 19.989% and decrease the selling price of surrounding properties by 0.496% per unit change in the foreclosure rate. The values derived from the regression indicate that the equity preserved for the public and the government outweighs the cost of enacting foreclosure mitigation programs.