What foreclosures in your 'hood cost you

You drive home from your job and there it is: a sign saying the house next door has been foreclosed on. According to new research out of Harvard and MIT, your own home's value just dropped about 8.7%. Yep, just like that.

The research found that the value of your house drops every time another house in the immediate neighborhood is foreclosed on. The degree to which you are impacted depends on certain circumstances, but in every case, your home's value will fall.

The research found that when nearby foreclosures are a symptom of an overall locally depressed economy -- say, the closing of the factory in a one-factory town -- the impact on your home's value will be felt more deeply. Basically you are in a community without jobs. No jobs equals no income means no one to buy houses.