An analysis of the relationship between housing foreclosures, lending practices, and neighborhood ecology: evidence from a distressed county

David H. Kaplan, Kent State University - Kent Campus
Gail G. Sommers

Abstract

Residential foreclosures increased sharply during the 1990s and in the first years of the twenty-first century. These foreclosures have profound impacts on the households and neighborhoods involved. Although foreclosures occur everywhere, the geography of foreclosures displays a pattern tied to a metropolitan area's social, fiscal, and economic geography. We examine these correspondences as they exist within Summit County (Akron), Ohio, between 2001 and 2003. Foreclosures themselves often result from unfortunate financial events that can affect any household, but we found that the geography of foreclosures corresponds primarily to Summit County's racial distribution, above and beyond any correspondence with income levels and housing fiscal stress. There also exists a clear coincidence of foreclosures with subprime lending, itself associated with Summit County's racial patterns. Concentrations of foreclosures in particular neighborhoods can be tremendously harmful to the social and economic health of the neighborhood. These comparisons help us to better understand the neighborhood ecology of foreclosure rates and subprime lending.