The negative impacts of foreclosure on communities are far reaching. Although little formal data exists on this subject, local news accounts and reports from local officials paint a multifaceted picture. Not only are people losing homes, but also communities are suffering economically, physically and socially. This report mainly focuses on areas that are hardest hit: metropolitan areas and their suburbs. We have identified the following seven impact areas for foreclosure.
1. Communities Suffer From Increased Crime
The burglary and stripping of abandoned homes, a rise in violent crime. In Buffalo, New York, over the past two years, “at least seven dead bodies, some of them crime victims, have been discovered in or around vacant buildings.” Illicit activities, like drug dealing, increase. A study in Austin, Texas, found that “blocks with unsecured [vacant] buildings had 3.2 times as many drug calls to police, 1.8 times as many theft calls, and twice the number of violent calls’ as blocks without vacant buildings.”
2. Communities Take Financial Hit
Individual homeowners are not the only ones suffering financially from the foreclosure crisis. Communities and local governments experience spillover effects that result in a reduction of their annual budget. The lower property values caused by foreclosed homes lead to a smaller tax base.
3. Community Members Are Vulnerable to Financial Scams
4. Youth Experience Stress and Instability
5. Displaced Residents Struggle to Find Shelter
When thousands of people are losing their homes, where do they move? According to the National Coalition for the Homeless, “76% of displaced homeowners and renters are moving in with relatives and friends. About 54% are moving to emergency shelters. About 40% are already on the streets. Nearly 61% of local and state homeless coalitions say they've seen a rise in homelessness since the foreclosure crisis began in 2007.”
6. Communities Are Blighted by Neglect
When homes are abandoned because of foreclosure, the properties and communities begin to deteriorate. Garbage, unmowed lawns, pests and dilapidated roofs and porches are eyesores. The lack of care can change the entire atmosphere in a community. The people who remain may have feelings of loneliness, fear and frustration. To make matters worse, potential buyers find conditions like these unattractive, turning them away and leaving empty homes remaining.
7. Minorities Are Impacted Disproportionately
Although all ethnic groups have been affected by foreclosure and subprime lending, minority communities have been hit particularly hard. According to a 2008 report by the nonprofit policy center United for a Fair Economy, “the foreclosure crisis will result in the greatest loss of wealth for people of color in recent U.S. history.” The report estimates that “black borrowers will lose between $71 billion and $122 billion, while Hispanic borrowers will lose between $76 billion and $129 billion (Rivera 2008).”
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source: Vidmar, C. (2008). Seven ways foreclosures impact communities. Retrieved from http://www.nw.org/network/neighborworksprogs/foreclosuresolutions/reports/documents/7ForeclosureImpacts.pdf
- Communities Suffer From Increased Crime
- Communities Take Financial Hit
- Community Members Are Vulnerable to Financial Scams
- Youth Experience Stress and Instability
- Displaced Residents Struggle to Find Shelter
- Communities Are Blighted by Neglect
- Minorities Are Impacted Disproportionately