Home Foreclosures and Community Crime: Causal or Spurious Association?

48 Pages Posted: 26 Oct 2010 Last revised: 15 May 2011

See all articles by David Kirk

David Kirk

University of Oxford

Derek Hyra

Virginia Polytechnic Institute & State University

Date Written: April 29, 2011

Abstract

More than 6.4 million U.S. properties entered foreclosure between 2007 and 2009. Among the dire consequences of foreclosure is a possible increase in crime. Foreclosures and the subsequent property vacancies and residential turnover may affect community crime rates by increasing opportunities for property crime and by undermining informal social control among community residents. Yet aggregate crime rates continue to decline despite the foreclosure crisis. This study examines the implications of rising foreclosure rates on community crime using crime and foreclosure data from the city of Chicago between 2002 and 2009. Dynamic panel-data models of crime reveal that the association between foreclosure and both property and violent crime is spurious. After accounting for simultaneity and time-variant and time-invariant community characteristics, the rise of recent home foreclosures has no independent effect on community crime rates. Rather, crime and foreclosures are explained by a common set of factors.

Keywords: foreclosure, crime, mortgage, community

JEL Classification: C3, K42

Suggested Citation

Kirk, David and Hyra, Derek, Home Foreclosures and Community Crime: Causal or Spurious Association? (April 29, 2011). Available at SSRN: https://ssrn.com/abstract=1697871 or http://dx.doi.org/10.2139/ssrn.1697871

David Kirk (Contact Author)

University of Oxford ( email )

Oxford, OX1 3UQ
United Kingdom

Derek Hyra

Virginia Polytechnic Institute & State University ( email )

250 Drillfield Drive
Blacksburg, VA 24061
United States

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