Foreclosure, Inequality, and the Difference That Place Makes

Abstract

AbstractWhile the Great Recession and the associated rise in foreclosures significantly impacted households across the United States, default rates in rural areas and rural‐urban foreclosure differences have failed to attract substantial research attention. To expand the scale and scope of the foreclosure literature, this article examines place‐based differences in estimated foreclosure rates across U.S. counties, which are classified as urban, suburban, micropolitan, or rural. Defaults are considered both overall and for each county classification, and are related to income distribution and inequality, homeownership, adjudication of default, place‐based factors including amenity scores and proximity to urban areas, and geographic region. The article finds a complex relationship among these variables, with inequality itself negatively associated with default rates and lower‐middle−income households positively related to foreclosure. Further, while proximity to urban areas is positively related to foreclosure rates among nonurban counties, natural amenities are related to lower default rates in these areas. The article concludes by considering policy implications, and recommends expanding foreclosure mitigation and prevention strategies to nonurban places.