The Impact of Residential Mortgage Foreclosure on Neighborhood Change and Succession

Abstract

Many factors contribute to neighborhood change and succession, one being residential mortgage foreclosures. Limited attention has been paid to how residential mortgage foreclosures in a neighborhood are related to households’ socioeconomic status and mobility decisions and, thus, lead to overall neighborhood change. We use sheriff’s foreclosure sales data in Cuyahoga County between 1983 and 1989 to predict changes in neighborhood indicators from 1990 to 2000, controlling for various neighborhood and census place indicators and their changes. Results suggest that higher foreclosure rates are positively related to changes in percentage black population, female headship rate, median household income, and unemployment rate. We thus conclude that foreclosures speed up the housing filtering process, and racial and economic turnover of residents. Our results will enable planners and policy makers to understand the transitional process of these neighborhoods so that they can be stabilized in the years following concentrated foreclosures.