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Why foreclosure highest in African American neighborhoods? A case study of a middle size city

By John Gilderbloom, Katrina Anaker, Gregory Squires, Matt Hanka and Joshua Ambrosius


Foreclosures have become one of the most important urban problems faced by contemporary cities. Our goal is to better understand factors that affect foreclosure rates in a typical, mid-sized U.S. city. While previous research has found that a key explanatory variable positively affecting foreclosures is the percentage of minorities in a neighborhood, our model finds that the effect of percent non-white is impacted by several key intervening variables, such as the presence and proximity of EPA listed Super-Fund Sites along with walkability, in these majority black neighborhoods. In the past, these factors have been ignored by social scientists because they are difficult to measure. Firstly, we look at how speculators in majority black neighborhoods account for a significant share of foreclosures in these neighborhoods. Secondly, we examine the effect of EPA-listed Superfund Sites and find that in this instance almost all are located either near or within many of these majority black neighborhoods and finally we look at walkability and its effect on foreclosures. We find that these three variables help explain the causes of greater foreclosures occurring in majority black neighborhoods. These three key variables add to previous explanations of high foreclosures resulting from unfavorable loan terms offered in black neighborhoods

Topics: ddc:330
Publisher: Louvain-la-Neuve: European Regional Science Association (ERSA)
Year: 2011
OAI identifier:
Provided by: EconStor

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