Daniel Cooper Dissertation Project Vanderbilt University

1. Beyond Dollars and Cents: Non-Financial Impacts and Implications of the Foreclosure Crisis For low-income minority communities Daniel Cooper Dissertation Project Vanderbilt University

2. What is the future viability of hardest hit urban communities? Do the efforts of community-based organizations (CBOs) produce more stable low-income homeowners? What are the psycho-social impacts of neighborhood foreclosures for non-homeowner populations? How might neighborhood foreclosures affect the decisions of aspiring low-income homeowners? Exploring “Community of Choice”

3. Structure of Presentation • Context: Disparate impacts of the foreclosure crisis • Research questions • Examining past CBO homeownership efforts • The next generation of low-income homeowners • Conclusion and Implications

4. Disparate Impacts of the Foreclosure Crisis • Chicago foreclosure rate in 2007 was 5 times greater for predominantly minority areas (Smith & Duda 2008) • Racial segregation has also been shown to be a large contributor to the foreclosure crisis (Rugh & Massey, 2010). • African Americans more likely to be in subprime market (Gerardi & Willen, 2009; Gruenstein-Bocian, Ernst, & Li, 2008). • Negative home price impacts are greatest in areas with higher proportion of minority populations (Sumell, 2009)

5. Disparate Impacts of the Foreclosure Crisis • Much longer absorption time of foreclosures in minority areas (Immergluck & Smith, 2006). • The longer property sits vacant, more deterioration (Mallach, 2006; 2010). • Areas with high foreclosure experience greater crime (Immergluck & Smith, 2006). • Aside from crime, stigma effect at work (Apgar &Calder, 2005) .

6. Homeownership as means of stabilization

7. Social Benefits of Homeownership • Homeowners more active, invested, engaged (Rohe et al., 2002) • Low-income home owners have larger networks, satisfaction (Manturuk et al., 2010). • Possibility of improved neighborhood quality (Santiago, Galster, Kaiser, Santiago-San Roman, Grace, & Linn, 2010

8. Homeownership and Neighborhood Confidence • Neighborhood confidence thought to be a key component of stabilization and revitalization (Varady, 1986) • Linked to: • Quality of the built environment (Taylor, Shumaker, & Gottfredson, 1985) • Perceptions of safety and incivilities (Brown, Brown, & Perkins, 2004) • Decisions to stay versus move out of a neighborhood (Taylor et al., 1985).

9. CBOs and Pathways to Stable Low-Income Homeownership • Pre-purchase counseling associated with lower default rate (Hirad & Zorn, 2001) • Community Land Trusts (Thaden & Rosenberg, 2010) • Individual Development Account (IDA) programs (Rademacher, Wiedrich, McKernan, Ratcliffe, & Gallagher 2010) • Longitudinally, IDA participants no more likely to still be in their home (Grinstein-Weiss, Sherraden, Gale, Rohe, Schreiner, & Key, 2011).

10. Non-Financial Impacts

11. Well-Being • Experiencing a foreclosure is known to cause severe psychological distress (Pollack & Lynch, 2009) • Impacts ripple out to social networks (Saegert et al., 2011) Less research on non-homeowner populations, particularly low-income renters • Low-quality housing and neighborhood linked to depression and anxiety (Macintyre, Ellaway, Hiscock, Kearns, Der, & McKay, 2003) • Housing and health linked in a bi-directional manner (Easterlow, Smith, & Mallison, 2010)

12. Psycho-Social Constructs: Sense of Community • Sense of Community (McMillan & Chavis, 1986) • Membership • Influence • Integration and Fulfillment of Needs • Shared Emotional Connection Linked to: • Neighborhood and political participation (Perkins & Long, 2002; Speer & Hughey, 1999) • Mental well-being, psychological empowerment (Peterson, Speer, & McMillan, 2008) • Perceptions of neighborhood problems can reduce SOC (Bogat, 1999)

13. Social Capital/Social Networks • Sense of community and social networks inextricably linked (Bothwell, Gindroz, & Lang, 1998). • Linked with neighborhood stability and revitalization (Temkin & Rohe, 1998; Saegert & Winkel, 1998) • Neighborhood bonding is thought to be a precursor to successful low-income homeownership (Brisson & Usher, 2007) • Low-income homeowners have larger social networks (Manturuk, Linblad, & Quercia, 2010).

14. Study Model and Questions

15. Research Question 1: Past CBO efforts • Do place-based CBO homeownership efforts contribute to stability and homeowner resilience, even in the presence of high foreclosure rates?

16. Social networks; Sense of community Research Question 2: Aspiring Low-Income Owners • How do surrounding neighborhood foreclosures impact neighborhood confidence? Do psycho-social processes mediate the relationship between neighborhood foreclosures and neighborhood confidence? Neighborhood problems Neighborhood confidence

17. Question 1: Examining Past CBO Low-Income Homeownership Efforts

18. Setting: Chicago’s West Garfield Park

19. Disparate Impacts of the Foreclosure Crisis in Chicago

20. Data and Methods • Longitudinal examination of CBO low-income homeownership efforts 1996-2008 • Property and loan history of buyers (N=99) compared with a random matched community sample on following: • Usage of “likely subprime or non-traditional” purchase loan • Leveraged refinancing • Subprime refinancing • Foreclosure filing • Foreclosure filing with ownership exit • Still in home through 2011

22. Results of CBO homeowners vs. random sample

23. Results of CBO homeowners vs. random sample

24. Results of CBO homeowners vs. random sample

25. Results of CBO homeowners vs. random sample

26. Results of CBO homeowners vs. random sample

27. Question 2: Aspiring Low-income homeowners, psycho-social processes, and neighborhood confidence

28. Social networks; Sense of community Research Question 2: Aspiring Low-Income Owners • How do surrounding neighborhood foreclosures impact neighborhood confidence? Do psycho-social processes mediate the relationship between neighborhood foreclosures and neighborhood confidence? Neighborhood problems Neighborhood confidence

29. The Next Generation of Low-Income Homeowners • How important are neighborhood foreclosures to aspiring homeowners? • How do perceptions of neighborhood foreclosures, crime impact neighborhood confidence? • Are these perceptions mediated by psycho-social processes? • Do perceptions of foreclosures / crime match actual neighborhood conditions?

30. The Next Generation of Low-Income Homeowners • Surveys collected in 2011 (N=200) at homebuyer workshops in Chicago • Response rate of 68% • 73% African American; 21% Latino • 88% renter • 67% female • 82% Household Income <$60,000 • Median number of vacant homes (2009-2011) within 1/10 mile = 5

31. Survey Locations

32. Respondent Locations

33. Results: Should I stay or should I go? • 53% would like to purchase a home in their current neighborhood Reasons: • Generally like or identify with the community = 38% • Social/Family ties = 26% • General Location / Proximity to amenities = 20% • Quiet / Peaceful = 16% • Transportation = 13% • Proximity to work = 11% • Neighborhood environment = 10% • Crime/Safety = 10%

34. Results: Should I stay or should I go? • 47% would like to purchase a home elsewhere Reasons: • Crime / Safety = 25% • Desire better neighborhood / Complaints about current environment = 24% • Affordability / Value / Feasible homeownership elsewhere = 13% • Proximity to work = 12% • Desire a location with more amenities / resources / space = 11% • Just desire a change = 9% • Identify with different type of neighborhood/community = 8% • School quality = 8% • Too noisy = 7%

35. Mediation: Multiple OLS Regressions

36. Social networks; Sense of community Multiple OLS Regression: Neighborhood Confidence Predicting Neighborhood confidence: • Step 1: Demographics • Step 2: Perceptions about neighborhood foreclosures • Step 3: Perceptions about neighborhood crime • Step 4: Sense of community and neighborhood satisfaction Neighborhood problems Neighborhood confidence

38. Multiple OLS Regression: Neighborhood Confidence • Perception that foreclosures are getting worse important, but… • Perception that crime is getting worse is actually the stronger explanatory variable • Sense of community and neighborhood satisfaction strongest predictors

39. Social networks; Sense of community Multiple OLS Regression: Sense of Community • Step 1: Demographics • Step 2: Perceptions of neighborhood foreclosures • Step 3: Perceptions about neighborhood crime Neighborhood problems

41. Multiple OLS Regression: Sense of Community • African Americans report less SOC • Perceptions of neighborhood crime = reduced SOC • Perception foreclosures are getting worse = reduced SOC

42. Partial Mediation Effect: Sense of Community • 1) perceptions that foreclosures have gotten worse in past two years (negatively) predicts sense of community, • 2) sense of community predicts neighborhood confidence, and • 3) the effect of foreclosure perceptions on neighborhood confidence is reduced when including sense of community in the model.

43. Sense of Community: Spatial Differences

44. Hierarchical Linear Models to test Geographic Variation

45. Hierarchical Linear Models to test Geographic Variation Neighborhood Confidence does not vary across geographies: Sense of community does (12% of variance found across geographies)

46. Hierarchical Linear Models to test Geographic Variation Main effect: Percent of vacant homes negative predictor of sense of community

47. Discussion and Conclusion

48. Key Findings • CBO homeownership efforts can make a difference in producing more stable homeowners • Examining foreclosure outcomes longitudinally exposes just how insidious the crisis is for low-income minority communities. 18% of the CBO sample and 47% of the random sample eventually experienced a foreclosure • How aspiring homeowners perceive neighborhood foreclosures is important, but how they perceive neighborhood crime is even more important. • People evaluate their neighborhoods dynamically—perceptions that crime and foreclosures are getting worse is most important • Actual neighborhood foreclosure rate and perceptions that they are worsening are associated with a decrease in sense of community, which partially mediates neighborhood confidence

49. Key Findings • However… • Foreclosures are not mentioned as one of the most important factors in prospective homebuyer location choice. Sense of community and social ties within a neighborhood are noted to be important in open ended items. • Only 24% of aspiring homeowners who expressed a desire to move mentioned foreclosures as a reason • Sense of community is the strongest predictor of neighborhood confidence, suggesting that community-building strategies could be just as important as bricks and mortar development for stabilization efforts

50. Strengths • Multi-faceted examination of hard-hit areas that incorporates both the supply side of affordable housing (CBOs) and demand side (aspiring homeowners), as well as very low-income renters • Mixed-methods approach