External investment in neighborhoods can inhibit crime. However, during the housing crisis, many investors were foreclosed upon, triggering large-scale community disinvestment. Yet the impact of this type of disinvestment on crime is currently unknown. Combining data on crime incidents with foreclosure, home sales, and sociodemographic data, this research assesses whether the foreclosure of properties owned by investors has an effect on crime in neighborhoods in Chandler, Arizona, a suburb in the heavily affected Phoenix region. Neighborhoods with a greater proportion of foreclosures on investors (FOIs) have higher total and property crime rates in the short term. In Hispanic neighborhoods, a greater proportion of FOIs result in lower rates of crime. Results suggest that neighborhood stabilization efforts should consider the role of investors in driving short-term crime rates, and that police and code enforcement strategies might prioritize neighborhoods with a high proportion of investor foreclosures.
AcevedoLuis G.2009. “An Empirical Analysis of the Impact of Home Foreclosure on the Crime Rate: Evidence in Atlanta, GA.” Research Paper, Economics, Bryant Univ., Smithfield, RI.
BiancoKatalina M.2008. The Subprime Lending Crisis: Causes and Effects of the Mortgage Meltdown. New York: CCH, Wolters Kluwer Law & Business.
6.
BocianDebbie GruensteinLiWeiReidCarolinaQuerciaRoberto G.2011. Lost Ground, 2011: Disparities in Mortgage Lending and Foreclosures. Oakland, CA: Center for Responsible Lending.
7.
BoggessLyndsay N.GreenbaumRobert T.TitaGeorge E.2013. “Does Crime Drive Housing Sales? Evidence from Los Angeles.” Journal of Crime and Justice36 (3): 299–318.
BrowningChristopher R.ByronReginald A.CalderCatherine A.KrivoLauren J.KwanMei-PoLeeJae-YongPetersonRuth D.2010. “Commercial Density, Residential Concentration, and Crime: Land Use Patterns and Violence in Neighborhood Context.” Journal of Research in Crime & Delinquency47:329–57.
10.
BursikRobert J.Jr.GrasmickHarold G.1993. “Economic Deprivation and Neighborhood Crime Rates, 1960-1980.” Law & Society Review27 (2): 263–83.
11.
ButeraNicole M.LanzaStephanie T.CoffmanDonna L.2014. “A Framework for Estimating Causal Effects in Latent Class Analysis: Is There a Causal Link Between Early Sex and Subsequent Profiles of Delinquency?” Prevention Science15 (3): 397–407.
CohenLawrence E.FelsonMarcus. 1979. “Social Change and Crime Rate Trends: A Routine Activities Approach.” American Sociological Review44:588–608.
14.
CoultonClaudiaSchrammMichaelHirshApril. 2010. “REO and Beyond: The Aftermath of the Foreclosure Crisis in Cuyahoga County, Ohio.” In REO and Vacant Properties: Strategies for Neighborhood Stabilization, edited by ChakrabartiPrabalLambertMatthewPetrusMary Helen, 47–54. Washington, DC: Federal Reserve Banks of Boston and Cleveland and the Federal Reserve Board.
CuiLinWalshRandall. 2015. “Foreclosure, Vacancy and Crime.” Journal of Urban Economics87:72–84.
17.
EllenIngrid GouldLacoeJohannaSharyginClaudia Ayanna. 2013. “Do Foreclosures Cause Crime?” Journal of Urban Economics74:59–70.
18.
FarrellGrahamPeaseKen. 1994. “Crime Seasonality: Domestic Disputes and Residential Burglary in Merseyside 1988–90.” British Journal of Criminology34 (4): 487–98.
19.
FeldmeyerBenSteffensmeierDarrell. 2009. “Immigration Effects on Homicide Offending for Total and Race/Ethnicity-Disaggregated Populations (White, Black, and Latino).” Homicide Studies13 (3): 211–26.
20.
FisherLynn M.Lambie-HansonLauren. 2010. Tenure and Foreclosure: Identifying Investor-Owners and Assessing their Impact. Boston, MA: MIT Center for Real Estate & Citizens’ Housing and Planning Association.
21.
FisherLynn M.Lambie-HansonLauren. 2012. “Are Investors the Bad Guys? Tenure and Neighborhood Stability in Chelsea, Massachusetts.” Real Estate Economics40 (2): 351–86.
22.
Fitch Ratings. 2007. “The Impact of Poor Underwriting Practices and Fraud in Subprime RMBS Performance.” U.S. Residential Mortgage Special Report, November28.
23.
FreemanLance. 2011. There Goes the Hood: Views of Gentrification from the Ground Up. Philadelphia: Temple Univ. Press.
24.
GalsterGeorge C.1983. “Empirical Evidence on Cross-Tenure Differences in Home Maintenance and Conditions.” Land Economics59:107–13.
25.
GerardiKristopher S.ShapiroAdam HaleWillenPaul S.2008. “Subprime Outcomes: Risky Mortgages, Homeownership Experiences, and Foreclosures.” Working Paper Series, Federal Reserve Bank of Boston.
GilderbloomJohn I.AmbrosiusJoshua D.SquiresGregory D.HankaMatthew J.KenitzerZachary E.2012. “Investors: The Missing Piece in the Foreclosure Racial Gap Debate.” Journal of Urban Affairs34 (5): 559–82.
GreenbergJeffreyEsseneRenLeeKai-yan. 2009. “The Myth of the Irresponsible Investor: Analysis of Southern New England’s Small Multifamily Properties.” New England Community Developments1:8–11.
30.
HarderValerie S.StuartElizabeth A.AnthonyJames C.2010. “Propensity Score Techniques and the Assessment of Measured Covariate Balance to Test Causal Associations in Psychological Research.” Psychological Methods15 (3): 234–49.
31.
HaughwoutAndrewLeeDonghoonTracyJosephKlaauwWilbert van der. 2011. “Real Estate Investors, the Leverage Cycle and the Housing Market Crisis.” Federal Reserve Bank of New York Staff Report No. 514, September.
32.
HaughwoutAndrewPeachRichardTracyJoseph. 2008. “Juvenile Delinquent Mortgages: Bad Credit or Bad Economy?” Journal of Urban Economics64 (2): 246–57.
33.
HerbertChristopher E.HaurinDonald R.RosenthalStuart S.DudaMark. 2005. Homeownership Gaps Among Low-Income and Minority Borrowers and Neighborhoods. Prepared for US Department of Housing and Urban Development, Office of Policy Development and Research. Cambridge, MA: Abt Associates Inc. http://www.huduser.gov/portal/Publications/pdf/HomeownershipGapsAmongLow-IncomeAndMinority.pdf.
34.
HerbertChristopher E.LewIreneSanchez-MoyanoRocio. 2013. The Role of Investors in Acquiring Foreclosed Properties in Low- and Moderate-Income Neighborhoods: A Review of Findings from Four Case Studies. Cambridge, MA: Joint Center for Housing Studies.
35.
HippJohn R.2007. “Income Inequality, Race and Place: Does the Distribution of Race and Class within Neighborhoods Affect Crime Rates?” Criminology45 (3): 665–97.
36.
HippJohn R.2010. “A Dynamic View of Neighborhoods: The Reciprocal Relationship Between Crime and Neighborhood Structural Characteristics.” Social Problems57 (2): 205–30.
37.
HippJohn R.2011. “Spreading the Wealth: The Effect of the Distribution of Income and Race/Ethnicity Across Households and Neighborhoods on City Crime Trajectories.” Criminology49:631–65.
38.
HippJohn R.ChamberlainAlyssa W.2015. “Foreclosures and Crime: A City-Level Analysis in Southern California of a Dynamic Process.” Social Science Research51:219–32.
39.
HippJohn R.CurranPatrick J.BollenKenneth A.BauerDaniel J.2004. “Crimes of Opportunity or Crimes of Emotion? Testing Two Explanations of Seasonal Change in Crime.” Social Forces82 (4): 1333–72.
40.
HippJohn R.TitaGeorge E.GreenbaumRobert T.2009. “Drive-Bys and Trade-Ups: Examining the Directionality of the Crime and Residential Instability Relationship.” Social Forces87 (4): 1778–1812.
41.
ImmergluckDan. 2010. “Holding or Folding? Foreclosed Property Durations and Sales During the Mortgage Crisis.” In REO and Vacant Properties: Strategies for Neighborhood Stabilization, edited by ChakrabartiPrabalLambertMatthewPetrusMary Helen, 47–54. Washington, DC: Federal Reserve Banks of Boston and Cleveland and the Federal Reserve Board. https://www.bostonfed.org/commdev/REO-and-vacant-properties/REO-and-vacant-properties.pdf.
42.
ImmergluckDan. 2012. “Distressed and Dumped: Market Dynamics of Low-Value, Foreclosed Properties During the Advent of the Federal Neighborhood Stabilization Program.” Journal of Planning Education and Research32 (1): 48–61.
43.
ImmergluckDan. 2013. “Too Little, Too Late, and Too Timid: The Federal Response to Foreclosure at the Five-Year Mark.” Housing Policy Debate23 (1): 199–232.
44.
ImmergluckDanLawJonathan. 2014a. “Investing in Crisis: The Methods, Strategies, and Expectations of Investors in Single-Family Foreclosed Homes in Distressed Neighborhoods.” Housing Policy Debate24:563–93.
45.
DanImmergluckLawJonathan. 2014b. “Speculating in Crisis: The Intrametropolitan Geography of Investing in Foreclosed Homes in Atlanta.” Urban Geography35:1–24.
46.
ImmergluckDanSmithGeoff. 2006. “The External Costs of Foreclosure: The Impact of Single Family Mortgage Foreclosures on Property Values.” Housing Policy Debate17 (1): 57–79.
47.
JacobsJ.1961. The Death and Life of Great American Cities. New York: The Modern Library.
48.
JonesRoderick W.PridemoreWilliam Alex. 2012. “The Foreclosure Crisis and Crime: Is Housing-Mortgage Stress Associated with Violent and Property Crime in U.S. Metropolitan Areas?” Social Science Quarterly93 (3): 671–91.
49.
KatyalNeal Kumar. 2002. “Architecture as Crime Control.” Yale Law Journal111:1039–1139.
50.
KatzCharles M.WallaceDanielleHedbergE. C.2013. “A Longitudinal Assessment of the Impact of Foreclosure on Neighborhood Crime.” Journal of Research in Crime and Delinquency50 (3): 359–89.
51.
KatzCharles M.WebbVincentSchaeferDavid. 2001. “An Assessment of the Impact of Quality of Life Policing on Crime and Disorder.” Justice Quarterly18 (4): 825–76.
52.
KellingGeorge L.ColesCatherine M.1996. Fixing Broken Windows: Restoring Order and Reducing Crime in Our Communities. New York: Simon & Schuster.
53.
KingsleyG. ThomasPettitKathryn L. S.2011. “Quality of Life at a Finer Grain: The National Neighborhood Indicators Partnership.” In Community Quality-of-Life Indicators: Best Cases V, edited by SirgyM. J.PhillipsR.RahtzD.Vol. 3, 67–96. Dordrecht: Springer.
54.
KingsleyG. ThomasSmithRobinPriceDavid. 2009. The Impacts of Foreclosures on Families and Communities. Washington, DC: Urban Institute.
55.
KirkDavidHyraDerek. 2012. “Home Foreclosures and Community Crime: Causal or Spurious Association?” Social Science Quarterly93 (3): 648–70.
56.
KrivoLauren J.PetersonRuth D.1996. “Extremely Disadvantaged Neighborhoods and Urban Crime.” Social Forces75:619–48.
57.
KrivoLauren J.PetersonRuth D.KuhlDanielle C.2009. “Segregation, Racial Structure, and Neighborhood Violent Crime1.” American Journal of Sociology114 (6): 1765–1802.
58.
LauriaMickey. 1998. “A New Model of Neighborhood Change: Reconsidering the Role of White Flight.” Housing Policy Debate9 (2): 395–424.
59.
LeeJin ManChoiJin Wook. 2011. “The Role of House Flippers in a Boom and Bust Real Estate Market.” The Journal of Economic Asymmetries8:91–109.
60.
LiYanmeiMorrow-JonesHazel A.2010. “The Impact of Residential Mortgage Foreclosure on Neighborhood Change and Succession.” Journal of Planning Education and Research30 (1): 22–39. doi:10.1177/0739456x10375305.
61.
LoganJohn R.MolotchHarvey L.1980. Urban Fortunes: The Political Economy of Place. Berkeley: Univ. of California Press.
62.
MallachAlan. 2010a. Meeting the Challenge of Distressed Property Investors in America’s Neighborhoods. New York: Local Initiatives Support Corporation.
63.
MallachAlan. 2010b. “REO Properties, Housing Markets, and the Shadow Inventory.” In REO and Vacant Properties: Strategies for Neighborhood Stabilization, edited by ChakrabartiPrabalLambertMatthewPetrusMary Helen, 47–54. Washington, DC: Federal Reserve Banks of Boston and Cleveland and the Federal Reserve Board.
64.
MalpezziStephenWachterSusan M.2005. “The Role of Speculation in Real Estate Cycles.” Journal of Real Estate Literature13 (2): 141–64.
65.
McCaffreyDaniel F.RidgewayGregMorralAndrew R.2004. “Propensity Score Estimation with Boosted Regression for Evaluating Causal Effects in Observational Studies.” Psychological methods9 (4): 403–25.
PerlmanMark. 2013. National League of Cities Municipal Action Guide. Washington, DC: National League of Cities.
72.
PetersonRuth D.KrivoLauren J.2010. Divergent Social Worlds: Neighborhood Crime and the Racial-Spatial Divide. New York: Russell Sage.
73.
PfeifferDeirdreWallaceDanielleChamberlainAlyssa. 2015. “Is Investor Purchasing of Foreclosures Related to Neighborhood Crime? Evidence from a Phoenix Suburb.” Housing Policy Debate25:67–90.
74.
PyleGerald F.1974. The Spatial Dynamics of Crime, Vol. 159. Chicago: University of Chicago, Department of Geography.
RoseDina R.ClearTodd R.1998. “Incarceration, Social Capital, and Crime: Implications for Social Disorganization Theory.” Criminology36 (3): 441–80.
78.
SampsonRobert J.2008. “Rethinking Crime and Immigration.” Contexts7:28–33.
79.
SampsonRobert J.GrovesW. Byron. 1989. “Community Structure and Crime: Testing Social-Disorganization Theory.” American journal of Sociology94 (4): 774–802.
80.
SampsonRobert J.RaudenbushStephen W.1999. “Systematic Social Observation of Public Spaces: A New Look at Disorder in Urban Neighborhoods.” American Journal of Sociology105 (3): 603–51.
81.
SampsonRobert J.RaudenbushStephen W.EarlsFelton. 1997. “Neighborhoods and Violent Crime: A Multilevel Study of Collective Efficacy.” Science277 (5328): 918–24.
82.
SantosRobertoSantosRachel Boba. 2015. “Practice-Based Research: Ex Post Facto Evaluation of Evidence-Based Police Practices Implemented in Residential Burglary Micro-Time Hot Spots.” Evaluation Review39 (5): 451–79.
83.
SaporuDarlene F.PattonCharles L.KrivoLauren J.PetersonRuth D.2011. “Differential Benefits? Crime and Community Investments in Racially Distinct Neighborhoods.” Race and Justice1 (1): 79–102.
84.
SchuetzJennyBeenVickiEllenIngrid Gould. 2008. “Neighborhood Effects of Concentrated Mortgage Foreclosures.” Journal of Housing Economics17 (4): 306–19.
85.
SchwartzAmy EllenSusinScottVoicuIoan. 2003. “Has Falling Crime Driven New York City’s Real Estate Boom?” Journal of Housing Research14 (1): 101–36.
86.
ShawClifford R.McKayHenry D.1942. Juvenile Delinquency and Urban Areas: A Study of Rates of Delinquents in Relation to Differential Characteristics of Local Communities in American Cities. Chicago: Univ. of Chicago Press.
87.
SkoganWesley G.1975. “Measurement Problems in Official and Survey Crime Rates.” Journal of Criminal Justice3 (1): 17–31.
88.
SkoganWesley G.1990. Disorder and Decline: Crime and the Spiral of Decay in American Neighborhoods. Berkeley: Univ. of California Press.
89.
SouthScott J.CrowderKyleChavezErick. 2005. “Migration and Spatial Assimilation Among U.S. Latinos: Classical Versus Segmented Trajectories.” Demography42 (3): 497–521.
90.
SpelmanWilliam. 1993. “Abandoned Buildings: Magnets for Crime?” Journal of Criminal Justice21:481–95.
91.
SquiresGregoryKubrinCharis. 2005. “Privileged Places: Race, Uneven Development and the Geography of Opportunity in Urban America.” Urban Studies42:47–68.
92.
StuckyThomas D.OttensmannJohn R.PaytonSeth B.2012. “The Effect of Foreclosures on Crime in Indianapolis, 2003-2008.” Social Science Quarterly93 (3): 602–24.
93.
TaylorRalph B.2009. Potential Models for Understanding Crime Impacts of High or Increasing Unoccupied Housing Rates in Unexpected Places, and How to Prevent Them. Washington, DC: U.S. Department of Justice, National Institute of Justice.
94.
TitaGeorge E.PetrasTricia L.GreenbaumRobert T.2006. “Crime and Residential Choice: A Neighborhood Level Analysis of the Impact of Crime on Housing Prices.” Journal of Quantitative Criminology22 (4): 299–317.
95.
TurnerMargery A.RossStephenGalsterGeorge C.YingerJohn. 2002. Discrimination in Metropolitan Housing Markets: National Results from Phase 1 of the Housing Discrimination Study (HDS). Washington, DC: U.S. Department of Housing and Urban Development.
96.
U.S. Census. 2000. “Decennial U.S. Census. Summary File 1.” U.S. Census Bureau, Washington, DC.
97.
U.S. Census. 2010a. “American Community Survey 1-Year Estimates.” U.S. Census Bureau, Washington, DC.
98.
U.S. Census. 2010b. “Decennial U.S. Census. Summary File 1.” U.S. Census Bureau, Washington, DC.
99.
VélezMaria B.2006. “Towards an Understanding of the Lower Rates of Homicide in Latino Versus Black Neighborhoods: A Look at Chicago.” In The Many Colors of Crime: Inequalities of Race, Ethnicity, and Crime in America, edited by PetersonR.KrivoL. J.HaganJ., 91–108. New York: New York Univ. Press.
100.
VélezMaría B.2009. “Contextualizing the Immigration and Crime Effect an Analysis of Homicide in Chicago Neighborhoods.” Homicide Studies13 (3): 325–35.
101.
VélezMaría B.RichardsonKelly. 2012. “The Political Economy of Neighbourhood Homicide in Chicago: The Role of Bank Investment.” British Journal of Criminology52 (3): 490–513.
102.
WallaceDanielleHedbergE. C.KatzCharles M.2012. “The Impact of Foreclosures on Neighborhood Disorder Before and During the Housing Crisis: Testing the Spiral of Decay.” Social Science Quarterly93 (3): 625–47.
WilsonJames Q.KellingGeorge L.1982. “Broken Windows: The Police and Neighborhood Safety.” Atlantic Monthly, March, 127:29–38.
106.
WilsonRonald E.PaulsenDerek J.2008. “Foreclosures and Crime: A Geographical Perspective.” Geography & Public Safety1:1–20.
107.
WilsonRonald E.PaulsenDerek J.2010. “A Theoretical Underpinning of Neighborhood Deterioration and the Onset of Long-Term Crime Problems from Foreclosures.” Working Paper No. 230450. https://www.ncjrs.gov/pdffiles1/nij/grants/230450.pdf.
108.
WilsonWilliam J.1987. The Truly Disadvantaged: The Inner City, the Underclass, and Public Policy. Chicago: Univ. of Chicago Press.
109.
WilsonWilliam J.1996. When Work Disappears. New York: Alfred A. Knopf.
ZimbardoPhillip G.1969. “The Human Choice: Individuation, Reason, and Order Versus Deindividuation, Impulse, and Chaos.” In Nebraska Symposium on Motivation, 1969, edited by ArnoldWilliam J.LevineDavid, 237–309. Lincoln: University of Nebraska Press.
