Foreclosures are on many people's minds these days, and it's not hard to see why. Foreclosures increased 57 percent in the past year, according to numbers recently released by RealtyTrac. Most of the attention paid to foreclosures focuses on their effect on the economy. But the impact of the foreclosure crisis is more broadly felt than that and extends even to crime rates in areas hit hard by foreclosures.
"Using data on foreclosures, neighborhood characteristics, and crime, we find that higher foreclosure levels do contribute to higher levels of violent crime," according to a 2005 study by the Federal Reserve Bank of Chicago. "A standard deviation increase in the foreclosure rate (about 2.8 foreclosures for every 100 owner-occupied properties in one year) corresponds to an increase in neighborhood violent crime of approximately 6.7 percent."
Charlotte, N.C., is one area that has experienced an increase in crime as foreclosures have climbed.
"While the crime rate citywide held steady, the rate in the heart of Charlotte's 10 highest-foreclosure areas rose 33 percent between 2003 and 2006, an Observer analysis found. All of them are suburban areas filled with starter-home subdivisions," according to a story published in the Charlotte Observer in December 2007.
"[The subdivision] Windy Ridge is 5 years old, but already 81 of its 132 homes have lapsed into foreclosure. Dozens stand boarded up or vacant, with windows smashed and doors kicked in. Vandals have ripped copper wire from walls. Vagrants and drug users frequent the empty houses--next door to families who thought they'd invested wisely in their northwest Charlotte suburb," according to the article.
"Violent crime at rental homes in single-family neighborhoods happens at three times the rate of crime at owner-occupied homes, according to Charlotte-Mecklenburg police. The property crime rate is 1.6 times higher."
Some who have purchased homes in these subdivisions want to sell, but they can't afford to because of the state of the market.
And the problem extends to all Charlotte residents, even those not in foreclosure and those who do not live in the areas with increased crime. "Taxpayers must cover the increased cost for police, housing inspectors and other government services in these neighborhoods," according to the article. "Sinking home values mean less tax revenue."
"Foreclosures can have implications for surrounding neighborhoods and even for their larger communities. Cities, counties, and school districts may lose tax revenue from abandoned homes," according to the study.
These abandoned homes can become havens for garbage, animals, squatters and drug dealers, according to the study. "Indirectly, the presence of boarded-up and abandoned buildings may lead to a lack of collective concern by neighborhood residents with neighborhood crime," according to the study.
This line of thinking is similar to the broken window theory, originally proposed by James K. Wilson and George L. Kelling in The Atlantic Monthly in 1982 and made more famous by Malcolm Gladwell's 2000 book The Tipping Point. The theory goes that the little things, such as a building with a few broken windows, can escalate into big problems, such as that same building being neglected further and becoming a site of criminal activity.
And maybe foreclosures once seemed like a little problem, but now they have escalated into a nationwide crisis. And not only are some people being forced out of their homes, but widespread foreclosures are leading to higher crime in some areas, so that their neighbors are not always safe in theirs.
Historically, the preconception is that recessions usually have higher crime rates. However, every area is different. For example, crime rate might have risen by 6% but the total population of the area has risen by 50%. Also, certain crimes (EX:murders) may have risen (3-6) causing a high percent change (50%) but the overall total crimes may have lowered (All crimes went from 1800 to 1100). There can be many reason as to why the crime rate is lower. 1- it actually is lower 2- there are false reports 3- there were no reports (perhaps it is easier for theives to steal microwaves and fridges from foreclosed property to sell for money than steal from property where people live?). It would be interested if further research and analysis shows up on this topic especially after this recent recession involving foreclosures.