Breaking the chain: Understanding the association between foreclosure intensity and neighborhood satisfaction |
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| Institution: | 1. University of Magdeburg, Universitätsplatz 2, Magdeburg 39106, Germany;2. Research Campus STIMULATE, Universitätsplatz 2, Magdeburg 39106, Germany;3. University of Jena, Ernst-Abbe-Platz 1, Jena 07743, Germany;1. Federal Reserve Board of Governors, 20th & C Streets, NW, Washington, DC 20551, USA\n;2. Graduate School of Management, University of California, Davis, CA 95616, USA;3. Haas School of Business, University of California, Berkeley, CA 94720, USA |
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| Abstract: | Extensive research has been conducted on the factors that cause foreclosure and the resulting neighborhood contagion effects. When residents see concentrated foreclosed homes in their neighborhood, their perceptions of their neighborhood are often negatively affected. Despite the potential psychological effects of foreclosures on residents, no research has looked at foreclosure intensity and impacts on other residents' satisfaction in the neighborhood.We used the 2004 Homeowner Satisfaction Survey and foreclosed property data from 2001 to 2004 in Franklin County, Ohio to explore the effect of foreclosure intensity on resident satisfaction. We used a structural equation model to capture the chain reaction of concentrated neighborhood disadvantage on foreclosure intensity and residents' neighborhood satisfaction. We found that the impacts of foreclosures are not limited to lenders and owners of mortgaged homes but extended to other residents living in the neighborhood. In this regard, we recommend housing recession recovery efforts must incorporate programs to alleviate neighbors' psychological distress. |
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| Keywords: | Neighborhood satisfaction Foreclosure intensity Chain effect Structural equation model |
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