Why Foreclosures Matter -- Foreclosure-Response.org

Understand Why Foreclosures Matter

Foreclosures always have devastating impacts on the families directly affected, but in the past – when foreclosures were relatively rare and widely scattered – the overall effects were limited. The unusually high rates of foreclosures occurring today, however, can trigger much wider damage, spilling over to undermine the well-being of neighbors, neighborhoods and whole communities, as well as markedly increasing the number of families directly displaced.

By learning more about these spill-over effects, local practitioners and advocates can strengthen their foreclosure response strategies. More specifically, reliable information about the potential harm to children, the elderly, neighborhood safety, and local property tax revenues can:

Raise public awareness and build local support for action
Engage organizations – like schools, child welfare agencies, or police departments – that might not otherwise see the foreclosure crisis as relevant to their mission, thereby expanding the resources available for tackling the problem
Enable local policymakers to anticipate the next wave of issues and challenges they are likely to face as foreclosure rates rise and their effects ripple through the community

Although much has been written recently about the foreclosure crisis, relatively little research has been completed on its local impacts, both because the crisis is itself so recent, and because researchers have not been able to rigorously study affected families over time. Nonetheless, we can learn a lot from existing research on what happens to families after they move for other reasons, especially those who were forced to move because of problems like loss of a job, divorce, illness, or eviction.

In this section we summarize the best available research on how today’s foreclosure crisis affects both families and the larger communities in which they live.

Click on one of the boxes below to learn more.

Ways Foreclosures Affect Families

Foreclosures affect both owner and renter families, and can lead to displacement, housing instability, financial difficulties, stress, and ill health.

Ways Foreclosures Affect Communities

Foreclosures affect entire communities, not just the families that are displaced. Foreclosures can lead to vacancies and abandonment, destabilize neighborhoods, decrease property values, increase disorder and crime, and worsen cities' fiscal problems.

Major parts of this section are drawn from G. Thomas Kingsley, Robin Smith and David Price. 2009. The Impacts of Foreclosures on Families and Neighborhoods. Report prepared for the Open Society Institute. Washington DC: The Urban Institute.

Photo credits (L to R): Gates of Ballston, Arlington VA -- photo courtesy of AHC, Inc.; Lorington Apartments, Chicago IL -- photo courtesy of Valerie Denney Communications