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Abstract
The housing market crash in the mid-2000s was characterized by unusually high rates of mortgage delinquencies and foreclosures. Thus, many householders and their families faced the prospect of losing their homes. This paper employs a unique data-set linking the 2008 Survey of Income and Program Participation with individual foreclosure event records from Realty Trac to examine the effects of foreclosure on changes in household well-being. Results from random effects models suggest that foreclosure was positively associated with hardship and food insecurity. Further, households at risk of foreclosure had greater odds of accessing government assistance programs but lower odds of receiving support from private safety nets. Results from lagged dependent variable models suggest that changes in foreclosure status are associated with increased hardship and reduced economic well-being. The lack of access to private safety nets suggests the need for comprehensive public programs to identify and assist homeowners at risk.
Acknowledgement
The author acknowledges Dr. Sharon O’Donnell of the U.S. Census Bureau for compiling the commingled SIPP-Realty Trac data set used in this analysis and for her insightful comments in the preparation of this manuscript.
Notes
1. The estimates in this paper are based on responses from a sample of the population. As with all surveys, estimates may vary from the actual values because of sampling variation and other factors. All comparisons made in this paper have undergone statistical testing and are significant at the 90-percent confidence level unless otherwise noted. For information on confidentiality protection, sampling error, non-sampling error, and definitions see http://www.census.gov/sipp/sourceac/S&A08_W1toW11(S&A-16).pdf.
3. However, Arnio et al. (Citation2012) conduct a county-level analysis of foreclosures and crime for the U.S.
4. This data-set was created by Sharon O’Donnell at the United States Census Bureau. Prior to linking the SIPP survey data to the Realty Trac foreclosure data, See Appendix A for additional information about the linkage process.
5. Households may consist of families, a single individual or a group of unrelated individuals. About 94% all households in Wave 1 of the 2008 SIPP Panel include one family. This figure includes householders living alone (which comprise about 22% of households) as well as extended family and/or multigenerational households.
6. Data from Wave 1 cover the period May through August 2008. The Adult Well-being topical modules were fielded in Waves 6 and 9, covering May through August 2010 and May through August 2011 respectively.
7. Attrition is an issue in any longitudinal survey and SIPP is no exception. At wave 1 of the 2008 SIPP Panel, there were 27,913 householders owning their home, representing 78.5 million homeowners. On average, a small but significantly higher proportion of homeowners in the analytic sample were unmarred female householders, compared to all homeowners at Wave 1. Homeowners in the analytic sample had significantly higher educational attainment than all Wave 1 homeowners on average.
8. Tyler White, Realty Trac, November 2011.
9. We include a dummy variable indicating whether or not the state required a Notice of Default to be filed in order to control for variability across states with respect to this requirement.
10. We have excluded the housing hardship question from this scale, i.e. whether respondents had difficulty paying their housing costs in the past 12 months, since those experiencing foreclosure are by definition delinquent in paying their housing costs.
11. We also tested a dichotomous measure of material hardship indicating whether or not the respondent had experienced any material hardship coded as 1 if they answered affirmatively to the questions regarding hardships outlined above, and 0 otherwise. Significant associations between foreclosure and material hardship were consistent with those reported here,.
12. We also tested a continuous measure of food insecurity calculated by summing the responses to the five questions discussed above. Significant associations between foreclosure and the food insecurity index were consistent with those reported for the dichotomous measure.
13. Total household income was adjusted to 2016 dollars using the CPI-U and was logged in the regression models.
14. We also ran these models with a categorical variable operationalized as 0: No Notice of Sale; 1: Notice of Sale; and 2: Notice of Lender Ownership, but the results associations were similar to those reported here.
15. A change in foreclosure status is coded as 1 if the household experienced any change in foreclosure status and 0 otherwise.
16. Our analytic sample includes Wave 1 homeowners who responded to the adult well-being module in both Waves 6 and/or 9.
17. Income from other sources includes any income that is not from earnings, government transfers or from property.
18. Full model results including coefficients for control variables are available upon request from the author.
19. Full model results including coefficients for control variables are available upon request from the author.
20. About 74% of all householders owning their home at Wave 1 remained in the SIPP Panel at Wave 9.
21. Opt-out rates for linking SIPP survey data to administrative records are negligible.
22. The name of the property owners was not included in the Realty Trac foreclosure event file.
23. About 4.0% of household in 4.7% of owner-occupied households in the original SIPP sample were matched to the Realty Trac data (i.e. had received any notice of foreclosure) through 2011.