On the Street During the Great Recession: Exploring the Relationship Between Foreclosures and Homelessness

ABSTRACT

During the Great Recession, policymakers and advocates for the poor raised concerns that the foreclosure crisis, which forced millions from their homes, was causally linked to the concurrent rise in homelessness. Despite these warnings—and the widespread consequences of the economic collapse on the housing market—no national-level research has evaluated the connection between foreclosures and homelessness. In this study, I combine homelessness data from the U.S. Department of Housing and Urban Development (HUD) with foreclosure data from RealtyTrac to analyze changes over time in both phenomena on the metropolitan level. I find that foreclosures within a given year are significantly correlated with homelessness in the following year net of controls for demographic, housing, and economic characteristics, regional time trends, and metropolitan area fixed effects. This relationship is strongest among single homeless individuals (compared with families) and the unsheltered population. These descriptive findings carry important implications for our understanding of the Great Recession’s consequences and demonstrate the need for expanded data collection on homeless populations, with which we can better understand whether and how foreclosure leads to homelessness.

KEYWORDS:

• Homelessness
• foreclosures
• Great Recession

Acknowledgment

I would like to share my gratitude for invaluable assistance and guidance from Davin Reed, Rob Collinson, and Ingrid Ellen. Jackelyn Hwang, Elizabeth M. Roberto, Peter Rich, and Gerard Torrats-Espinosa also helped with this research.

Disclosure Statement

No potential conflict of interest was reported by the author.

Notes

1. Byrne et al. (2014) found stronger relationships between homelessness and both housing and demographic characteristics in a longitudinal analysis, perhaps because they did not use fixed effects (Hanratty, 2017).

2. Recent ethnographic work has further demonstrated that housing instability (e.g., because of foreclosure and eviction) can be a cause of economic instability—rather than simply a consequence—through, for example, the inability of employers to contact individuals (Desmond, 2016; Edin & Shaefer, 2015). The reciprocal nature of the relationship between housing and employment, therefore, is worthy of further study.

3. Importantly, this work excluded those who ended up homeless following an eviction, which likely resulted in conservatively biased estimates of the deleterious effects of forced moves (Desmond & Shollenberger, 2015).

4. Measured as individuals reporting greater household income than personal income.

5. Households with children were also more likely to live in structures with 1–4 units (87.48%) compared with households without children (82.48%).

6. CBSAs include metropolitan statistical areas and micropolitan statistical areas.

7. The logged median value of owner-occupied units as well as Fair Market Rents (FMR) caused multicollinearity problems with logged median rent. The former was positively predictive of family homelessness, which we might expect if they are the population for whom homebuying might matter more. FMR was not significantly correlated with homelessness.

8. In results available upon request, an interaction term between this indicator variable and the foreclosure measure was not significant, suggesting no meaningful variation in the relationship between foreclosures and homelessness across CBSA coverage by CoCs.

9. The lack of a significant relationship between family homelessness and foreclosures may be due to statistical power (i.e., single individual homelessness is far more common). In identically structured random effects models, foreclosures are marginally positively correlated with family homelessness.

Additional information

Notes on contributors

Jacob William Faber

Jacob William Faber is an assistant professor at New York University’s Robert F. Wagner School of Public Service and is an associated faculty member of NYU’s Sociology Department. His research focuses on spatial inequality. He leverages observational and experimental methods to study the mechanisms responsible for sorting individuals across space and how the distribution of people by race and class interacts with political, social, and ecological systems to create and sustain economic disparities.