Foreclosures and crime: A city-level analysis in Southern California of a dynamic process

• Test the foreclosures/crime relationship with monthly data in 128 cities.
• Cumulative 3-month foreclosure lag has strongest effect on crime.
• Test whether social distance in cities moderates this relationship.
• Foreclosure effect enhanced in cities with high inequality and economic segregation.
• City economic and racial characteristics alter the foreclosure/crime relationship.

Although a growing body of research has examined and found a positive relationship between neighborhood crime and home foreclosures, some research suggests this relationship may not hold in all cities. This study uses city-level data to assess the relationship between foreclosures and crime by estimating longitudinal models with lags for monthly foreclosure and crime data in 128 cities from 1996 to 2011 in Southern California. We test whether these effects are stronger in cities with a combination of high economic inequality and high economic segregation; and whether they are stronger in cities with high racial/ethnic heterogeneity and high racial segregation. One month, and cumulative three month, six month, and 12-month lags of foreclosures are found to increase city level crime for all crimes except motor vehicle theft. The effect of foreclosures on these crime types is stronger in cities with simultaneously high levels of inequality but low levels of economic segregation. The effect of foreclosures on aggravated assault, robbery, and burglary is stronger in cities with simultaneously high levels of racial heterogeneity and low levels of racial segregation. On the other hand, foreclosures had a stronger effect on larceny and motor vehicle theft when they occurred in a city with simultaneously high levels of racial heterogeneity and high levels of racial segregation. There is evidence that the foreclosure crisis had large scale impacts on cities, leading to higher crime rates in cities hit harder by foreclosures. Nonetheless, the economic and racial characteristics of the city altered this effect.