Existing research has shown multiple negative spillover effects of foreclosure on both residents and properties that are located near a foreclosed property.  Researchers have argued that foreclosure causes general disinvestment that leads to physical deterioration of the foreclosed property and properties surrounding it, lower property values, and/or increases in crime.

The majority of research to date has focused on the effects of foreclosure on the aggregate level.  Through a mixed-method analysis of one block in Jamaica, Queens this paper illustrates the social, physical, and financial implications of foreclosure at the micro-level.  Given that a high concentration of foreclosure activity does not affect every city block with the same magnitude, this micro-level analysis highlights outcomes and processes that may be lost in macro-level analyses. 

In June 2009, 23.9% of properties on the study block had a foreclosure filing in the prior 18 months.  This block had one of the highest concentrations of foreclosure actions in the city. This longitudinal study utilizes detailed information on all properties, including those that experienced foreclosure and those that have not. A team of researchers performed windshield surveys for all 46 properties on the block in 2009 and again in 2012. These data, along with photographs of each property at each time point, were used to code for signs of physical distress and decline. Brief, semi-structured interviews with a sample of residents provide information on the perception of residents over time. Analysis of sales transaction histories of this block from 2000 through 2011 are linked to the interviewer observations and resident surveys to provide a case study of the history of a community with high levels of foreclosure during the housing boom and foreclosure crisis.

Our findings show the complexity of foreclosure. The results of the 2009 survey show that many residents were not aware of their neighbors’ foreclosure filings, despite the high prevalence of both foreclosure starts and auctions. In 2012, residents show increased awareness of the problems on the block even though fewer properties were in foreclosure two and a half years later.  

Contrary to prevailing theories, we found no association between physical distress and foreclosure.  In many cases, we saw evidence of auctioned properties having been renovated and generally in a state of better external condition than surrounding buildings. 

Many properties were resold multiple times over the twelve-year period we examined. Foreclosed properties were resold at auction for a fraction of the previously recorded purchase, thereby encouraging investment by individuals and corporations who subsequently resold at higher prices.  While these low-cost investments could allow low-income households entrée into the housing market, auctions are also avenues for speculative investment that may lead to future foreclosures due to escalating housing prices.

This paper details the mixed-method case study and compares the experiences on this single block with data on additional blocks that had similarly high concentrations of foreclosure in 2009 to assess the validity of our findings and offer evidence of some of the underlying processes that may link foreclosure to changes in residential conditions.