The geography of foreclosure in Contra Costa County, California

Americans of all races and income levels recognize homeownership as a quintessential part of the American dream. This belief, along with federal policy that encourages homeownership and increased access to credit, has contributed to a dramatic rise in the number of families that own their home, particularly among low-income and minority households. In addition, rising homeownership in the first part of this decade contributed substantially to neighborhood revitalization, and brought much needed investment into low- and moderate-income neighborhoods. The recent subprime meltdown and rising foreclosures, however, threaten these gains. In this study, I use 2007 foreclosure data from Contra Costa County, California, to examine how foreclosures are distributed across neighborhoods, and to identify the neighborhood characteristics that are associated with foreclosure. I find that foreclosures are directly associated with subprime lending and that both subprime lending and foreclosures are concentrated in neighborhoods with high proportions of minority residents, lower-income households, and less educated households. These results have important policy implications for mortgage lending regulations and housing policies moving forward.