Elsevier

Social Science & Medicine

Volume 162, August 2016, Pages 88-96
Social Science & Medicine

Review article
The health effects of the foreclosure crisis and unaffordable housing: A systematic review and explanation of evidence

https://doi.org/10.1016/j.socscimed.2016.06.014Get rights and content

Highlights

  • Experiencing a foreclosure is associated with elevated anxiety and depression.

  • Homeowners who face unaffordable housing experience poorer self-reported health.

  • Foreclosures are linked with increased population-level violence and health utilization.

Abstract

The foreclosure crisis was detrimental to the financial well-being of many households, yet the non-economic consequences are still poorly understood. This systematic review aims to understand the direct and spillover effect of foreclosures on several health-related outcomes by synthesizing evidence from 40 studies. First, this study identifies research gaps using a schema to organize studies by line of inquiry, health-related outcome, and measure of homeowner financial distress. In order to provide context for the findings, four pathways – stress, effect-budgeting, frustration-aggression, and trust – evoked in the literature are described to explain the relationship between foreclosures and health. The research suggests that experiencing a foreclosure and living near foreclosures are associated with poor psychological and behavioral morbidities, namely anxiety and violent behavior, and declining health utilization. Evidence is sparse on suicide, substance abuse, somatic morbidities, and mortality. Future research is needed to fill the gaps and explicitly test the mechanisms proposed.

Introduction

The housing bubble burst in early 2007 and by 2010, one in 45 homes in the United States was subject to at least one foreclosure filing. The politically charged nature and the magnitude of the foreclosure crisis precipitated extensive inquiry on how mortgage holders fared in addition to how the crisis affected other, seemingly unrelated domains. The effect of the foreclosure crisis on property values, crime, and education has been well documented (Bradbury et al., 2014, Ellen et al., 2013, Lin et al., 2009). Only recently, an emerging body of research has begun to look at the effect of the foreclosure crisis on the health of homeowners who lost their homes and the spillover effects on health within neighborhoods.

The salience of the foreclosure crisis to public health is manifest in its history. The field public health, rooted in medicine, has evolved since the early days of Durkheim to take into account the social distribution and determinants of health. The distribution of the foreclosure crisis was inarguably unequal across race and class; neighborhood patterns of subprime lending were heavily concentrated in minority neighborhoods and resulted in $1.1 trillion decline in home equity as a result of spillover from homes in foreclosure (Bocian et al., 2011). Although the link between housing and health policies has been recognized since the Industrial Revolution, the recent initiatives by the Obama administration has built upon these efforts by adopting a cross-sector initiative to put “health in all policies” in housing and community development (Bostic et al., 2012).

The foreclosure crisis, although a unique phenomenon, was not an isolated one. At a national level, the U.S. housing crisis preceded the Great Recession and contributed in part to the increase in unemployment (Estevão and Tsounta, 2011, Karahan and Rhee, 2013). However, the labor market turned downward prior to the housing market in more than half of metropolitan areas (Winkler, 2013). The tension between the housing and labor markets has defined housing affordability; housing claims the largest portion of wages for most Americans and contributes to access to the labor market (M. Stone, 2010). Studies on recessions have historically focused exclusively on the labor market, despite its inexorable linkage with the housing market.

This review uncovers gaps in the research agenda in this emerging body of literature and offers a theoretical framework to explain the direct and spillover effect of foreclosures and unaffordable housing on health. The first section of this review provides a discussion of the conceptual space and mechanisms linking housing and health that are explicitly tested or invoked in the literature (Fig. 1). Next, this review offers a schema for summarizing the evidence on foreclosures, housing affordability, and health. The schema is then applied to synthesize existing evidence and highlight discrepancies in research findings. It concludes with a discussion of how these findings align or depart from the existing research on the economy and health.

Section snippets

Level of analysis

The research in this review falls into two lines of inquiry. Individual-level, sometimes referred to as “risk-factor,” studies explore how differential exposure to a contracting housing markets relates to the health of individuals. This research focuses on the somatic, psychological, and behavioral health of those who experience foreclosure, mortgage delinquency, or unaffordable housing.

It is difficult to determine the causal direction between foreclosures and health at the individual-level

Methods

The studies included in this review were collected through a search for peer-reviewed articles that address an association between foreclosures or housing affordability and health. Next, the references from each article were reviewed to identify additional peer-reviewed articles that met these criteria. The following databases were reviewed: PubMed, EconLit, and the National Bureau of Economic Research, in addition to all databases available through Google Scholar. The search was limited to

Results

All studies included in the review are organized by level, construct, and outcome in Table 1. A table with descriptions of all studies is included as Supplementary Material.

Discussion

Most studies suggest foreclosures are mostly harmful for health. Homeowners who experience a foreclosure or mortgage-related distress (i.e. notice of default) are likely to experience more anxiety and depression. However, the experience of unaffordable housing does not track with psychological health in the same manner. This might be because while unaffordable housing can be taxing, the foreclosure process can precipitate loss of trust in oneself, the mortgage-broker, or the government, which

Conclusion

Our review of 40 studies finds foreclosures and unaffordable housing are mostly detrimental to health at both the individual and population level. Evidence from the most rigorous studies suggest that homeowners who experience a foreclosure have more anxiety and depression, and foreclosures at the population-level is associated with increased violent behavior and healthcare utilization. This emerging field is still in it’s early phase; 90% of studies were published after the Foreclosure Crisis.

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