A Regional Examination of Foreclosures

Foreclosures, causes and remedies, are being discussed and fiercely debated across our nation. Although there has been some examination of the causes of foreclosures, the current research has devoted its attention to examining what factors change the probability that an individual will go into foreclosure. By examining Wisconsin counties over eight years this paper makes a major contribution to the literature by taking a regional approach to examining the causes of foreclosures. This regional approach has greater policy applications since policy is often based on regional not individual factors. Several empirical models are estimated and there are consistent results that greater unemployment, a lower median age, larger families in rental units, and a smaller percentage of Asian or Native Americans leads to more foreclosures in a county. There is also evidence that education seems to affect foreclosures in a non-monotonic way; higher percentage of the population with a high school degree vs. non high school graduates increases foreclosures, but there is a negative impact or no significant difference between bachelors degree and no high school degree