Homeownership and crime: A complicated relationship
Recent studies suggest that neighborhoods with high homeownership rates have lower crime rates. But these studies can't answer the bigger question: Does a high homeownership rate cause a neighborhood's crime rate to drop, or are homebuyers instead attracted to neighborhoods that already have low crime rates?
It's a chicken-and-egg question that has no easy answer.
The national homeownership rate has fallen since the housing crisis. According to the U.S. Census Bureau, the homeownership rate stood at 65.2 percent in the fourth quarter of 2013, 0.2 percentage points lower than in the fourth quarter of 2012. This rate peaked at 69.2 percent in 2004.
Crime and homeownership
"The chicken-or-egg question is a good one," says Mark Lindblad, research director for the Center for Community Capital at the University of North Carolina at Chapel Hill. "I imagine it works both ways. No one, though, has really teased out that answer. Homeowners might look for a safer neighborhood when they're searching for a home. But I don't know how to answer that chicken-and-egg question."
Lindblad is in a good position to look deeply at homeownership's impact on crime. He, along with William Rohe, a professor with the University of North Carolina at Chapel Hill's Department of City & Regional Planning, presented their paper "Reexamining the Social Benefits of Homeownership after the Housing Crisis," in the summer of 2013 at the Joint Center for Housing Studies at Harvard University.
Benefits of homeownership
The professors concluded that high levels of homeownership bring social benefits to a neighborhood, everything from neighbors who are more willing to intervene in community problems to residents who are more likely to join Parent-Teacher Associations and neighborhood watch groups. And these benefits remain even after the recent housing crisis.
The professors also concluded that the relationship between crime and homeownership is a complex one. It's true that neighborhoods with high homeownership rates tend to have lower rates of both violent and property crimes. But it's not homeownership alone that tends to lower crime, the professors wrote. Residents who are involved in their neighborhoods, who are willing to form neighborhood watch groups and attend community meetings, are the key to a lower crime rate, both Lindblad and Rohe said. And those types of residents are more common in neighborhoods in which more people own homes.
"You need two factors: a higher sense of community and people who are willing to intervene in local problems," Lindlbad says. "Then, through that social fabric, you can say that homeownership reduces crime. But you must have those two factors."
Low-crime rates attract homebuyers
Rohe, too, has no definitive answer on whether high homeownership rates are the reason for lower crime rates. But he does have his own theory, arguing that perhaps neighborhoods that already have low crime rates are more likely to also have high homeownership rates because they are the kind of neighborhoods that attract buyers.
"If there is a relationship between homeownership and crime levels, I would posit that it's interactive," he said in an email interview. "Certainly, higher levels of crime should cause a decreased interest in buying among non-investor buyers, a decrease in property values and a greater likelihood that an area's rental rate will increase and its income level will decrease."
Lower-income areas tend to have higher crime rates, said Rohe.
This study isn't the first time that Lindblad has looked at crime and homeownership. In his paper "Sense of Community and Informal Social Control Among Lower Income Households: The Role of Homeownership and Collective Efficacy in Reducing Subjective Neighborhood Crime and Disorder," a paper that he wrote with Roberto Quercia, director of the Center for Community Capital and professor and chair of the department of city and regional planning at the University of North Carolina at Chapel Hill, which was published in April 2012 for the Society for Community Research and Action, Lindblad found that residents who lived in neighborhoods with high homeownership rates thought that their community had lower amounts of criminal activity, regardless of the area's actual crime stats.
Erica Raleigh, acting director of Data Driven Detroit, and George Galster, Clarence Hilberry professor of urban affairs at the Department of Urban Studies and Planning at Wayne State University in Detroit, also found a relationship between crime and homeownership rates in their paper "Neighborhood Disinvestment, Abandonment and Crime Dynamics," which the pair presented at the Urban Affairs Association Meeting in San Francisco in April 2013.
The researchers found that many types of crime were much lower on blocks in Detroit that had higher percentages of owner-occupants, Galster said in an email.
Jinlan Ni and Christopher Decker, professors at the University of Nebraska at Omaha, addressed the relationship between crime and homeownership more directly in their 2009 study "The Impact of Homeownership on Criminal Activity: Empirical Evidence from United States' County Level Data."
What's higher homeownership worth?
According to their study, an increase of 1 percent in homeownership led to a fall of 1.253 percent and 1.513 percent in subsequent per-capita property crime in neighborhoods in 1991 and 1992, respectively. The same percent increase in homeownership led to drops of 1.043 percent and 1.123 percent in subsequent per-capita violent crime in 1991 and 1992, respectively.
The professors determined that an increase of 1 percent in homeownership, then, will reduce the annual cost of property crimes in the United States to victims by $221.9 million. The same percent increase in homeownership will reduce the yearly cost of violent crimes in the United States to victims by $959.8 million.
"We did find a significant relationship between high homeownership rates and neighborhoods with lower crime rates," Ni says. "Homeownership gives people more stability and security."
But Ni, too, could not say whether high homeownership rates cause crime to fall or whether low crime rates naturally boost homeownership rates in a community.
Where will homeownership go from here?
In their study, Rohe and Lindblad say that they don't expect the homeownership rate to fall much lower, if at all. People still want to buy homes, and the long-term preference of a vast majority of U.S. consumers is to buy homes rather than to rent. And now that the worst of the housing crisis is over, it's safe to assume that people will continue buying homes, they wrote.
Rohe and Lindblad wrote, too, that even after the housing crisis, homeownership still has positive social benefits for a neighborhood. This holds true even after so many homeowners lost their residences to foreclosure, Lindblad said.
Neighborhoods with higher rates of homeownership still tend to have residents who are more likely to take an active role in their communities. This would indicate that high homeownership rates will still result in lower crime rates, even after the negative experiences so many homeowners had during the housing crisis, Lindblad said.
Dan Rafter has covered financial topics for more than 15 years for publications such as the Washington Post, Chicago Tribune, Consumers Digest and other publications.
Ask the Expert
- Q. How does child support affect mortgage qualification?
- Q. Struggling after a job loss: should I consider a loan modification or bankruptcy?
question gets published.
< Go Back
Most Popular Articles
- »Tight credit standards benefit lenders and borrowers alike
- »How to refinance when you are self-employed
- »Federal Reserve policy and mortgage rate cycles
- »Refinance into an adjustable rate mortgage (ARM)
- »Military homeowners getting lower mortgage rates
- »What is the new ‘FICO Score 9’ and what are the benefits?
- »Will a low-rate refinance prevent you from selling?