Study Finds Foreclosure and Homelessness Linked

by Shannon Moriarty

Published June 26, 2009 @ 12:11PM PT

Today, organizations across the country that serve homeless and low-income people confirm what we have long suspected: victims of foreclosure are ending up on the streets. A new study released today by a seven national homeless advocacy groups and highlights this disturbing effect of the foreclosure crisis.

But don't let the buzz-worthy term "foreclosure" fool you. The bursting housing bubble's effect on the bigger economic picture remains the number one reason for homelessness in America.

Still, the findings from this study are significant. Although there has been a great deal of speculation and anecdotal evidence suggesting that victims of foreclosure are ending up homeless, this is the first large-scale study to confirm these suspicions. Nearly 200 homeless service providers across the country were surveyed and asked to identify the percentage of those seeking assistance as a direct result of foreclosure. Homeless people affected by foreclosure were also surveyed.

Here are a few of the most note-worthy findings in the study, from the National Alliance to End Homelessness:

• Non-housing service providers estimated that 20 percent of their clients experienced homelessness as a result of foreclosure
• Housing providers (including emergency, transitional, and permanent housing) estimated that five percent of their clients experienced homelessness as a result of foreclosure
• Roughly ten percent of the 2008 homeless population was homeless as a direct result of foreclosure

Since organizations that serve very low-income folks reported that a higher portion of their clients were affected by foreclosure, these numbers suggest that many people who lost their home to foreclosure are on the brink of becoming homeless. In other words, a family may utilize services, such as a food pantry or legal aid, prior to becoming homeless and seeking shelter.

Also notable: the study found that the majority of those who were homeless due to foreclosure were renters.

The authors of the report make it very clear that while foreclosure has contributed to homelessness in recent years, it has not become a root cause. Unemployment, substance abuse, domestic violence, low wages, and mental illness are all more common causes for homelessness than foreclosure. The NAEH has put together an interactive map for your perusal that compiles reasons for homelessness in communities across the country.

In any case, it's nice to finally have a study backing up our long-held suspicions. With the incredibly rapid increase in the foreclosure rate over the past two years, the findings from this study aren't terribly surprising.