Population Association of America 2013 Annual Meeting Submission (Full Paper) Neighborhood Disorder and Resident Sentiment in the Wake of the Las Vegas Foreclosure Crisis

Using surveys collected from a sample of 643 households nested within 22 ‘naturally occurring’ neighborhoods in Las Vegas, NV during the most recent economic recession, this study examined associations between real and perceived measures of neighborhood distress (foreclosure rate, physical decay, crime) and residents’ reports of neighborhood quality of life and neighborhood satisfaction. Consistent with social disorganization theory, both real and perceived measures of neighborhood disorder were negatively associated with quality of life and neighborhood satisfaction. Residents’ perceptions of neighborliness partially acted as a buffer against the effects of neighborhood distress on quality of life and neighborhood satisfaction. There has certainly been no shortage of studies that examine predictors of neighborhood satisfaction and residential quality of life in urban areas of the U.S. (Amerigo and Aragones 1997; Dassopoulos, Batson, Futrell, and Brents 2012; Galster and Hesser 1981; Grogan-Kaylor et al. 2006; Hipp 2009; Lovejoy, Handy, and Mokhtarian, 2010; Parkes, Kearns, and Atkinson 2002). Understanding the relationship between residential contentment and community wellbeing is all the more important in the wake of a deep economic recession as residents face uncertain economic futures, and city planners and policymakers face reduced budgets for community development and improvements. As a result of the most recent economic recession which officially began in December 2007 and ended in 2009 (Muro et al.2009), cities across the United States are dealing with record high housing foreclosures, unemployment rates, and newfound urban distress. For the residents living in these urban areas, residential morale and quality of life have been compromised, generating important questions about the complex relationship between urban distress and community attachment. Neighborhoods remain among the most common settings where residents forge attachments to people and create meaning, significance, and coherence in their lives. Resilient and stable communitarian neighborhoods are vital to the sustainability of healthy cities. When residents feel satisfied with their neighborhoods, they report greater neighborhood attachment, higher overall life satisfaction, better mental and physical health, greater political participation, and are more likely to invest in building healthy and stable communities (Adams, 1992; Hays & Kogl 2007, Sampson, Morenoff & Gannon-Rowley, 2002; Sirgy & Cornwell, 2002). Consequently, when residents are dissatisfied with their neighborhoods, they report less neighborhood satisfaction, lower quality of life, and are more likely to leave their communities (Bolan, 1997; Oh, 2003; Sampson, 2003). Various characteristics of neighborhood disorder, including poverty, crime, dilapidated infrastructure, graffiti, transiency, and litter, have repeatedly been found to be negatively associated with neighborhood satisfaction and quality of life (Ross and Mirowsky 1999; Galster and Hesser 1981). However, neighborhood social ties, friendship bonds, and feelings of collective efficacy strengthen neighborhood attachment, satisfaction, and quality of life through feelings of social integration and trust (Grogan-Kaylor et al. 2006; Kasarda and Janowitz 1974; Parkes, Kearns, and Atkinson 2002). While there has been a plethora of research on predictors of neighborhood satisfaction and quality of life, few studies have been able to capture residents’ neighborhood sentiments in the wake of a deep economic recession. Our study is the first to combine residential survey data collected during the most recent recession with housing foreclosure data to examine the associations between urban distress and neighborhood satisfaction and quality of life. We center our study in Las Vegas, Nevada, an attractive location to explore the relationships between housing foreclosure, neighborhood distress, and residential sentiment. Following nearly 20 years of the nation’s most rapid population growth and urban sprawl (CensusScope 2000), Las Vegas has experienced a whirlwind of social and economic disorder stemming from the recession. Unemployment rates and home foreclosures are among the highest in the nation, social services are overburdened, and population growth is stagnant (Bureau of Labor Statistics 2011; Center for Business and Economic Research 2011). While much research has explored neighborhood quality of life issues at the national level, or in other metropolitan contexts, there has been almost no empirical research on community issues in Las Vegas. Our survey-based study, coupled with metropolitan data on housing foreclosures allows us to combine residents’ perceptions of physical distress with actual measures of distress to determine the extent to which these actual and perceived measures of neighborhood distress are associated with neighborhood satisfaction and quality of life. Our study is guided by the following research questions: 1. ) Is housing foreclosure associated with residents’ perceptions of neighborhood quality of life and neighborhood satisfaction above and beyond the traditional indicators of neighborhood disorder (physical disorder and crime)? and 2. ) Do perceptions of neighborliness mediate the relationships between neighborhood disorder and quality of life and neighborhood satisfaction? Boom and Bust: Las Vegas and the Foreclosure Crisis The Las Vegas metropolitan area led the nation in population growth during the 1990s at 66.3%, almost doubling the rate of population growth of second ranked Arizona (CensusScope, 2000). Population growth in the Las Vegas metropolitan region continued apace in the 2000s with roughly half a million people arriving between 2000 and 2007. Some demographers estimate that the Las Vegas population will double again by 2040 (Lang, Sarynski, & Muro, 2008). In this context of population growth, transiency was also high. In 2000, Nevada ranked highest among all states in residential mobility, where 25% of the population had moved from another state to Nevada within the past five years. Between 2000 and 2004, Nevada had the highest domestic annual rate of net migration in the country (Perry 2006). As a result of such rapid population growth and concomitant economic boom, the Las Vegas housing market flourished between 1990 and 2006. With approximately 6,000 newcomers per month arriving in Las Vegas at the height of the boom, home prices reached all-time highs in 2006. The average median price of a single-family home was $349,500 in January of 2007. Just four years later, following the economic bust and housing crisis, the median price of single-family homes in January 2011 was $132,000 – an astonishing 62% decline (Greater Las Vegas Realtors Association, 2007, 2011). This is the largest decline of any metropolitan area in the United States (Community Resources Management Division 2010). With the largest concentration of subprime mortgage originations in the country (Mayer and Pence 2008), the Las Vegas housing market was a ticking time bomb for a housing bust. Subprime mortgage products were designed to provide home ownership opportunities to the most credit-vulnerable buyers, including those with no established credit history, little documentation of income, and/or those with smaller down payments. In addition to subprime lending, mortgage companies also made it easier for current homeowners to refinance loans and withdraw cash from houses that had appreciated in value (Mayer and Pence 2008). Dependent on tourism and service-based employment, many people who made Las Vegas home during the boom years either relied on income with little documentation (gambling revenues, cocktail waitress, valet drivers), or simply were not able to afford conventional mortgage loans. For an urban area to be among the hardest hit in housing foreclosures, it needed to experience most, if not all, of the problems associated with subprime lending: large racial and ethnic concentration, mid-level credit scores, new housing construction, and high unemployment rates (Mayer and Pence 2008). Las Vegas fit the bill. Ripe with a large wave of Hispanic immigrant population growth, workers with unconventional sources of income, chaotic urban sprawl and rampant new construction, and high unemployment, Las Vegas experienced harshly pronounced rates of appreciation and concentrations of subprime lending (Mayer and Pence 2008). As a result, since 2007, approximately 70,000 housing units have been foreclosed upon with nearly 6,000 new foreclosures still occurring every quarter (Community Resources Management Division 2010). Up until 2006, Nevada had a very low loan delinquency rate, particularly among subprime borrowers. This was partly because borrowers in the robust Nevada housing market could often avoid foreclosure by quickly selling their homes to eager buyers (Immergluck 2010). However, between 2007 and 2010 the foreclosure rate in Nevada has increased at a rate of about 3% per year (Community Resources Management Division 2010). This number may actually be higher because of the foreclosures held by banks but not yet made available for sale. In addition, estimates are that 25% of all mortgage holders are experiencing serious delinquency (90 days or more past due), which is the second highest level in the nation. In all likelihood, these rates will continue to increase over the next few years (Community Resources Management Division 2010). As home prices have witnessed unfathomable declines and homeowners struggle to make mortgage payments on undervalued properties, southern Nevada has also been faced with the largest increase in unemployment of any major metropolitan region in the country. Between April 2008 and April 2010, unemployment in Southern Nevada jumped 10 percentage points to an unprecedented high of 15.1% (US Bureau of Labor Statistics 2012). High rates of unemployment put current mortgage holders at risk for