In yet another analysis of the causes behind the current financial crisis, it turns out that vehicle ownership and a lack of access to public transportation may be just as predictive of mortgage foreclosure rates as low credit scores and high debt-to-income ratios.
Such are the results of a study, commissioned by the Natural Resources Defense Council, of foreclosure rates in San Francisco, Chicago and Jacksonville, Florida. The survey found mortgage holders were less likely to face foreclosure (.pdf) if they lived in “compact” neighborhoods with sufficient public transit to make owning a car optional. For example, a hypothetical borrower in the Chicago area with a credit score of 680, a debt to income ratio of 41 percent and a 20 percent down payment would be 2.7 percent more likely to default if the home is in a sprawling suburb instead of a compact urban area.
According to the study authors, living in a location-efficient area provides a greater buffer against volatile transportation costs, which even before fuel prices spiked in 2008 accounted for as much as 17 percent of an average household’s income. This also may explain why vehicle ownership was predictive of mortgage default. The term “location efficient” refers to communities with several transportation options beyond owning a car.
Economia é um assunto fascinante.