Arnab Chakraborty, a professor of urban and regional planning at the University of Illinois, has identified another factor in the crisis – neighborhood zoning. According to a study published in the journal Housing Policy Debate, communities that zoned too strictly for the development of large, single-family homes have a higher risk for foreclosure when compared to areas that accommodate a broader spectrum of housing options.

“It intuitively makes sense,” Chakraborty said. “If you push too much housing in the high-price sector, then people who would otherwise buy cheaper housing would either be forced to buy more expensive housing or move elsewhere. It is, ultimately, a question of choice for the homebuyers.”

Chakraborty and two doctoral students, Dustin Allred and Robert H. Boyer, focused on mortgages that had entered the foreclosure process from 2005 through 2008, the period of the housing bubble. The study used data from six metropolitan areas across the United States – Baltimore-Washington, D.C.; Boston; Miami; Minneapolis-St. Paul; Portland, Ore.; and Sacramento, Calif. – chosen to represent a variety of real estate markets and regulatory approaches.

These six metro areas included 129 municipalities and a wide range of zoning types. To determine what proportion of land each community reserved for large homes, the researchers created four broad zoning classifications based on the maximum number of households allowed per acre, ranging from a high of more than eight units per acre down to the least dense category – less than one unit per acre.

The researchers adopted a similarly broad definition of foreclosure risk, counting any mortgage that entered the foreclosure process, regardless of the ultimate outcome. “We did that for a very specific reason, which is that foreclosure regulations vary a great deal state to state,” Chakraborty said. “The fact that the mortgage loan entered foreclosure was an indicator that the homeowner was under some vulnerability.”