The existence and stability of localized patterns of criminal activity are studied for the reaction-diffusion model of urban crime that was introduced by Short et. al. [Math. Models. Meth. Appl. Sci., 18, Suppl. (2008), pp. 1249--1267]. Such patterns, characterized by the concentration of criminal activity in localized spatial regions, are referred to as hot-spot patterns and they occur in a parameter regime far from the Turing point associated with the bifurcation of spatially uniform solutions. Singular perturbation techniques are used to construct steady-state hot-spot patterns in one and two-dimensional spatial domains, and new types of nonlocal eigenvalue problems are derived that determine the stability of these hot-spot patterns to ${mathcal O}(1)$ time-scale instabilities. From an analysis of these nonlocal eigenvalue problems, a critical threshold $K_c$ is determined such that a pattern consisting of $K$ hot-spots is unstable to a competition instability if $K>K_c$. This instability, due to a positive real eigenvalue, triggers the collapse of some of the hot-spots in the pattern. Furthermore, in contrast to the well-known stability results for spike patterns of the Gierer-Meinhardt reaction-diffusion model, it is shown for the crime model that there is only a relatively narrow parameter range where oscillatory instabilities in the hot-spot amplitudes occur. Such an instability, due to a Hopf bifurcation, is studied explicitly for a single hot-spot in the shadow system limit, for which the diffusivity of criminals is asymptotically large. Finally, the parameter regime where localized hot-spots occur is compared with the parameter regime, studied in previous works, where Turing instabilities from a spatially uniform steady-state occur.
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