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Direct and spillover effects of forced sales on house prices: Evidence from the Netherlands

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  • Mocking, Remco
  • Overvest, Bastiaan

Abstract

We estimate the effects of forced sales on the Dutch housing market. A forced sale may have two distinct effects: a lower transaction price of the property itself (“direct effect”) and lower transaction prices for unforced nearby transactions (“spillover effect”). We estimate both effects. We employ an unusual rich dataset of about 750000 house transactions in the Netherlands between 2007 and 2013. To identify the effects of forced sales we control for neighborhood-time effects, detailed house characteristics, and use both a quasi difference-in-differences specification and a repeat-sales specification. A forced sale results in a price discount of about 5% and a nearby forced sale reduces the transaction price by about 0.6%.

Suggested Citation

  • Mocking, Remco & Overvest, Bastiaan, 2017. "Direct and spillover effects of forced sales on house prices: Evidence from the Netherlands," Journal of Housing Economics, Elsevier, vol. 38(C), pages 50-61.
    • Handle: RePEc:eee:jhouse:v:38:y:2017:i:c:p:50-61
    DOI: 10.1016/j.jhe.2017.10.002
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    References listed on IDEAS

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    10. Harding, John P. & Rosenthal, Stuart S. & Sirmans, C.F., 2007. "Depreciation of housing capital, maintenance, and house price inflation: Estimates from a repeat sales model," Journal of Urban Economics, Elsevier, vol. 61(2), pages 193-217, March.
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    Cited by:

    1. Renigier-Biłozor, Małgorzata & Walacik, Marek & Źróbek, Sabina & d’Amato, Maurizio, 2018. "Forced sale discount on property market – How to assess it?," Land Use Policy, Elsevier, vol. 78(C), pages 104-115.
    2. van Veldhuizen, Sander & Vogt, Benedikt & Voogt, Bart, 2020. "Negative home equity reduces household mobility: Evidence from administrative data," Journal of Housing Economics, Elsevier, vol. 47(C).
    3. Conklin, James N. & Edward Coulson, N. & Diop, Moussa & Mota, Nuno, 2023. "An Alternative Approach to Estimating Foreclosure and Short Sale Discounts," Journal of Urban Economics, Elsevier, vol. 134(C).

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    More about this item

    Keywords

    Forced sales; Mortgages; Housing market; Externalities;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • R20 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - General
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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