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Is something better than nothing? The impact of foreclosed and lease-purchase properties on residential property values

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  • Youngme Seo

    (Ryerson University, Canada)

  • Michael Craw

    (University of Arkansas at Little Rock, USA)

Abstract

Lease-purchase (L-P) programmes that rehabilitate foreclosed property for sale as affordable housing may provide a way to reduce foreclosure externalities on nearby property values. This paper investigates the feasibility of such a strategy by estimating the effects of foreclosed properties on nearby residential property values compared with those of an L-P programme operated by the Cleveland Housing Network, Cleveland, Ohio. The findings indicate that although both L-P and foreclosed properties have a negative effect on the value of nearby non-distressed homes, the negative effect of foreclosure is larger. At the same time, the scope of the foreclosure externality is greater in low- and moderate-income neighbourhoods, while the foreclosure externality is generally smaller in high income neighbourhoods. Such results imply that an L-P strategy is likely to be more effective in offsetting foreclosure externalities in low- and moderate-income neighbourhoods than in high income neighbourhoods.

Suggested Citation

  • Youngme Seo & Michael Craw, 2017. "Is something better than nothing? The impact of foreclosed and lease-purchase properties on residential property values," Urban Studies, Urban Studies Journal Limited, vol. 54(16), pages 3681-3699, December.
    • Handle: RePEc:sae:urbstu:v:54:y:2017:i:16:p:3681-3699
    DOI: 10.1177/0042098016681704
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    References listed on IDEAS

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