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Foreclosure externalities and Vacant Property Registration Ordinances

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  • Biswas, Arnab
  • Cunningham, Chris
  • Gerardi, Kristopher
  • Sexton, Daniel

Abstract

Vacant Property Registration Ordinances (VPROs) were widely adopted by local U.S. governments to compel mortgage lenders to monitor and maintain foreclosed properties. Using a border discontinuity, triple difference identification strategy, we find that enactment of VPROs in Florida more than halved the negative spillover from proximate foreclosures on arms-length sale prices. This finding is robust to various time-by-location fixed effects, different distance buffers around VPRO/non-VPRO borders, alternative foreclosure measures, and two falsification exercises. Finally, we show that foreclosed properties subject to a VPRO sell at higher prices when ultimately returned to the market, consistent with an underlying physical externality.

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  • Biswas, Arnab & Cunningham, Chris & Gerardi, Kristopher & Sexton, Daniel, 2021. "Foreclosure externalities and Vacant Property Registration Ordinances," Journal of Urban Economics, Elsevier, vol. 123(C).
    • Handle: RePEc:eee:juecon:v:123:y:2021:i:c:s0094119021000176
    DOI: 10.1016/j.jue.2021.103335
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    1. Geoffrey K. Turnbull & Arno J. van der Vlist, 2023. "After the Boom: Transitory and Legacy Effects of Foreclosures," The Journal of Real Estate Finance and Economics, Springer, vol. 66(2), pages 422-442, February.
    2. Lauren Lambie‐Hanson & Wenli Li & Michael Slonkosky, 2022. "Real estate investors and the U.S. housing recovery," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 50(6), pages 1425-1461, November.
    3. Blanco, Hector, 2023. "Pecuniary effects of public housing demolitions: Evidence from Chicago," Regional Science and Urban Economics, Elsevier, vol. 98(C).

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    More about this item

    Keywords

    Mortgage default; Foreclosure; Externality; Policy; Vacancy; Ordinance;
    All these keywords.

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • K25 - Law and Economics - - Regulation and Business Law - - - Real Estate Law
    • R28 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Government Policy
    • R52 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Land Use and Other Regulations

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