Property value impacts of foreclosed housing acquisitions under uncertainty
Community development corporations seek to stabilize neighborhoods affected by the recent foreclosure crisis through acquisition and redevelopment of distressed properties. One rationale for this work is the alleviation or avoidance of negative foreclosure impacts. We estimate the lost value to proximate properties associated with a single foreclosure through a Markov chain representing probabilistic transitions between foreclosure stages. We apply our model to a case study of foreclosure properties in Chelsea, MA. A rank ordering by estimated property value impacts indicates significant potential gains in social value as compared to current community development practice. We extend our basic model to address the effects of clusters of foreclosed units upon the value of proximate properties. This study provides additional support for the use of decision modeling in foreclosed housing acquisition and redevelopment.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Guasch, J. Luis & Marshall, Robert C., 1985. "An analysis of vacancy patterns in the rental housing market," Journal of Urban Economics, Elsevier, vol. 17(2), pages 208-229, March.
- Robert W. Wassmer, 2011. "The recent pervasive external effects of residential home foreclosure," Housing Policy Debate, Taylor & Francis Journals, vol. 21(2), pages 247-265, March.
- Stephan Whitaker & Thomas J. Fitzpatrick, 2012. "The impact of vacant, tax-delinquent, and foreclosed property on sales prices of neighboring homes," Working Paper 1123, Federal Reserve Bank of Cleveland.
- Tammy Leonard & James Murdoch, 2009. "The neighborhood effects of foreclosure," Journal of Geographical Systems, Springer, vol. 11(4), pages 317-332, December.
- W. Scott Frame, 2010. "Estimating the effect of mortgage foreclosures on nearby property values: a critical review of the literature," Economic Review, Federal Reserve Bank of Atlanta.
- Foote, Christopher L. & Gerardi, Kristopher & Willen, Paul S., 2008.
"Negative equity and foreclosure: Theory and evidence,"
Journal of Urban Economics,
Elsevier, vol. 64(2), pages 234-245, September.
- Christopher L. Foote & Kristopher S. Gerardi & Paul S. Willen, 2008. "Negative equity and foreclosure: theory and evidence," Public Policy Discussion Paper 08-3, Federal Reserve Bank of Boston.
- Giglio, Stefano & Pathak, Parag & Campbell, John Y., 2011.
"Forced Sales and House Prices,"
9887623, Harvard University Department of Economics.
- Kristopher Gerardi & Eric Rosenblatt & Paul S. Willen & Vincent Yao, 2012.
"Foreclosure externalities: Some new evidence,"
NBER Working Papers
18353, National Bureau of Economic Research, Inc.
- Kristopher S. Gerardi & Eric Rosenblatt & Paul S. Willen & Vincent W. Yao, 2012. "Foreclosure externalities: some new evidence," Public Policy Discussion Paper 12-5, Federal Reserve Bank of Boston.
- Kristopher S. Gerardi & Eric Rosenblatt & Paul S. Willen & Vincent W. Yao, 2012. "Foreclosure externalities: Some new evidence," FRB Atlanta Working Paper 2012-11, Federal Reserve Bank of Atlanta.
- Mingche M. Li & H. James Brown, 1980. "Micro-Neighborhood Externalities and Hedonic Housing Prices," Land Economics, University of Wisconsin Press, vol. 56(2), pages 125-141.
- Ingrid Gould Ellen & Ioan Voicu, 2006. "Nonprofit housing and neighborhood spillovers," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 25(1), pages 31-52.
- Paul Zipkin, 1993. "Mortgages and Markov Chains: A Simplified Evaluation Model," Management Science, INFORMS, vol. 39(6), pages 683-691, June.
- Schuetz, Jenny & Been, Vicki & Ellen, Ingrid Gould, 2008. "Neighborhood effects of concentrated mortgage foreclosures," Journal of Housing Economics, Elsevier, vol. 17(4), pages 306-319, December.
- Kelly D. Edmiston, 2012. "Nonprofit housing investment and local area home values," Economic Review, Federal Reserve Bank of Kansas City, issue Q I, pages 67-96.
- Zhenguo Lin & Eric Rosenblatt & Vincent Yao, 2009. "Spillover Effects of Foreclosures on Neighborhood Property Values," The Journal of Real Estate Finance and Economics, Springer, vol. 38(4), pages 387-407, May.
- Kai-yan Lee, 2008. "Foreclosure's price-depressing spillover effects on local properties: a literature review," Public and Community Affairs Discussion Papers 2008-1, Federal Reserve Bank of Boston.
- Harding, John P. & Rosenblatt, Eric & Yao, Vincent W., 2009. "The contagion effect of foreclosed properties," Journal of Urban Economics, Elsevier, vol. 66(3), pages 164-178, November.
- Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
- William H. Rogers & William Winter, 2009. "The Impact of Foreclosures on Neighboring Housing Sales," Journal of Real Estate Research, American Real Estate Society, vol. 31(4), pages 455-480.
- Stephen Malpezzi, . "Hedonic Pricing Models: A Selective and Applied Review," Wisconsin-Madison CULER working papers 02-05, University of Wisconsin Center for Urban Land Economic Research.
When requesting a correction, please mention this item's handle: RePEc:eee:soceps:v:47:y:2013:i:4:p:292-308. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.