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The Impact of Foreclosures on Neighboring Housing Sales

Author

Listed:
  • William H. Rogers

    () (University of Missouri at Saint Louis)

  • William Winter

    () (University of Missouri at Saint Louis)

Abstract

Housing foreclosures likely have little neighborhood impacts if there are few foreclosures in a neighborhood and the foreclosed housing can resell quickly. However, when there are both many foreclosures and a sluggish housing market, foreclosures can lead to neighborhood destabilization, which should cause house prices to further fall. This paper measures the impact of foreclosures on housing sales using a unique dataset from St. Louis County, Missouri. Results show an expected decline the sales price of neighboring sales but the marginal impact of foreclosures seems to decline with an increase in the number of foreclosures. These results are robust to a variety of neighborhood control variables and spatial econometric techniques.

Suggested Citation

  • 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.
  • Handle: RePEc:jre:issued:v:31:n:4:2009:p:455-480
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    References listed on IDEAS

    as
    1. Dye, Richard F. & McMillen, Daniel P., 2007. "Teardowns and land values in the Chicago metropolitan area," Journal of Urban Economics, Elsevier, vol. 61(1), pages 45-63, January.
    2. Dennis R. Capozza & Dick Kazarian & Thomas A. Thomson, 1997. "Mortgage Default in Local Markets," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 25(4), pages 631-655.
    3. Chengri Ding & Robert Simons & Esmail Baku, 2000. "The Effect of Residential Investment on Nearby Property Values: Evidence from Cleveland, Ohio," Journal of Real Estate Research, American Real Estate Society, vol. 19(1), pages 23-48.
    4. Chang Moo-Lee & Dennis P. Culhane & Susan M. Wachter, "undated". "The Differential Impacts of Federally Assisted Housing Programs on Nearby Property Values: A Philadelphia Case Study," Zell/Lurie Center Working Papers 316, Wharton School Samuel Zell and Robert Lurie Real Estate Center, University of Pennsylvania.
    5. John Harding & Thomas J. Miceli & C.F. Sirmans, 2000. "Do Owners Take Better Care of Their Housing Than Renters?," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 28(4), pages 663-681.
    6. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 31(3), pages 129-137.
    7. Kelly D. Edmiston & Roger Zalneraitis, 2007. "Rising foreclosures in the United States: a perfect storm," Economic Review, Federal Reserve Bank of Kansas City, issue Q IV, pages 115-145.
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    More about this item

    JEL classification:

    • L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services

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