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The Impact of Foreclosures on Neighboring Housing Sales

  • William H. Rogers

    ()

    (University of Missouri at Saint Louis)

  • William Winter

    ()

    (University of Missouri at Saint Louis)

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.

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File URL: http://pages.jh.edu/jrer/papers/pdf/past/vol31n04/04.455_480.pdf
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Article provided by American Real Estate Society in its journal journal of Real Estate Research.

Volume (Year): 31 (2009)
Issue (Month): 4 ()
Pages: 455-480

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Handle: RePEc:jre:issued:v:31:n:4:2009:p:455-480
Contact details of provider: Postal: American Real Estate Society Clemson University School of Business & Behavioral Science Department of Finance 401 Sirrine Hall Clemson, SC 29634-1323
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Order Information: Postal: Diane Quarles American Real Estate Society Manager of Member Services Clemson University Box 341323 Clemson, SC 29634-1323
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  1. 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.
  2. Heckman, James J, 1979. "Sample Selection Bias as a Specification Error," Econometrica, Econometric Society, vol. 47(1), pages 153-61, January.
  3. 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.
  4. 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.
  5. Chang Moo-Lee & Dennis P. Culhane & Susan M. Wachter, . "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.
  6. 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.
  7. 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.
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