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Neighborhood price externalities of foreclosure rehabilitation: an examination of the Neighborhood Stabilization Program

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Listed:
  • Tammy Leonard

    () (University of Dallas)

  • Nikhil Jha

    (University of Melbourne)

  • Lei Zhang

    (North Dakota State University)

Abstract

The federally funded, HUD-administered Neighborhood Stabilization Program (NSP) was enacted in the wake of the financial recession to mitigate the underlying adverse neighborhood effects associated with foreclosed properties. We examined the neighborhood price impacts of NSP-funded foreclosure rehabilitation undertaken by Habitat for Humanity in Dallas County, Texas, using a difference-in-difference framework. Foreclosure rehabilitation projects in Dallas County produced an average 15% increase in neighborhood home prices that sold up to 30 months after the rehabilitated property sale and within 0.1 miles of the rehabilitated property. Foreclosure rehabilitation that involved significant exterior repairs was associated with the largest estimated effect sizes. Results suggest that NSP funding in Dallas County effectively targeted homes that had the potential to have the most severe neighborhood impacts and that rehabilitation was an effective means of reversing neighborhood price externalities associated with blighted foreclosed properties.

Suggested Citation

  • Tammy Leonard & Nikhil Jha & Lei Zhang, 2017. "Neighborhood price externalities of foreclosure rehabilitation: an examination of the Neighborhood Stabilization Program," Empirical Economics, Springer, vol. 52(3), pages 955-975, May.
  • Handle: RePEc:spr:empeco:v:52:y:2017:i:3:d:10.1007_s00181-016-1194-1
    DOI: 10.1007/s00181-016-1194-1
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Neighborhood Stabilization Program; Foreclosures; Externalities;
    All these keywords.

    JEL classification:

    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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