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Foreclosures and house prices


  • Michele Loberto

    (Bank of Italy)


This paper studies the impact of foreclosures on house prices in Italy using a large dataset of listings. We estimate that the foreclosure discount is considerable, and this would suggest a high degree of market segmentation and limited spillovers from foreclosures to the market for non-foreclosed homes. However, we find that the entry of foreclosures into the market increases the propensity of home sellers to adjust their list price. Moreover, foreclosure listings have a significant and negative impact on the prices of non-foreclosed homes nearby. Our evidence is quantitatively consistent with the recent literature on the impact of foreclosures on the US housing market.

Suggested Citation

  • Michele Loberto, 2021. "Foreclosures and house prices," Temi di discussione (Economic working papers) 1325, Bank of Italy, Economic Research and International Relations Area.
  • Handle: RePEc:bdi:wptemi:td_1325_21

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    References listed on IDEAS

    1. Michele Loberto & Andrea Luciani & Marco Pangallo, 2020. "What do online listings tell us about the housing market?," Papers 2004.02706,
    2. Dan Immergluck & Geoff Smith, 2006. "The external costs of foreclosure: The impact of single‐family mortgage foreclosures on property values," Housing Policy Debate, Taylor & Francis Journals, vol. 17(1), pages 57-79.
    3. Charles Towe & Chad Lawley, 2013. "The Contagion Effect of Neighboring Foreclosures," American Economic Journal: Economic Policy, American Economic Association, vol. 5(2), pages 313-335, May.
    4. Federica Ciocchetta & Wanda Cornacchia & Roberto Felici & Michele Loberto, 2016. "Assessing financial stability risks from the real estate market in Italy," Questioni di Economia e Finanza (Occasional Papers) 323, Bank of Italy, Economic Research and International Relations Area.
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    More about this item


    house prices; foreclosures; neighborhood effects;
    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

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