The role of proximity in foreclosure externalities: evidence from condominiums
We explore several different explanations of the effect of foreclosures on neighboring properties using a dataset of transactions in Boston, for which we have rich data on the size and location of condominium associations. There is compelling evidence against a supply effect—nearby condo foreclosures in different associations, and even those within the same association but at different physical addresses, have little impact on condo sale prices. However, condos transact at average discounts of 2.4 percent when a foreclosure shares the same physical address. We view the results as indicating that investment externalities drive foreclosures’ impacts on neighboring house prices.
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- David Genesove & Christopher J. Mayer, 1994.
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NBER Working Papers
4861, National Bureau of Economic Research, Inc.
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- Daniel Hartley, 2011. "The effect of foreclosures on nearby housing prices: supply or disamenity?," Working Paper 1011, Federal Reserve Bank of Cleveland, revised 01 Sep 2014.
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