The effect of foreclosures on nearby housing prices: supply or disamenity?
A number of studies have measured the negative price effects of foreclosed residential properties on nearby property sales. However, only one study beside this one addresses the mechanism responsible for these effects. I measure separate effects for different types of foreclosed properties and use the estimates to decompose he effects of foreclosures on nearby home prices into two components. One component is due to the additional available housing supply and the other is due to a disamenity stemming from deferred maintenance or vacancy. I estimate that each extra unit of supply decreases prices within 0.05 miles by about 1.2% while the disamenity stemming from a foreclosed property is near zero.
|Date of creation:||2011|
|Date of revision:||01 Sep 2014|
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- Schuetz, Jenny & Been, Vicki & Ellen, Ingrid Gould, 2008. "Neighborhood effects of concentrated mortgage foreclosures," Journal of Housing Economics, Elsevier, vol. 17(4), pages 306-319, December.
- Leigh Linden & Jonah E. Rockoff, 2008. "Estimates of the Impact of Crime Risk on Property Values from Megan's Laws," American Economic Review, American Economic Association, vol. 98(3), pages 1103-27, June.
- Christopher L. Foote & Kristopher S. Gerardi & Paul S. Willen, 2008.
"Negative equity and foreclosure: theory and evidence,"
Public Policy Discussion Paper
08-3, Federal Reserve Bank of Boston.
- Foote, Christopher L. & Gerardi, Kristopher & Willen, Paul S., 2008. "Negative equity and foreclosure: Theory and evidence," Journal of Urban Economics, Elsevier, vol. 64(2), pages 234-245, September.
- Zhenguo Lin & Eric Rosenblatt & Vincent Yao, 2009. "Spillover Effects of Foreclosures on Neighborhood Property Values," The Journal of Real Estate Finance and Economics, Springer, vol. 38(4), pages 387-407, May.
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