The impact of vacant, tax-delinquent, and foreclosed property on sales prices of neighboring homes
In this empirical analysis, we estimate the impact of vacancy, neglect associated with property-tax delinquency, and foreclosures on the value of neighboring homes using parcel-level observations. Numerous studies have estimated the impact of foreclosures on neighboring properties, and these papers theorize that the foreclosure impact works partially through creating vacant and neglected homes. To our knowledge, this is only the second attempt to estimate the impact of vacancy itself and the first to estimate the impact of tax-delinquent properties on neighboring home sales. We link vacancy observations from Postal Service data with property-tax delinquency and sales data from Cuyahoga County (the county encompassing Cleveland, Ohio). We estimate hedonic price models with corrections for spatial autocorrelation. We find that an additional property within 500 feet that is vacant, delinquent, or both reduces the home’s selling price by at least 1.3 percent. In low-poverty areas, tax-current foreclosed homes have large negative impacts of 4.6 percent. In high-poverty areas, we observe positive correlations of sale prices with tax-current foreclosures and negative correlations with tax-delinquent foreclosures. This may reflect selective foreclosing on better-maintained properties or better maintenance by tax-paying foreclosure auction winners. The marginal medium-poverty census tracts display the largest negative responses to vacancy and delinquency in nearby nonforeclosed homes.
|Date of creation:||2012|
|Contact details of provider:|| Postal: 1455 East 6th St., Cleveland OH 44114|
Web page: http://www.clevelandfed.org/
More information through EDIRC
|Order Information:|| Email: |
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Downes, Thomas A. & Zabel, Jeffrey E., 2002. "The impact of school characteristics on house prices: Chicago 1987-1991," Journal of Urban Economics, Elsevier, vol. 52(1), pages 1-25, July.
- Edward L. Glaeser & Joseph Gyourko, 2005.
"Urban Decline and Durable Housing,"
Journal of Political Economy,
University of Chicago Press, vol. 113(2), pages 345-375, April.
- Edward L. Glaeser & Joseph Gyourko, "undated". "Urban Decline and Durable Housing," Zell/Lurie Center Working Papers 382, Wharton School Samuel Zell and Robert Lurie Real Estate Center, University of Pennsylvania.
- Edward L. Glaeser & Joseph Gyourko, 2001. "Urban Decline and Durable Housing," NBER Working Papers 8598, National Bureau of Economic Research, Inc.
- Edward L. Glaeser & Joseph Gyourko, 2001. "Urban Decline and Durable Housing," Harvard Institute of Economic Research Working Papers 1931, Harvard - Institute of Economic Research.
- Robert A. Simons & Roberto G. Quercia & Ivan Maric, 1998. "The Value Impact of New Residential Construction and Neighborhood Disinvestment on Residential Sales Price," Journal of Real Estate Research, American Real Estate Society, vol. 15(2), pages 147-162.
- David M. Drukker & Hua Peng & Ingmar Prucha & Rafal Raciborski, 2013. "Creating and managing spatial-weighting matrices with the spmat command," Stata Journal, StataCorp LP, vol. 13(2), pages 242-286, June.
- Hartley, Daniel, 2014. "The effect of foreclosures on nearby housing prices: Supply or dis-amenity?," Regional Science and Urban Economics, Elsevier, vol. 49(C), pages 108-117.
- Daniel Hartley, 2011. "The effect of foreclosures on nearby housing prices: supply or disamenity?," Working Paper 1011, Federal Reserve Bank of Cleveland, revised 01 Jan 2014.
- John Y. Campbell & Stefano Giglio & Parag Pathak, 2011. "Forced Sales and House Prices," American Economic Review, American Economic Association, vol. 101(5), pages 2108-2131, August.
- John Y. Campbell & Stefano Giglio & Parag Pathak, 2009. "Forced Sales and House Prices," NBER Working Papers 14866, National Bureau of Economic Research, Inc.
- Giglio, Stefano & Pathak, Parag & Campbell, John Y., 2011. "Forced Sales and House Prices," Scholarly Articles 9887623, Harvard University Department of Economics.
- David M. Drukker & Ingmar Prucha & Rafal Raciborski, 2013. "Maximum likelihood and generalized spatial two-stage least-squares estimators for a spatial-autoregressive model with spatial-autoregressive disturbances," Stata Journal, StataCorp LP, vol. 13(2), pages 221-241, June.
- Stephan Whitaker, 2011. "Foreclosure-related vacancy rates," Economic Commentary, Federal Reserve Bank of Cleveland, issue July.
- White, Michelle J., 1986. "Property taxes and urban housing abandonment," Journal of Urban Economics, Elsevier, vol. 20(3), pages 312-330, November. Full references (including those not matched with items on IDEAS)