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Foreclosure Spillovers within broad Neighborhoods

Author

Listed:
  • Weiran Huang
  • Ashlyn Nelson
  • Stephen Ross

Abstract

Most evidence on foreclosure spillovers identifies localized effects that are modest in magnitude, but these effects could multiply to larger aggregate effects across broad neighborhoods. We test this proposition developing a proxy for the fraction of mortgages in negative equity during the foreclosure crisis and estimating a difference-in-differences model for foreclosure. This proxy exploits the timing of foreclosures in each tract, and this within tract variation is not predicted by mortgage attributes, housing attributes or sales prices. Our estimates suggest that 61 percent of the increase in across tract dispersion in foreclosure filings can be explained by these spillover effects.

Suggested Citation

  • Weiran Huang & Ashlyn Nelson & Stephen Ross, 2021. "Foreclosure Spillovers within broad Neighborhoods," NBER Working Papers 28851, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:28851
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    Cited by:

    1. Chen, Denghui & Kiefer, Hua & Liu, Xiaodong, 2022. "Estimation of discrete choice network models with missing outcome data," Regional Science and Urban Economics, Elsevier, vol. 97(C).
    2. Stephen L. Ross & Yuan Wang, 2022. "Mortgage Lenders and the Geographic Concentration of Foreclosures," Working Papers 2022-001, Human Capital and Economic Opportunity Working Group.
    3. Chernick, Howard & Reschovsky, Andrew & Newman, Sandra, 2021. "The effect of the housing crisis on the finances of central cities," Journal of Housing Economics, Elsevier, vol. 54(C).

    More about this item

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population
    • R32 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Other Spatial Production and Pricing Analysis

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