The impact of foreclosures on the housing market

Daniel Hartley

Economic Commentary, 2010, issue Oct

Abstract: A record number of mortgage loans are either in default or in danger of being defaulted upon. Many of the properties that back these loans will end up going through the foreclosure process. A growing body of research shows that foreclosed homes sell at a discount and that foreclosures have a negative impact on the value of other homes that are nearby. The effect on nearby property values happens for two different reasons, but my recent work suggests that one or the other predominates depending on certain characteristics of the neighborhood where the foreclosures are occurring. This finding implies that different approaches might be required to mitigate the negative effects of foreclosures in different neighborhoods.

Keywords: Foreclosure; Housing - Finance; Mortgage loans (search for similar items in EconPapers)
Date: 2010
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