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The effect of foreclosures on nearby housing prices: Supply or dis-amenity?

Daniel Hartley ()

Regional Science and Urban Economics, 2014, vol. 49, issue C, 108-117

Abstract: A number of studies have measured negative price effects of foreclosed residential properties on nearby property sales. However, only one other study addresses which mechanism is responsible for these effects. I measure separate effects for different types of foreclosed properties and use these estimates to decompose the effects of foreclosures on nearby home prices into a component that is due to additional available housing supply and a component that is due to dis-amenity 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 dis-amenity stemming from a foreclosed property is near zero.

Keywords: Foreclosure; Housing prices; Spillover (search for similar items in EconPapers)
Date: 2014
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DOI: 10.1016/j.regsciurbeco.2014.09.001

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