Short-Term Own-Price and Spillover Effects of Distressed Residential Properties: The Case of a Housing Crash

Nasser Daneshvary, Terrence M. Clauretie () and Ahmad Kader ()
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Terrence M. Clauretie: University of Nevada Las Vegas
Ahmad Kader: University of Nevada Las Vegas

Journal of Real Estate Research, 2011, vol. 33, issue 2, 179-208

Abstract: Most previous empirical studies of price spillover effects of foreclosure on no-default transactions are based on data from a stable housing-market period. In this paper, we use 2008 transactions from a housing market with a relatively large number of REO/foreclosures. Our overall results indicate that: (1) REO and in the process of foreclosure have the same spillover effects, but short sales do not produce a spillover effect; (2) models that control for the overall market trend produce smaller spillover effects; (3) the marginal effect of an REO is 1%; (4) the cumulative effects of multiple distressed neighbors can be as severe as 8%; and (5) excluding transactions of homes that were sold under distress from the sample increases the estimated marginal spillover effect to about 2% and the cumulative effects to about 21%.

JEL-codes: L85 (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (14)

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