After the Boom: Transitory and Legacy Effects of Foreclosures

Geoffrey K. Turnbull () and Arno J. van der Vlist ()
Additional contact information
Geoffrey K. Turnbull: University of Central Florida
Arno J. van der Vlist: University of Groningen

The Journal of Real Estate Finance and Economics, 2023, vol. 66, issue 2, No 7, 422-442

Abstract: Abstract Foreclosures lead to lower house prices in the short run. However, whether or not foreclosures also have long-run or legacy price effects has not been addressed extensively. Do neighborhoods with a greater number of past foreclosures exhibit long lasting house price discounts? This paper examines both transitory and legacy foreclosure price effects. We use almost 20 years of data from one of the epicenters of the foreclosure crisis: Orange County, Florida. We measure the number of recent and past foreclosures within narrowly defined neighborhoods for each house sold during 2016–2019:Q2. We compare transaction prices with different numbers of recent and past foreclosures, while controlling for differences in observed property characteristics and taking measures to reduce the impact of unobserved heterogeneity. We find that greater numbers of recent and past foreclosures are associated with lower house prices. We find strong transitory effects consistent with the existing literature. We also find significant but modest legacy effects on surrounding prices. These long-run discounts are about 0.41 percent to 0.79 percent in Orange County, Florida.

Keywords: Foreclosure crisis; House prices; Homeownership; Defaults; Tenure change; Local housing markets; Depreciation; Long-term foreclosure effects; R21; G10 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s11146-021-09882-w Abstract (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:jrefec:v:66:y:2023:i:2:d:10.1007_s11146-021-09882-w

Ordering information: This journal article can be ordered from
http://www.springer. ... ce/journal/11146/PS2

DOI: 10.1007/s11146-021-09882-w

Access Statistics for this article

The Journal of Real Estate Finance and Economics is currently edited by Steven R. Grenadier, James B. Kau and C.F. Sirmans

More articles in The Journal of Real Estate Finance and Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().