Is something better than nothing? The impact of foreclosed and lease-purchase properties on residential property values

Youngme Seo and Michael Craw
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Youngme Seo: Ryerson University, Canada
Michael Craw: University of Arkansas at Little Rock, USA

Urban Studies, 2017, vol. 54, issue 16, 3681-3699

Abstract: Lease-purchase (L-P) programmes that rehabilitate foreclosed property for sale as affordable housing may provide a way to reduce foreclosure externalities on nearby property values. This paper investigates the feasibility of such a strategy by estimating the effects of foreclosed properties on nearby residential property values compared with those of an L-P programme operated by the Cleveland Housing Network, Cleveland, Ohio. The findings indicate that although both L-P and foreclosed properties have a negative effect on the value of nearby non-distressed homes, the negative effect of foreclosure is larger. At the same time, the scope of the foreclosure externality is greater in low- and moderate-income neighbourhoods, while the foreclosure externality is generally smaller in high income neighbourhoods. Such results imply that an L-P strategy is likely to be more effective in offsetting foreclosure externalities in low- and moderate-income neighbourhoods than in high income neighbourhoods.

Keywords: affordability; externality; foreclosure; hedonic model; low-income housing; random coefficient model; å ¯è´Ÿæ‹…æ€§ã€; 外部效应ã€; ç‰¹å¾ æ¨¡åž‹ã€; ä½Žæ”¶å…¥ä½ æˆ¿ã€; éš æœºç³»æ•°; 模型 (search for similar items in EconPapers)
Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:sae:urbstu:v:54:y:2017:i:16:p:3681-3699

DOI: 10.1177/0042098016681704

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