Opioid Crisis and Real Estate Prices

Custódio, Cláudia, Dragana Cvijanovic and Moritz WIedemann
Authors registered in the RePEc Author Service: Claudia Custodio

No 16272, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: This paper estimates the impact of opioid abuse on real estate prices. We exploit the variation in opioid prescriptions induced by the staggered passage of state laws intending to limit the abuse of opioids. We document a long-term negative relationship between opioid prescriptions and residential real estate prices. For a one standard deviation change in prescriptions we find a 1.36 percentage points change in home values over the following 5 years. We also estimate a positive increase in home prices of 0.54 and 0.91 percentage points respectively in the first and second years following the passage of these laws. One im- portant factor driving this relationship are changes in mortgage delinquency rates. Overall, our results are consistent with opioid abuse having significant long lasting negative economic effects that are mitigated if opioid supply is limited.

Keywords: Opioid; Prescription opioids; Real estate prices (search for similar items in EconPapers)
Date: 2021-06
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