Working Paper

The effect of foreclosures on nearby housing prices: supply or disamenity?

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

Keywords: Foreclosure; Housing - Prices;

Bibliographic Information

Provider: Federal Reserve Bank of Cleveland

Part of Series: Working Papers (Old Series)

Publication Date: 2014-09-01

Number: 1011