NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Role of Proximity in Foreclosure Externalities: Evidence from Condominiums

Paul S. Willen, Lauren Lambie-Hanson, Lynn M. Fisher

NBER Working Paper No. 20080
Issued in April 2014
NBER Program(s):   EFG

We measure the effect of foreclosures on the sale prices of nearby properties using a dataset of condominiums in Boston. A foreclosure in the same association and at the same address depresses the sale price by 2.5 percent, but properties in the same association but located at a different address have an effect that is tightly estimated at zero. Since properties in the same association are close substitutes, we argue that the evidence points against the pecuniary externality of property coming on the market and toward a physical externality as the source of measured foreclosure externalities.

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Document Object Identifier (DOI): 10.3386/w20080

Published: Lynn M. Fisher & Lauren Lambie-Hanson & Paul Willen, 2015. "The Role of Proximity in Foreclosure Externalities: Evidence from Condominiums," American Economic Journal: Economic Policy, vol 7(1), pages 119-140.

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