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NBER Working Papers and Publications
|September 2012||Foreclosure externalities: Some new evidence|
with Kristopher Gerardi, Paul S. Willen, Vincent Yao: w18353
In a recent set of influential papers, researchers have argued that residential mortgage foreclosures reduce the sale prices of nearby properties. We revisit this issue using a more robust identification strategy combined with new data that contain information on the location of properties secured by seriously delinquent mortgages and information on the condition of foreclosed properties. We find that while properties in virtually all stages of distress have statistically significant, negative effects on nearby home values, the magnitudes are economically small, peak before the distressed properties complete the foreclosure process, and go to zero about a year after the bank sells the property to a new homeowner. The estimates are very sensitive to the condition of the distressed property,...
Published: Journal of Urban Economics Volume 87, May 2015, Pages 42–56 Cover image Foreclosure externalities: New evidence ☆ Kristopher Gerardia, , , Eric Rosenblattb, , Paul S. Willenc, , Vincent Yaob,