FED PAPER | Estimates of the Size and Source of Price Declines Due to Nearby Foreclosures

Vacant Homes

Estimates of the Size and Source of Price Declines Due to Nearby Foreclosures

Abstract

Using a novel dataset which merges real estate listings with realestate transactions in San Francisco from 2007-2009, we present newevidence that foreclosures causally depress nearby home prices. Weshow that this decrease occurs only after the foreclosed home is listedfor sale, which suggests that the effect is due to the additional housingsupply created by foreclosure rather than from neglect of the foreclosedproperty. Consistent with a framework where a foreclosed home simplyincreases supply, we find that new listings of foreclosed homes and non-foreclosed homes each lower sales prices of homes within 0.1 miles of the listing by 1 percent.

~

4closureFraud.org

~

Estimates of the Size and Source of Price Declines Due to Nearby Foreclosures

Leave a Reply