Working Paper: NBER ID: w20080
Authors: Lynn M. Fisher; Lauren Lambiehanson; Paul S. Willen
Abstract: 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.
Keywords: foreclosure; externalities; condominiums; property values
JEL Codes: G12; R3
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Foreclosure in the same association and at the same address (Sasa) (R31) | Sale prices of condominiums (R31) |
| Foreclosure in the same association but at different addresses (Sada) (R31) | Sale prices of condominiums (R31) |
| Nearby foreclosures (R31) | Sale prices of condominiums (R31) |
| Negative equity (G32) | Foreclosure (G33) |
| Foreclosure (G33) | Sale prices of condominiums (R31) |