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Time and distance heterogeneity in the neighborhood spillover effects of foreclosed properties

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  • Lei Zhang
  • Tammy Leonard
  • James C. Murdoch

Abstract

In this paper, we examined heterogeneity in the simultaneous space-time impact of foreclosures on neighborhood property values. Foreclosures with longer foreclosure processes were associated with negative neighborhood price externalities from the time the foreclosing household still had ownership of the property and continued through the Real Estate Owned period. However, foreclosures with shorter foreclosure processes were associated with negative neighborhood price externalities that did not occur until at least three months after the foreclosure auction and were much smaller in magnitude. Results suggest a negative neighborhood effect of extending the length of the foreclosure process. Policy encouraging foreclosure “workout” efforts, which when unsuccessful extend the duration of the foreclosure process, should take these additional price externalities into account.

Suggested Citation

  • Lei Zhang & Tammy Leonard & James C. Murdoch, 2016. "Time and distance heterogeneity in the neighborhood spillover effects of foreclosed properties," Housing Studies, Taylor & Francis Journals, vol. 31(2), pages 133-148, March.
    • Handle: RePEc:taf:chosxx:v:31:y:2016:i:2:p:133-148
    DOI: 10.1080/02673037.2015.1070794
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    References listed on IDEAS

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    1. Harding, John P. & Rosenblatt, Eric & Yao, Vincent W., 2009. "The contagion effect of foreclosed properties," Journal of Urban Economics, Elsevier, vol. 66(3), pages 164-178, November.
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    3. Zhang, Lei & Leonard, Tammy, 2014. "Neighborhood impact of foreclosure: A quantile regression approach," Regional Science and Urban Economics, Elsevier, vol. 48(C), pages 133-143.
    4. Ambrose, Brent W & Capone, Charles A, Jr, 1996. "Cost-Benefit Analysis of Single-Family Foreclosure Alternatives," The Journal of Real Estate Finance and Economics, Springer, vol. 13(2), pages 105-120, September.
    5. Tammy Leonard & James Murdoch, 2009. "The neighborhood effects of foreclosure," Journal of Geographical Systems, Springer, vol. 11(4), pages 317-332, December.
    6. Daniel Immergluck & Geoff Smith, 2005. "The impact of single-family mortgage foreclosures on neighborhood crime," Proceedings 955, Federal Reserve Bank of Chicago.
    7. Schuetz, Jenny & Been, Vicki & Ellen, Ingrid Gould, 2008. "Neighborhood effects of concentrated mortgage foreclosures," Journal of Housing Economics, Elsevier, vol. 17(4), pages 306-319, December.
    8. Robert W. Wassmer, 2011. "The recent pervasive external effects of residential home foreclosure," Housing Policy Debate, Taylor & Francis Journals, vol. 21(2), pages 247-265, March.
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    Cited by:

    1. Paredes, Dusan & Skidmore, Mark, 2017. "The net benefit of demolishing dilapidated housing: The case of Detroit," Regional Science and Urban Economics, Elsevier, vol. 66(C), pages 16-27.
    2. Ming Li & Guojun Zhang & Yunliang Chen & Chunshan Zhou, 2019. "Evaluation of Residential Housing Prices on the Internet: Data Pitfalls," Complexity, Hindawi, vol. 2019, pages 1-15, February.
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    4. Kanayama, Yuki & Sadayuki, Taisuke, 2021. "What types of houses remain vacant? Evidence from a municipality in Tokyo, Japan," Journal of the Japanese and International Economies, Elsevier, vol. 62(C).
    5. Suzuki, Masatomo & Hino, Kimihiro & Muto, Sachio, 2022. "Negative externalities of long-term vacant homes: Evidence from Japan," Journal of Housing Economics, Elsevier, vol. 57(C).

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