The contagion effect of foreclosed properties

摘要: Although previous research shows that prices of homes in neighborhoods with foreclosures are lower than those without foreclosures, it remains unclear whether the result a general decline neighborhood values or reduce nearby non-distressed sales through contagion effect. We provide robust evidence discount by simultaneously estimating local price trend and incremental impact foreclosures. At its peak, is roughly 1% per foreclosed property. The diminishes rapidly as distance to distressed property increases. grows from onset distress foreclosure sale then stabilizes. This pattern consistent effect being visual externality associated deferred maintenance neglect.