The neighborhood effects of foreclosure
First Online: 08 May 2009 Received: 13 March 2008 Accepted: 17 April 2009 DOI:
Cite this article as: Leonard, T. & Murdoch, J.C. J Geogr Syst (2009) 11: 317. doi:10.1007/s10109-009-0088-6 Abstract
Neighborhood quality is an important attribute of housing yet its value is rarely known to researchers. We argue that changes in nearby foreclosures reveal changes in neighborhood quality. Thus estimates of the hedonic price of nearby foreclosures provide a glimpse of values that people hold for local neighborhood quality. The empirical models include controls for both spatial dependence in housing prices and in the errors. The estimates indicate that nearby foreclosures produce externalities that are capitalized into home prices—an additional foreclosure within 250 feet of a sale negatively impacts selling price by approximately $1,666,
ceteris paribus. Keywords Hedonic model Foreclosures Spatial dependence Local public goods Property values References
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