The Role of Proximity in Foreclosure Externalities: Evidence from Condominiums

36 Pages Posted: 28 Apr 2014 Last revised: 15 May 2022

See all articles by Lynn M. Fisher

Lynn M. Fisher

Mortgage Bankers Association

Lauren Lambie-Hanson

Federal Reserve Banks - Federal Reserve Bank of Philadelphia

Paul Willen

Federal Reserve Bank of Boston - Research Department; National Bureau of Economic Research (NBER)

Date Written: April 2014

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.

Suggested Citation

Fisher, Lynn M. and Lambie-Hanson, Lauren and Willen, Paul S., The Role of Proximity in Foreclosure Externalities: Evidence from Condominiums (April 2014). NBER Working Paper No. w20080, Available at SSRN: https://ssrn.com/abstract=2430074

Lynn M. Fisher (Contact Author)

Mortgage Bankers Association ( email )

1919 M Street NW
Washington, DC 20006-3404
United States

Lauren Lambie-Hanson

Federal Reserve Banks - Federal Reserve Bank of Philadelphia ( email )

Ten Independence Mall
Philadelphia, PA 19106-1574
United States

HOME PAGE: http://sites.google.com/laurenlambiehanson

Paul S. Willen

Federal Reserve Bank of Boston - Research Department ( email )

600 Atlantic Avenue
Boston, MA 02210
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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