Estimating the Effect of Crime Risk on Property Values and Time on Market: Evidence from Megan’s Law in Virginia

40 Pages Posted: 30 May 2010 Last revised: 24 Sep 2012

See all articles by Raymond T. Brastow

Raymond T. Brastow

Federal Reserve Banks - Quantitative Supervision & Research

Bennie D. Waller

Longwood University

Scott Wentland

Bureau of Economic Analysis (BEA)

Date Written: May 29, 2010

Abstract

We examine neighborhood externalities that arise from the perceived risk associated with the proximity of a registered sex offender’s residence. We find large negative externality effects on a property’s price and liquidity, employing empirical techniques that include a fixed-effects OLS model, a correction for sample selection bias and censoring using a Heckman treatment, and a 3SLS model to account for simultaneity bias in the joint determination of a home’s sale price and liquidity. Additionally, we find amplified effects for homes with more bedrooms (a proxy for children) and if the nearby offender is designated by the state as “violent.”

Keywords: Property values, Time on market, Hedonic, Megan's Law, Home Price, Real Estate Externalities

JEL Classification: H80, K42, R23, R31

Suggested Citation

Brastow, Raymond T. and Waller, Bennie D. and Wentland, Scott, Estimating the Effect of Crime Risk on Property Values and Time on Market: Evidence from Megan’s Law in Virginia (May 29, 2010). Available at SSRN: https://ssrn.com/abstract=1617711 or http://dx.doi.org/10.2139/ssrn.1617711

Raymond T. Brastow

Federal Reserve Banks - Quantitative Supervision & Research ( email )

United States

Bennie D. Waller (Contact Author)

Longwood University ( email )

201 High Street
Farmville, VA 23909
United States
434-395-2046 (Phone)
434-395-2203 (Fax)

HOME PAGE: http://www.benniewaller.com

Scott Wentland

Bureau of Economic Analysis (BEA) ( email )

1441 L Street NW
Washington, DC 20910
United States

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