American Economic Review Vol. 101 No. 5 2011

Forced Sales and House Prices

John Y. Campbell¹; Stefano Giglio²; Parag A. Pathak³

¹ Department of Economics, Littauer Center, Harvard University, Cambridge, MA 02138, and NBER. · ² Department of Finance, University of Chicago Booth School of Business, 5807 South Woodlawn Ave., Chicago IL 60637, and visiting scholar, Federal Reserve Bank of Boston. · ³ Department of Economics, MIT, 50 Memorial Drive, E52, Cambridge, MA 02142.

Abstract

This paper uses data on all house transactions in Massachusetts over the last 20 years to show that houses sold after foreclosure, or close in time to the death or bankruptcy of a seller, are sold at lower prices than other houses. Foreclosure discounts are on average at 27 percent of the value of a house. Moreover, foreclosures that take place within small local geographies of a house lower the price at which it is sold. Our preferred estimate is that a foreclosure at a distance of 0.05 miles lowers the price of a house by about 1 percent. JEL: D14, R31

DOI

10.1257/aer.101.5.2108

Volume

101

Issue

5

Pages

2108-2131

Language

en

Sources

bibtex:phds-export.bib openalex crossref

Cite

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