No abstract

Using a novel dataset which merges real estate listings with real estate transactions in San Francisco from 2007-2009, we present new evidence that foreclosures causally depress nearby home prices. We show that this decrease occurs only after the foreclosed home is listed for sale, which suggests that the effect is due to the additional housing supply created by foreclosure rather than from neglect of the foreclosed property. Consistent with a framework where a foreclosed home simply increases supply, we find that new listings of foreclosed homes and nonforeclosed homes each lower sales prices of homes within 0.1 miles of the listing by 1 percent. * We thank Leah Brooks, Karen Pence, Hui Shan, and seminar participants for helpful suggestions. We thank Lindsay Relihan for excellent research assistance, and Nate Howard, a real estate agent at Louise Beck Properties, who provided valuable insights into the residential real estate market and MLS data. The analysis and conclusions set forth are those of the authors and do not indicate concurrence by other members of the research staff or the Board of Governors.† Federal Reserve Board of Governors, Washington DC.

Using a novel dataset which merges real estate listings with real estate transactions in San Francisco from 2007-2009, we present new evidence that foreclosures causally depress nearby home prices. We show that this decrease occurs only after the foreclosed home is listed for sale, which suggests that the effect is due to the additional housing supply created by foreclosure rather than from neglect of the foreclosed property. Consistent with a framework where a foreclosed home simply * We thank Leah Brooks, Karen Pence, Hui Shan, and seminar participants for helpful suggestions. We thank Lindsay Relihan for excellent research assistance, and Nate Howard, a real estate agent at Louise Beck Properties, who provided valuable insights into the residential real estate market and MLS data. The analysis and conclusions set forth are those of the authors and do not indicate concurrence by other members of the research staff or the Board of Governors.