Date of Award

8-2015

Document Type

Dissertation

Degree Name

Doctor of Philosophy (PhD)

Legacy Department

Economics

Committee Member

Dr. Paul W. Wilson, Committee Chair

Committee Member

Dr. Robert Tollison

Committee Member

Dr. F. Andrew Hanssen

Committee Member

Dr. Daniel Miller

Abstract

This first chapter uses neighborhood vacancies as a proxy for foreclosures and examines their impact on the value of surrounding neighborhood properties.

Often, the negative spillover of a foreclosure results from decay of the foreclosed property. Existence of a foreclosure within a neighborhood is proxied for by a vacant structure within 300 feet of the observed unit, resulting in a lower bound foreclosure externality.

Using the special neighbor sample of the American Housing Sample waves 1985, 1989 and 1993, small neighborhoods are observed and categorized into racially different neighborhoods (black, integrated or white neighborhood). Additionally, neighborhood-specific averages are constructed, such as mean income, crime and other characteristics. Estimating an hedonic housing price model, this study finds a decrease of about 15 percent for houses located within close proximity to a vacant structure. The effect is even bigger, approximately 18.5 percent, if a house is located near a vacant house in a black neighborhood vs. a white neighborhood.

These results suggest that a negative foreclosure effect exists, but that it differs in magnitude depending on the type of neighborhood as well as the general location of the neighborhood (i.e., city center, urban or rural).

The second chapter investigates the impact of a municipality’s financial condition on the housing values within a municipality. The data consist of 68,882 housing units located in 175 cities through 115 MSAs across 42 states. Information on the housing units’ and owner’s characteristics are drawn from the 2011 IPUMS and supplemented with MSA-level economic condition variables. The municipal financial information is drawn from the 2010 government census and consists of very detailed information of every local government’s finances. The empirical results provide evidence that the financial state of a municipality affects local housing values.

Included in

Economics Commons

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