The Neighborhood Effect of Concentrated Sheriff Sales on Adjacent Property Values
Abstract: As the nation advances through the stages of its foreclosure crisis, the evolution brings with it negative outcomes that impact the general real estate market. One outcome is the harm it causes on neighboring properties by reducing their property values. This negative externality causes further challenges when these falling property values ultimately realign the property tax distribution within a community. The extent to which sheriff’s sales do drive down adjacent property values is examined in this paper. By using a unique dataset on property sales, sheriff’s sales and foreclosures for the City of Milwaukee from 2005 to 2008, it is possible to regress the magnitude in price discount that exists given the geographic relationship a non-sheriff sale transaction holds with the sheriff sale property.