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Prior research indicates a discount for foreclosures sold through the multiple listing service (MLS). The purpose of this paper is to examine whether the effect of foreclosure on house value is consistent over submarkets based on property size in the US single family home market. The paper also tests whether the spillover effect of a nearby foreclosure on the specific property value varies across submarkets.

The full sample is split into four quartiles based on the square feet of all observations. The hedonic pricing models are estimated across full sample and three subsamples, in order to examine the effect of foreclosure on selling price. The number of neighborhood foreclosures within each combination of radii and timing intervals is used to investigate the spillover effect of a nearby foreclosure on the specific property value.

It is found that the quartile with smaller houses have the largest discount associated with a foreclosure of approximately 24 percent, while the medium and larger houses have a discount of approximately 19 percent. The results are robust after including a proxy for property quality. Second, the spillover effects of nearby foreclosures are lowest for small properties and highest for large properties. Adding additional controls for housing quality reduces the observed spillover effect.

The findings on foreclosure discount are consistent with Pennington‐Cross's argument, that the foreclosures in the smaller properties have lower appreciation than the larger ones. The paper's results about spillover effects also support the previous research, implying a greater stigma for foreclosed houses in neighborhoods with larger, more expensive houses.

The paper provides potential explanation for foreclosure discount and spillover effects of nearby foreclosure in the US single family residential markets.

This paper aims to investigate the foreclosure discount for the German residential market in the years from 2008 to 2011.

The determinants of the foreclosure discount are estimated in a hedonic price model. The analysis is based on a unique data set compiled from three different data sources with 135,000 foreclosed properties.

The findings reveal that residential units in foreclosures are sold at a discount of 19 per cent compared to residential units with similar characteristics that are not in foreclosure. Second, a regional pattern can be observed, with discounts being negatively correlated to unemployment risk and liquidity. Third, the model with interaction terms shows that foreclosure discounts are linked to specific property characteristics. Fourth, these object-related risks are typically smaller than regional risks or locational risks.

Given the highly fragmented system of Gutachterausschüsse in Germany, who are responsible for collecting transaction data, we were not able to directly analyze transaction data, but only a proxy for this price information.

The results can be important for financial institutions that are trying to assess the risk of lending for a specific object in a specific location. So far, banks primarily try to assess the default risk of private lenders by analyzing the debtor’s financial position and the quality of the property. The analysis provides insights into which characteristics of a property might imply additional risk, and in which region these risks are biggest.

To the best of the authors’ knowledge, this is the first attempt to analyze the foreclosure discount for the German housing market.

Mortgage defaults within a neighborhood may tip the scales whereby a vicious cycle of disinvestment and deterioration in the surrounding neighborhoods begins. This paper aims to examine the impact that mortgage default has on properties in the same ZIP code and neighboring ZIP codes.

Hypothesizing that neighborhoods' susceptibility to cascade failure can be measured by the rate of acceleration of mortgage failures within the neighborhood, the paper introduces a model to investigate whether or not this vicious cycle is such that mortgage failures multiply, and there is a tipping point at which the downward cycle accelerate.

The paper applies the model to data for the Los Angeles metropolitan area for the period 2006-2007 and finds evidence of a tipping point.

The paper is limited by the availability of data with respect to both time and space.

A failure tipping point will provide a signal that mortgage crisis is pending. Reacting to this signal could allow financial markets to avert such crises in the future.

Some neighborhoods may resist being labelled as one with significant mortgage failure activity. This resistance may cause a negative reaction to these results and implementation for the findings.

To-date, no evidence of a mortgage failure tipping point has been discovered in the literature.

The purpose of this study is to demonstrate that the conventional mortgage system is not appropriate for household finance because it encourages equity extraction and excessive leverage during housing boom and leads to negative equity during a housing bust, a situation that translates into mortgage defaults and foreclosures. Home financing could alternatively be structured as a diminishing partnership preventing the homeowner from ever having negative equity.

Using Johansen’s cointegration test, the authors provide evidence of a long-run relationship between the delinquency rates, volume of refinancing and the change in house price index (HPI) during the 1994–2019 period. To unravel the short run dynamics between these variables, the authors used a Granger causality test that concludes that the volume of refinancing and the change in the HPI Granger cause default rates.

The authors provide evidence that under the current conventional mortgage system, excessive refinancing opportunities and equity extraction that are the main factors determining delinquency rates leading to a non-sustainable homeownership.

If mortgages were such that they do not incentivize defaults and foreclosures during a housing downturn, the recovery of the housing market always leads to capital gains. Therefore, disincentivizing refinancing and equity extraction would lead to a more sustainable homeownership.

Households would be encouraged to pursue sustainable homeownership through a partnership-based model with long-term wealth accumulation for themselves and their heirs rather than short-term home ownership through the conventional mortgage system, leading to negative equity and defaults when the housing market slumps.

Policymakers ought to rethink the mortgage design by promoting partnership-based finance to protect the equity a household accumulates over a lifetime and thereby enhancing stable and sustainable homeownership.

This paper aims to introduce mathematical models to capture the spreading of epidemics to explain the expansion of mortgage default events in the USA.

The authors use the state of infectiousness and death to represent the subsequent steps of payment elinquency and default, respectively. As the local economic structure influences regional unemployment, which is a strong driver of mortgage default, the authors model interdependencies of regional mortgage default rates through employment conditions and vicinity.

Based on a large sample between 2000 and 2014 of loan-level data, the estimation of key parameters of the model is proposed. The model’s forecast accuracy shows an above-average performance compared to well-known approaches such as linear regression or logit models.

The key findings may be useful in understanding the dynamics of mortgage defaults and its spatial spreading.

This study aims to explore the spatial externalities of apartment vacancy rates on housing rent by considering multiple vacancy durations.

This research uses smart meter data to measure unobservable vacant houses. This study made a significant contribution by applying building-level smart meter data to housing market analysis. It examined whether vacancy duration significantly affected apartment rent and whether the relationship between apartment rent and vacancy rate differed depending on the level of housing rent.

The primary finding indicates that there is a significant negative correlation between apartment rent and vacancy duration. Considering the spatial externalities of apartment vacancy rates, the apartment vacancy rates of surrounding buildings did not show any statistical significance. Moreover, quantile regression results indicate that although the bottom 10% of apartment rent levels showed a negative correlation with all vacancy durations, the top 10% showed no statistical significance related to vacancies.

This study measures the extent of spatial externalities that can differentiate taxation based on housing vacancies.

The findings indicate that landlords have asymmetric information about their buildings compared with the surrounding buildings, and the extent to which price adjusts for long-term vacancies differs depending on the level of apartment rent.

Almost every city in America has felt the effects of the current home foreclosure crisis. It has been reported that 94 of the top 100 metropolitan areas reported an increase in home foreclosures in 2008. Yet, some of the varying costs of this ongoing crisis are relatively unknown. This chapter offers a theoretical examination of the influence an increase in vacant homes due to home foreclosure may have on criminal behavior. It does so by first discussing the breadth of the home foreclosure crisis. Next, the chapter covers strain, social disorganization, and disorder theories and addresses their explanations of the potential criminal consequences of vacant homes due to home foreclosure. Then, the chapter discusses if these classic theories actually apply to this crisis. This is done by introducing the concept of suburban insulation. Finally, the conclusion links the key concepts and ideas from the aforementioned theories and how they best relate to this current phenomenon.

Purpose – This chapter presents information about the residential patterns and reported segregation or discrimination of Latinos in the greater Washington, DC, metropolitan region. The author provides definitions, associated concepts, causes and consequences, selected data findings, and a historical and demographic overview of the Latino population in the region.

Methodology/approach – A literature review of scholarly articles from the social sciences, policy reports, census data, and other public use data, and other publications.

Findings – Data from the Harvard University DiversityData Project (2012) reveals evidence of Hispanic residential segregation throughout the Washington, DC, metropolitan region. In addition, Hispanic children are more racially isolated, have less exposure to Whites, and are more densely populated and residentially clustered in the region.

Research limitations/implications (if applicable) – This chapter does not present new research or original evidence about residential patterns, residential segregation, or housing discrimination among Latinos in the greater Washington, DC, metropolitan region.

Practical/social implications – The prevalence of residential discrimination, segregation and its impact on the restricted residential patterns, social mobility, and isolation of Latinos is a regional and national social problem. The greater Washington, DC, region will continue to receive Latino newcomers who will disperse into areas where they have not resided before. The ways in which they and their families are received and treated by their neighbors can provide context into race relations in a so-called post-racial America.

Originality/value of chapter – The residential patterns of Latinos in the greater Washington, DC, metropolitan region and evidence of the segregation and discrimination they have encountered caution us to examine how segregation perpetuates disadvantage, inequality, racialization, social distance, and other kinds of discrimination. Whether residential segregation is voluntary or involuntary, its remnants are a visceral force that cannot be ignored.

The purpose of this paper is to analyze the differences between the actual mortgage prompt and late payments and their respective expected measures from 2004 to 2010 to spot early symptoms of housing crisis.

This paper explores these discrepancies across the entire US market and along various delinquency lengths of 30, 60 and 90 days. This paper constructs a Bayesian forecasting model that relies on prior distributional properties of diverse time horizons.

Abnormal mortgage delinquency rates are identified in real time and can be served as early symptoms for housing crisis.

The statistical scheme proposed in this paper can function as a valuable predictive tool for lending institutions, bank audit companies, regulatory bodies and real estate professional investors who examine changes in economic settings and trends in short sale leads.

The abnormal mortgage delinquencies can serve as indicators of changes in economic fundamentals and early signs of a mounting housing crisis.

This paper presents a unique statistical technique in the context of mortgage delinquencies.

The purpose of this paper is to evaluate the parcel-level impacts of the zoning change.

Using hedonic regression and propensity score matching econometric techniques, this paper analyses single-family housing prices within Fulton County Georgia. This paper combines data on the parcel-level zoning changes with nearby housing sales transactions to study the potential externality effects because of rezoning induced by private parties.

The paper finds evidence of heterogeneous rezoning effects, depending upon the type of rezoning conducted. At a distance within 0.75 miles, housing prices appreciate by 8.31% when nearby privately initiated rezoning maintains the residential character of a neighbourhood. However, housing prices decline by 21.26% when residential housing zones are converted to non-residential housing zones. The negative influences of rezoning residential use to non-residential uses decline as distance increases.

The analysis provides quantitative information on the impact of rezoning on residential property prices. Planning officials and developers can use these results to assuage homeowner fears of potential negative housing price effects associated with rezoning.