CAMBRIDGE, Mass., Aug. 4, 2010 — Foreclosure reduces the eventual sale price of a home by an average 27 percent, compared to the prices paid for similar properties nearby. Those nearby homes, in turn, could see their own prices depressed by 1 percent, if they happen to be within 250 feet of the foreclosed property.Those are the findings of economists at Harvard University and the Massachusetts Institute of Technology who scoured records pertaining to 1.83 million Massachusetts home sales from 1987 to 2009. Their research, forthcoming in the journal American Economic Review, is the most rigorous and comprehensive analysis to date of the losses sustained on foreclosed properties.
“The losses on foreclosed homes proved to be much larger than we had expected,” says lead author John Y. Campbell, the Morton L. and Carole S. Olshan Professor of Economics at Harvard. “If anything, these results may underestimate losses on foreclosed properties nationwide, since Massachusetts has not experienced a housing boom and bust as pronounced as that seen in many other parts of the country in recent years.”
To read the full, original article click on this link: Foreclosure reduces a home’s sale price by 27 percent on average — Science Blog
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