American Economic Review: Vol. 101 No. 5 (August 2011)


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Forced Sales and House Prices

Article Citation

Campbell, John Y., Stefano Giglio, and Parag Pathak. 2011. "Forced Sales and House Prices." American Economic Review, 101(5): 2108-31.

DOI: 10.1257/aer.101.5.2108


This paper uses data on all house transactions in Massachusetts over the last 20 years to show that houses sold after foreclosure, or close in time to the death or bankruptcy of a seller, are sold at lower prices than other houses. Foreclosure discounts are on average at 27 percent of the value of a house. Moreover, foreclosures that take place within small local geographies of a house lower the price at which it is sold. Our preferred estimate is that a foreclosure at a distance of 0.05 miles lowers the price of a house by about 1 percent.

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Campbell, John Y. (Harvard U)
Giglio, Stefano (U Chicago)
Pathak, Parag (MIT)

JEL Classifications

D14: Personal Finance
R31: Housing Supply and Markets

American Economic Review

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