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Article
Property Value Impacts of Foreclosed Housing Acquisitions under Uncertainty
Socio-Economic Planning Sciences (2013)
  • Michael P Johnson, Jr., University of Massachusetts Boston
  • Senay Solak, University of Massachusetts - Amherst
  • Rachel B Drew, University of Massachusetts Boston
  • Jeffrey Keisler, University of Massachusetts Boston
Abstract
Community development corporations seek to stabilize neighborhoods affected by the recent foreclosure crisis through acquisition and redevelopment of distressed properties. One rationale for this work is the alleviation or avoidance of negative foreclosure impacts. We estimate the lost value to proximate properties associated with a single foreclosure through a Markov chain representing probabilistic transitions between foreclosure stages. We apply our model to a case study of foreclosure properties in Chelsea, MA. A rank ordering by estimated property value impacts indicates significant potential gains in social value as compared to current community development practice. We extend our basic model to address the effects of clusters of foreclosed units upon the value of proximate properties. This study provides additional support for the use of decision modeling in foreclosed housing acquisition and redevelopment. [NOTE: The publisher, Elsevier, has generously provided *free* access to the full-text of the article through January 31, 2014]
Keywords
  • foreclosed housing,
  • Markov chains,
  • cost-benefit analysis,
  • decision models
Publication Date
August 14, 2013
Citation Information
Michael P Johnson, Senay Solak, Rachel B Drew and Jeffrey Keisler. "Property Value Impacts of Foreclosed Housing Acquisitions under Uncertainty" Socio-Economic Planning Sciences Vol. 47 Iss. 4 (2013)
Available at: http://works.bepress.com/jeffrey_keisler/33/