Do Property Rehabs Affect Neighboring Property Prices?

78 Pages Posted: 22 Mar 2021 Last revised: 20 Jun 2022

See all articles by Rohan Ganduri

Rohan Ganduri

Emory University

Gonzalo Maturana

Emory University - Goizueta Business School

Date Written: June 16, 2022

Abstract

We examine the effect of distressed property rehabilitations on neighboring property prices. We find that house prices around a rehabilitated property increase 2.3 percentage points following the rehabilitation. Moreover, the average rehabilitation generates aggregate welfare benefits 3.8 times greater than the amount invested. Rehabilitation externalities are stronger for longer rehabilitations and greater rehabilitation investments, and they are prevalent even in areas with high rates of foreclosures. The spillover effect of rehabilitations operates through their salience rather than through a reduction in the supply of distressed properties, through property appraisals, or through homebuyers with higher income moving into the neighborhood.

Keywords: property rehabilitation, house prices, externalities, foreclosures

JEL Classification: G21, R31

Suggested Citation

Ganduri, Rohan and Maturana, Gonzalo, Do Property Rehabs Affect Neighboring Property Prices? (June 16, 2022). Available at SSRN: https://ssrn.com/abstract=3794796 or http://dx.doi.org/10.2139/ssrn.3794796

Rohan Ganduri

Emory University ( email )

1300 Clifton Rd
Atlanta, GA 30322
United States

Gonzalo Maturana (Contact Author)

Emory University - Goizueta Business School ( email )

1300 Clifton Road
Atlanta, GA 30322-2722
United States

HOME PAGE: http://www.gonzalomaturana.com/

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