Estimating the Effect of Crime Risk on Property Values and Time on Market: Evidence from Megan's Law in Virginia
- 30 August 2013
- journal article
- Published by Wiley in Real Estate Economics
- Vol. 42 (1) , 223-251
Abstract
We examine neighborhood externalities that arise from the perceived risk associated with the proximity of a registered sex offender's residence. We find large negative externality effects on a property's price and liquidity, employing empirical techniques that include a fixed‐effects OLS model, a correction for sample selection bias and censoring using a Heckman treatment, and a three‐stage least‐squares model to account for simultaneity bias in the joint determination of a home's sale price and liquidity. Additionally, we find amplified effects for homes with more bedrooms (a proxy for children) and if the nearby offender is designated by the state as “violent.”Keywords
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