The Spatial and Time-Varying Contagion Effect of Foreclosures

We employ a Cox proportional hazard model to examine the effect of observed mortgage defaults within a neighborhood on homeowners' strategic default decisions, using multiple datasets from the Fresno-Clovis metropolitan area in California between 2007 and 2012. We show empirical evidence that t...

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Bibliographic Details
Published in:The Journal of real estate research 2020-01, Vol.42 (3), p.397-419
Main Authors: Fan, Qin, Hansz, J. Andrew
Format: Article
Language:English
Subjects:
Contagion
Default
Foreclosure
Homeowners
Housing
Housing prices
Influence
Literature reviews
Mortgages
Neighborhoods
Recessions
Relocation
Sales
Social interaction
Survival analysis
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Summary:We employ a Cox proportional hazard model to examine the effect of observed mortgage defaults within a neighborhood on homeowners' strategic default decisions, using multiple datasets from the Fresno-Clovis metropolitan area in California between 2007 and 2012. We show empirical evidence that the contagion effect of foreclosures declines rapidly with distance. The effect declines gradually over time, but it tends to be long-lasting. We include a racial diversity indicator in our study to capture social interactions. We find that the contagion effect attributable to social interactions is stronger in racially diverse neighborhoods.
ISSN:0896-5803
2691-1175
DOI:10.1080/08965803.2020.1829426