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This paper investigates the impact of property tax delinquency on the sales price of nearby residential properties, an effect that we call the "delinquency discount". We use a sample of 34,500 home sales and the population of delinquent properties for Chicago, Illinois during the period 2010 to 2013. We focus on the delinquency discount for properties within the same census block. We also examine the effect of delinquency duration on neighboring properties, as this measures the level of their financial distress. We estimate the magnitude of the delinquency discount using several alternative estimation methods, in each case controlling for local foreclosure activity. Our preferred method is a matching estimator, as it works to eliminate the potential for omitted variable bias that is common in this type of estimation. We find large, negative, and statistically meaningful effects of delinquent properties for which the local government has placed a tax lien and has put the lien up for sale to private investors. For properties with a tax lien that are not successfully sold, we estimate a negative spillover of 5.1 percent ($12,872) on surrounding properties. Properties with a tax lien that are sold to private investors have a smaller, but still negative impact on surrounding property values of 2.5 percent ($6310).

While home foreclosure can lead to mental and physical health declines in persons experiencing the foreclosure, whether neighborhood foreclosures can affect the health of other residents is debatable. Using a racially/ethnically diverse sample of Chicago metropolitan area residents linked to foreclosure data from 2008 to 2014, we assessed whether exposure to neighborhood foreclosure fillings was associated with changes in objectively measured body mass index (BMI) over time. Using a retrospective longitudinal design, we employed fixed-effects regression models that controlled for individual- and neighborhood-level covariates to test the association of neighborhood foreclosures and BMI in >60,000 individuals and for individuals who did not move during the follow-up period. We also adjusted for the non-linear association of age and BMI and comorbidities and employed a series of sensitivity analysis to test for robustness. In fully adjusted models, a standard-deviation increase in neighborhood foreclosure filings within 500 m was associated with increases in BMI for individuals who did not move (nonmovers) (mean = 0.03 BMI units, 95% confidence interval: 0.01, 0.06). Neighborhood foreclosure rates were not associated with changes in BMI for the full sample. Given the potential deleterious effects of neighborhood foreclosure on individuals with longer exposure to the local vicinity, clarifying the potential health effects of neighborhood foreclosures would help policymakers when planning actions to prevent home losses, predatory home loans, and that aim to more efficiently return foreclosure properties to productive uses.

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