Estimating the Effect of Crime Risk on Property Values and Time on Market: Evidence from Megan's Law in Virginia

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."

The Impact of Crime on Residential Property Value - On the Example of Szczecin

“…Its condition and potential is also included in social phenomena (FORYŚ, 2011). However, in the analysis of the housing market, the safety factor is rarely taken into account as a criterion influencing the market value of housing (CELLER, KURYJ, ŹRÓBEK, 2005), (WENTLAND et al, 2014).…”

A cross-sectional exploration of household financial reactions and homebuyer awareness of registered sex offenders in a rural, suburban, and urban county.

“…Due to the stigmatizing nature of the sex offender label, it comes to no surprise that residents are unwilling to reside near RSOs given that depressed home sale values were associated with nearby RSOs (Bian et al, 2013;Caudill et al, 2014;Larsen et al, 2003;Linden & Rockoff, 2008;Navarro & Rabe-Hemp, 2017;Pope, 2008;Wentland et al, 2014;Yeh, 2015). At the same time, community members are grossly unaware of the presence of RSOs within their communities (Anderson & Sample, 2008;Burchfield, 2012;Craun, 2010;Kernsmith, Comartin, et al, 2009;Lieb & Nunlist, 2008;Phillips, 1998; see Beck & Travis, 2006).…”

“…The perceptions of a "neighbor" do vary by community types, especially in rural environments (Wentland et al, 2014). Thus, formal structures of notification may not be necessary for rural communities to inform themselves of who is in close proximity to their residence (Anderson et al, 2009) because rural residents may rely on neighbors to transmit knowledge of such offenders in their neighborhoods (Craun, 2010).…”

“…Residents notified of a nearby RSO reported a substantially higher personal and altruistic fear of a sexual assault when compared to residents not informed (even though they resided in the same neighborhood). In fact, family homes have been associated with greater depressions in the selling prices of family homes (defined as a household with three bedrooms or more) than non-family homes (Bian et al, 2013;Wentland et al, 2014), which suggests an unwillingness of parents to reside nearby RSOs.…”

“…Real estate markets in various jurisdictions have been compromised in the form of depressed home selling prices as a consequence of the presence of RSOs (Bian, Brastow, Waller, Stoll, & Wentland, 2013;Caudill, Affuso, & Yang, 2014;Larsen, Lowrey, & Coleman, 2003;Linden & Rockoff, 2008;Navarro & Rabe-Hemp, 2017;Pope, 2008;Wentland, Waller, & Brastow, 2014;Yeh, 2015)-referred to as the RSOhome sale value research in the present study. However, existent within each of these publications are methodological issues that were not assessed.…”