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Abstract

A challenge in analyzing the spillover impact of sheriff’s sales on neighboring properties is the recognition that housing markets are segmented. In this fashion, the large heterogeneous market of housing is broken down into small, more homogeneous segments, and buyers emerge that match their wants and needs with the product offered by the marketplace. It is clear that comparing the impact of sheriff’s sales of single-family homes to condominium prices ignores the idea of segmented markets. As a result, it is valuable to break down these markets by sector. By using a unique dataset on property sales, sheriff’s sales, and foreclosures for the City of Milwaukee from October 2005 to September 2009, we confirm that a single-family condominium foreclosure has a negative and significant impact on the sale of surrounding condominium units. The estimated impact decays with distance from the sheriff’s sale property and the length of time separating the two transactions, the most significant impact being a loss of 24% - 28% when the two units are sold within thirty days of one another and within the same building.

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