Exploring Threshold Effects in the Impact of Housing Abandonment on Nearby Property Values. Issue 3 (May 2019) - Han, Hye-Sung
Most research examining the impact of distressed properties on nearby property values has assumed that each additional distressed property has the same marginal effect on nearby property values as the prior distressed property had. Scholars have suggested that there could be threshold effects in the impact of distressed properties, yet no research has explored this issue. Therefore, this research explores the presence of threshold effects in the impact of housing abandonment on nearby property values in Baltimore, Maryland, from 1991 to 2010. This research finds that the magnitude of the impact of housing abandonment does not increase proportionally to the number of nearby abandoned properties. Specifically, it finds that the marginal impact on nearby property values increases significantly when the number of abandoned properties within 250 ft. increases by more than two. The research also finds that the marginal impact drops significantly when the number of abandoned properties within 250 ft. increases by more than 14.