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

Real Estate Economics, Forthcoming

Posted: 12 Oct 2012

See all articles by Scott Wentland

Scott Wentland

Bureau of Economic Analysis (BEA)

Bennie D. Waller

Longwood University

Raymond T. Brastow

Federal Reserve Banks - Quantitative Supervision & Research

Date Written: October 11, 2012

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 3SLS 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.”

Keywords: Megan's Law, sex offenders, home price, time on market, crime risk

Suggested Citation

Wentland, Scott and Waller, Bennie D. and Brastow, Raymond T., Estimating the Effect of Crime Risk on Property Values and Time on Market: Evidence from Megan's Law in Virginia (October 11, 2012). Real Estate Economics, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2160416

Scott Wentland (Contact Author)

Bureau of Economic Analysis (BEA) ( email )

1441 L Street NW
Washington, DC 20910
United States

Bennie D. Waller

Longwood University ( email )

201 High Street
Farmville, VA 23909
United States
434-395-2046 (Phone)
434-395-2203 (Fax)

HOME PAGE: http://www.benniewaller.com

Raymond T. Brastow

Federal Reserve Banks - Quantitative Supervision & Research ( email )

United States

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