Externalities of residential property flipping |
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Authors: | Lingxiao Li Abdullah Yavas Bing Zhu |
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Affiliation: | 1. College of Business & Economics, California State University, Fullerton, California;2. School of Business, University of Wisconsin, Madison, Wisconsin;3. Technical University of Munich, Munich, Germany |
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Abstract: | This study investigates whether flipping activities impose an externality on the transaction prices of the neighboring nonflipped properties. Using a data set of residential property transactions in Clark County, Nevada for the period 2003–2013, we find that flippers impose a significant positive impact on the price of neighboring nonflipped properties in an up market, but a significant negative effect in a down market. This procyclical impact of flipping activity contributes to the volatility of housing prices, hence magnifying boom and bust cycles and increasing the likelihood of a mortgage crisis. |
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Keywords: | distressed property externality flipper house price |
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