About four percent of the value of your home. That’s what the economists Leigh Linden and Jonah Rockoff (both of Columbia University) concluded in a National Bureau of Economic Research working paper called “There Goes the Neighborhood? Estimates of the Impact of Crime Risk on Property Values From Megan’s Law.” Here’s how the NBER Digest summarizes their findings:
They combine data from the housing market with data from the North Carolina Sex Offender Registry to find that when a sex offender moves into a neighborhood, houses within a one-tenth mile area around the sex offender’s home fall by 4 percent on average (about $5,500), while those further away show no decline in value. “These results suggest that individuals have a significant distaste for living in close proximity to a known sex offender,” the authors conclude.
I am well known for admiring economists, but even I have to admit that that last sentence is a little, um … obvious? More significantly, however: I wonder when, or if, homesellers will be routinely required to notify potential buyers of a nearby sex offender. Linden and Rockoff note that is already the case in some states, but I am guessing it is rare. On the other hand, it’s already pretty easy to search for registered sex offenders in a given neighborhood, so maybe this is just one more element of home-shopping that people will become accustomed to. Finally, I can imagine that if the Linden-Rockoff findings become common knowledge, it will make people scream even louder about having a registered sex offender placed in their neighborhoods.
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Interesting – many people on S.O. lists are no danger to neighbors, e.g. a statutory rape offense from 3 decades earlier. This might give more people a reason to see those lists made more relevant.
Interesting – many people on S.O. lists are no danger to neighbors, e.g. a statutory rape offense from 3 decades earlier. This might give more people a reason to see those lists made more relevant.
At first, I wondered how they could be so sure it was “sex offenders” rather than just crime in general — wouldn’t various types of crime be heavily correlated.
For the city of Chicago, there’s a lovely mapping capability. For example, you can filter out and display the locations of homicides in the past X days:
http://www.chicagocrime.org/map/
Doing the same thing, but filtering on sex offenses, shows a much different pattern. This could be due to differences in enforcement, of course. But just looking at the map, I don’t have nearly as much skepticism that the study’s authors could find an effect.
This is a fascinating site. One of the interesting things about perusing this is how safe the loop (downtown) area is.
At first, I wondered how they could be so sure it was “sex offenders” rather than just crime in general — wouldn’t various types of crime be heavily correlated.
For the city of Chicago, there’s a lovely mapping capability. For example, you can filter out and display the locations of homicides in the past X days:
http://www.chicagocrime.org/map/
Doing the same thing, but filtering on sex offenses, shows a much different pattern. This could be due to differences in enforcement, of course. But just looking at the map, I don’t have nearly as much skepticism that the study’s authors could find an effect.
This is a fascinating site. One of the interesting things about perusing this is how safe the loop (downtown) area is.
Fellow bloggers,
Is it feasible to have a strategy where sex offenders are hired and endowed with housing capital to live in rich neighborhoods (assuming the homeowner’s association doesn’t have any existing rules to prevent this)?
Once prices are sufficiently depressed, the houses are bought out and the sex offender is relocated elsewhere by “management”. Then the houses are flipped for some profit.
I see two problems – contracting with the sex offenders so that there is no hold out problem and coordination problems with other individuals with the same strategy.
Fellow bloggers,
Is it feasible to have a strategy where sex offenders are hired and endowed with housing capital to live in rich neighborhoods (assuming the homeowner’s association doesn’t have any existing rules to prevent this)?
Once prices are sufficiently depressed, the houses are bought out and the sex offender is relocated elsewhere by “management”. Then the houses are flipped for some profit.
I see two problems – contracting with the sex offenders so that there is no hold out problem and coordination problems with other individuals with the same strategy.
This tells us what it costs existing homeowners if a sex offender becomes a neighbor – they face a one-off captial loss on the value of their home. People who buy the house after the sex offender has moved in (and the house price has fallen) benefit from the lower price, so they are, on average, no worse off. They might even get a capital gain if the sex offender moves away.
This tells us what it costs existing homeowners if a sex offender becomes a neighbor – they face a one-off captial loss on the value of their home. People who buy the house after the sex offender has moved in (and the house price has fallen) benefit from the lower price, so they are, on average, no worse off. They might even get a capital gain if the sex offender moves away.