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NNIP Meeting April 17, 2008

F. U. R. M. A. N. C. E. N. T. E. R. F. O. R. R. E. A. L. E. S. T. A. T. E. &. U. R. B. A. N. P. O. L. I. C. Y. K. U. N. E. W. Y. O. R. N. I. V. E. R. S. I. T. Y. S. C. H. O. O. L. O. F. L. A. W. ・. W. A. G. N. E. R. S. C. H.

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NNIP Meeting April 17, 2008

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  1. F U R M A N C E N T E R F O R R E A L E S T A T E & U R B A N P O L I C Y K U N E W Y O R N I V E R S I T Y S C H O O L O F L A W ・ W A G N E R S C H O O L O F P U B L I C S E R V I C E Foreclosures in New York CityAmy Armstrong Vicki BeenIngrid Gould EllenStephen RobertsJenny Schuetz NNIP Meeting April 17, 2008

  2. Furman Center for Real Estate and Urban Policy Since its founding in 1995, the Furman Center for Real Estate and Urban Policy has become the leading academic research center in New York City devoted to the public policy aspects of land use, real estate development and housing. The Furman Center is dedicated to: • Providing objective academic and empirical research on the legal and public policy issues involving land use, real estate, housing and urban affairs in the United States, with a particular focus on New York City; • Promoting frank and productive discussions among elected and appointed officials, leaders of the real estate industry, leaders of non-profit housing and community development organizations, scholars, faculty and students about critical issues in land use, real estate and urban policy; and • Presenting essential data and analysis about the state of New York City’s housing and neighborhoods to all those involved in land use, real estate development, community economic development, housing, urban economics and urban policy. NYU’s Furman Center for Real Estate and Urban Policy

  3. Revealing Simple Facts about Foreclosures • How large is the problem in NYC, and how much has it grown? • How concentrated are foreclosure filings, and in which neighborhoods? • Association with rates of subprime lending? • Association with racial composition and income? • Which properties are affected? • Renters=victims? • Have foreclosures affected the value of neighboring properties in NYC? • Neighborhood=victims? NYU’s Furman Center for Real Estate and Urban Policy

  4. NYC’s foreclosure process and timeline • Foreclosure start: lis pendens (LP) filing with county court • Can occur 90+ days after borrower becomes delinquent • First public notice of loan distress • Foreclosure completion • In NYC, most foreclosures resolved within 12-18 months of LP • After LP, borrower may resume payments, refinance, sell property, reach workout with lender, or remain delinquent • Majority of LPs in NYC do not reach foreclosure auction • At auction, property can be sold to lender (REO), investor, other third party NYU’s Furman Center for Real Estate and Urban Policy

  5. Data description • Property-level mortgage-related LP filings for 2000 - 2007 • (Public Data Corporation) • Data on property characteristics from RPAD file • (NYC Dept of Finance) • Residential property sales prices (2000-2006) • (NYC Dept. of Finance) • 2006 Data on Demographics/Income of PUMAs • American Community Survey Data, PUMA level NYU’s Furman Center for Real Estate and Urban Policy

  6. NYU’s Furman Center for Real Estate and Urban Policy

  7. NYU’s Furman Center for Real Estate and Urban Policy

  8. NYU’s Furman Center for Real Estate and Urban Policy

  9. NYU’s Furman Center for Real Estate and Urban Policy

  10. Which properties are affected? • Of the 15,000 foreclosure filings in NYC in 2007, 60% were on 2 to 4 family and 5+ unit buildings, while about 40% were on condos and single-family properties NYU’s Furman Center for Real Estate and Urban Policy

  11. Renters are at risk too! • 30,000 households lived in buildings that entered foreclosure process in 2007 • 15,000 of these households were renters NYU’s Furman Center for Real Estate and Urban Policy

  12. How do foreclosures affect surrounding neighborhoods? • We identify property sales that are within 1,000 feet of a property receiving a notice of foreclosure • We test whether sales prices of properties within 1,000 feet of a property receiving a foreclosure notice fall relative to other properties in the same neighborhood NYU’s Furman Center for Real Estate and Urban Policy

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  14. Key findings and implications • Some preliminary evidence that LPs are causing decline in nearby property values • Estimated effect somewhat smaller than previous work • Different methods: stronger controls • Different context: NYC housing market experienced more rapid price appreciation • Caution: difficult to identify effects of foreclosures • Foreclosures may depress prices; but fall in prices also cause foreclosures. • Future analysis of smaller geographies (LPs on same block) may help determine direction of causal relationship NYU’s Furman Center for Real Estate and Urban Policy

  15. For more information: Furman Center for Real Estate and Urban Policy http://furmancenter.nyu.edu We gratefully acknowledge support for this project from the Surdna Foundation. NYU’s Furman Center for Real Estate and Urban Policy

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