Housing Crisis Spillover Effects in Areas of High Concentration of Non-primary Residences

Abstract

Prior research finds that non-primary residences will have higher mortgage default rates and foreclosure rates than first homes. We investigate sub-markets with high concentrations of non-primary residences for differences in price behavior, marketing time, and probability of sale during the recent housing crisis relative to those areas with normal concentrations of non-primary residences. We find that there are significant differences between these areas, with generally greater price declines for those areas with high concentrations of non-primary residences. These price declines are also accompanied by statistically significant changes in marketing time for those homes in high non-primary residence areas.