Sex Offender Location and Home Prices

An interesting new paper in the latest American Economic Review examines the impact of sex offenders movements into a community on housing prices. The authors are Linden and Rockoff and the article is entitled "Impact of Crime Risk on Property Values." There is no abstract, so I'll copy the conclusion.

"We use the hedonic estimation methodology to measure the impact of crime risk on property values. Using very detailed data on the locations of convicted sex offenders (whose identities and residential locations are made public on the North Carolina Sex Offender Registry) and the dates on which they move into a neighborhood, we estimate that, on average, the values of homes within 0.1 miles of an offender fall by roughly 4 percent. This effect dissipates quickly with distance of homes from the offender; homes between 0.1 and 0.3 miles away show no effect. Because we exploit the quasi-random process that introduces a convicted criminal into a very specific geographic area at a very specific time, we believe these results are a significant improvement upon the existing literature that attempts to identify the causal relationship between the risk of crime and changes in property values."

I've not read the paper yet, but I saw a paper like this many years ago published in an industry journal published for the workers who evaluate the values of homes (my mind is completely blanking on what this is called just now). They also used hedonic regression and found proximity to a sex offender was associated with falling housing prices, and as with this paper, found the effect dissipated with increased distance from the offender.

One immediately wonders about the equity issues involved here. Society pays for sex offenders both by the offense and when the offender relocates back into the community - in the form of lost equity in a home. Laws that make neighbors aware of an offender's presence appear to, then, have two effects which move in opposite directions. On the one hand, the law makes neighbors aware that the offender is nearby, and thus helps parents manage the risk their children may face. By putting more eyes on the offender, the laws effectively incapacitate the offender's ability to prey upon children again and potentially deter many potential abusive situations before they arise. But at the same time, the laws make everyone - even future buyers of the home - aware of the dangers, too, and by increasing the risks of the home itself, require a lower price to compensate parents for moving into the marginally more dangerous home.