Estimating the Effect of Crime Risk on Property Values and Time on Market : Evidence from Megan's Law in Virginia

This paper analyzes the effect that living near a sex offender has on the marketability of ones home. Specifically, we estimate the impact on a homes sales price, its list price, and on the length of time it takes to for the home to sell. Since the 1994 passage of Sexual Offender Act (known as Megan's Law), persons convicted of sex crimes have been required to notify local law enforcement about their current domicile and any change of address. Since then, sex offenders residencies have become publicly available information allowing anyone to lookup whether a sex offender resides nearby. Using cross-sectional data from a central Virginia multiple listing service we find statistically significant and economically large effects of the proximity to a sexual offender. Results indicate that the presence of a nearby registered sex offender reduces home values by approximately 9%. Moreover, these same homes are listed at lower prices and take as much as 10% longer to sell than homes not located near registered sex offenders. These results prove robust over numerous specifications and modeling techniques