Megan's Law Hits Local Property Prices

If a registered sex offender, reformed or not, moves into your immediate neighborhood, it's bad financial news. The potential price for your home likely has been trimmed substantially.

Economists Leigh Linden and Jonah Rockoff measure the impact of living in close proximity to such a convicted criminal in 'There Goes the Neighborhood? Estimates of the Impact of Crime Risk on Property Values from Megan's Laws' (NBER Working Paper No. 12253). 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.

...A 1994 federal law, the Jacob Wetterling Crimes Against Children and Sexually Violent Offender Registration Program, created a mandatory state requirement for the registration of sex offenders. It threatens non-complying states with a reduction of federal grants for state law enforcement efforts. The legislation was extended in 1996 to require the dissemination of information in the registry.

By now, all 50 states maintain a registry making some information available to the public. However, the method of compliance varies significantly. Forty-six provide public Internet access to the offender registry. Louisiana has perhaps the most aggressive notification law. It requires offenders to, "give notice of the crime for which he was convicted, his name, and his address to at least one person in every residence or business within a one mile radius of his residence in a rural area and a three tenths of a mile radius in an urban or suburban area."

Thanks to The NBER Digest