An interesting new paper by Leigh Linden and Jonah Rockoff at Columbia explores whether, and to what extent, home prices fall when a sex offender moves into the neighborhood. The paper is available for download here. Using North Carolina data, Linden and Rockoff find that when a sex offender moves into a neighborhood, real estate prices fall by 3.5% within one-tenth of a square mile of the offender's residence, but they find no statistically significant effect on real estate prices further away from the sex offender's home. (Home prices actually rose between .1 and .3 miles from the sex offender's home, but not by a statistically significant amount.)
These findings, in conjuntion, present something of a puzzle. I know of no reliable data indicating that sex offenders disproportionately prey on their immediate neighbors, as opposed to neighbors living a few blocks away or across town. While sex offenders would find it easier to access their immediate neighbors, offending further away from home probably reduces the likelihood that a sex offender would be recognized and apprehended. There are some highly publicized instances of released sex offenders victimizing people living on their block, so it may be, as Linden and Rockoff speculate, that next-door neighbors overestimate the risks posed by sex offenders and neighbors living one-fifth of a mile away underestimate those same risks. (The lion's share of sex offenders victimize their own family members, who generally do not benefit from, but may be harmed by, Megan's Laws.)
Alternative explanations, some of which Linden and Rockoff allude to very briefly, include the idea that the presence of sex offenders reduces the neighbors' desire to want to interract with others in the neighborhood (perhaps eroding the block's store of social capital), and the idea that having a sex offender on your block may make those living elsewhere less likely to want to visit you in your home. Another possible explanation, which Linden and Rockoff do not explore, but which seems plausible, is that there is such a thing as "block status" and having a sex offender on your block substantially reduces the prestige of a particular block, even if it has no effect on the prestige of a surrounding neighborhood.
Linden and Rockoff's paper sheds some light on the effects of Megan's Laws. But I wish they'd examined whether the seriousness of an offender's prior offenses or the assessed recidivism risk of an offender matter. Currently, some jurisdictions' sex offenders' registries include those convicted of heinous sex offenses like rape and child molestation as well as those convicted of less serious crimes, including indecent exposure or violating a peeping Tom statute. Sex offender registries in many jurisdictions also include the state's assessment of the likelihood that the offender will re-offend. If real estate prices are sensitive to the presence of a sex offender, but not to the assessed recidivism risk posed by the offender, it might help us understand what factors are driving the selective drop in home prices that the authors observed.