Guarding the Subjective Premium: Condemnation Risk Discounts in the Housing Market

Article by Sebastien Gay & Nadia Nasser-Ghodsi

We propose the condemnation risk discount theory, whereby home buyers deduct a discount from housing prices in the absence of insurance against the risk that the government will condemn their property for private transfer. Home owners cannot separate out the negative risk that their home will be condemned from the positive effect that high-value redevelopment projects may have on the surrounding area. There are, consequently, competing effects of the risk of eminent domain on fair market value.


89 Tul L. Rev. 79 (2014)