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Foreclosure Contagion and REO versus non-REO Sales

Author

Listed:
  • Stephanie Y. Rauterkus

    (Assistant Professor of Finance, 1150 10th Avenue South, BEC 311-C, University of Alabama at Birmingham, Birmingham, AL 35294)

  • Norman G. Miller

    (Professor of Real Estate, AV-111, 5998 Alcala Park, University of San Diego, San Diego, CA 92110)

  • Grant I. Thrall

    (Managing Director and Owner, www.businessgeography.com, 8703 SW 38th Avenue, Gainesville, FL32608)

  • Michael A. Sklarz

    (President, Collateral Analytics, 3465 Waialae Avenue, Suite 330, Honolulu, HI 96816)

Abstract

We examine the real estate owned (REO) discount by using ZIP code-level data on foreclosure rates, distressed and non- distressed sales in Chicago, Illinois. We find significant differences in price between distressed and non-distressed properties in high- versus low-foreclosure rate neighborhoods. We expand this analysis to determine if trends in the REO discount can be explained by trends in foreclosure rates and if this correlation can be used to identify a ¡¥tipping point¡¦ in foreclosure rates. We identify key relationships between trends in the REO discount, the proportion of REO sales to total sales, and sales volume.

Suggested Citation

  • Stephanie Y. Rauterkus & Norman G. Miller & Grant I. Thrall & Michael A. Sklarz, 2012. "Foreclosure Contagion and REO versus non-REO Sales," International Real Estate Review, Global Social Science Institute, vol. 15(3), pages 307-324.
    • Handle: RePEc:ire:issued:v:15:n:03:2012:p:307-324
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    References listed on IDEAS

    as
    1. William H. Rogers & William Winter, 2009. "The Impact of Foreclosures on Neighboring Housing Sales," Journal of Real Estate Research, American Real Estate Society, vol. 31(4), pages 455-480.
    2. Charles W. Calomiris & Stanley D. Longhofer & William Miles, 2008. "The Foreclosure-House Price Nexus: Lessons from the 2007-2008 Housing Turmoil," NBER Working Papers 14294, National Bureau of Economic Research, Inc.
    3. Tammy Leonard & James Murdoch, 2009. "The neighborhood effects of foreclosure," Journal of Geographical Systems, Springer, vol. 11(4), pages 317-332, December.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Hanqing Zhou & Yuan Yuan & Christopher Lako & Michael Sklarz & Charles McKinney, 2015. "Foreclosure Discount: Definition and Dynamic Patterns," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 43(3), pages 683-718, September.

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    More about this item

    Keywords

    REO; Foreclosure; Contagion;
    All these keywords.

    JEL classification:

    • L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services

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