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The accumulation of foreclosed properties: trajectories of metropolitan REO inventories during the 2007–2008 mortgage crisis

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  • Daniel Immergluck

Abstract

In addition to causing financial and social hardship to families and individuals, high foreclosure rates can have negative effects on neighborhoods, cities, and metropolitan regions. One key concern among policymakers and community developers is the extent to which lender-owned homes, often called real estate owned or REO properties, accumulate in different local housing markets. The neighborhood and community impacts of foreclosure are expected to be worse if foreclosed properties sit vacant for significant periods of time and are not absorbed back into the market in some productive way. The inventory of REO properties in a local housing market or submarket may become not just a symptom of housing market decline but an impediment to recovery. An increasing amount of REO inventory in a local or regional housing market may discourage price stabilization and the return of even moderate levels of home purchase activity and financing.

Suggested Citation

  • Daniel Immergluck, 2009. "The accumulation of foreclosed properties: trajectories of metropolitan REO inventories during the 2007–2008 mortgage crisis," Community Development Innovation Review, Federal Reserve Bank of San Francisco, issue 1, pages 07-42.
    • Handle: RePEc:fip:fedfcr:y:2009:p:7-42:n:v.5no.1
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    References listed on IDEAS

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    1. Kristopher Gerardi & Adam Hale Shapiro & Paul S. Willen, 2007. "Subprime outcomes: risky mortgages, homeownership experiences, and foreclosures," Working Papers 07-15, Federal Reserve Bank of Boston.
    2. Anthony Pennington-Cross, 2006. "The Value of Foreclosed Property," Journal of Real Estate Research, American Real Estate Society, vol. 28(2), pages 193-214.
    3. Dan Immergluck & Geoff Smith, 2006. "The external costs of foreclosure: The impact of single‐family mortgage foreclosures on property values," Housing Policy Debate, Taylor & Francis Journals, vol. 17(1), pages 57-79.
    4. Schuetz, Jenny & Been, Vicki & Ellen, Ingrid Gould, 2008. "Neighborhood effects of concentrated mortgage foreclosures," Journal of Housing Economics, Elsevier, vol. 17(4), pages 306-319, December.
    5. Michelle A. Danis & Anthony Pennington-Cross, 2005. "A dynamic look at subprime loan performance," Working Papers 2005-029, Federal Reserve Bank of St. Louis.
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    Cited by:

    1. William H. Rogers, 2010. "Declining foreclosure neighborhood effects over time," Housing Policy Debate, Taylor & Francis Journals, vol. 20(4), pages 687-706, September.
    2. Lynn Fisher & Lauren Lambie-Hanson & Paul S. Willen, 2010. "A profile of the mortgage crisis in a low-and-moderate-income community," Public Policy Discussion Paper 10-6, Federal Reserve Bank of Boston.
    3. Prabal Chakrabarti, 2009. "Massachusetts’ efforts to address foreclosed properties," Community Development Innovation Review, Federal Reserve Bank of San Francisco, issue 1, pages 65-72.
    4. Kathe Newman, 2010. "Go Public!," Journal of the American Planning Association, Taylor & Francis Journals, vol. 76(2), pages 160-171, April.
    5. Ingrid Gould Ellen & Josiah Madar & Mary Weselcouch, 2015. "The Foreclosure Crisis and Community Development: Exploring REO Dynamics in Hard-Hit Neighborhoods," Housing Studies, Taylor & Francis Journals, vol. 30(4), pages 535-559, July.
    6. Christopher Niedt & Isaac William Martin, 2013. "Who Are the Foreclosed? A Statistical Portrait of America in Crisis," Housing Policy Debate, Taylor & Francis Journals, vol. 23(1), pages 159-176, January.
    7. Daniel Immergluck, 2009. "Intrametropolitan patterns of foreclosed homes: ZIP-code-level distributions of real-estate-owned (REO) properties during the U.S. mortgage crisis," FRB Atlanta Community and Economic Development Discussion Paper 2009-01, Federal Reserve Bank of Atlanta.
    8. Jeremy R. Groves & William H. Rogers, 2011. "Effectiveness of RCA Institutions to Limit Local Externalities: Using Foreclosure Data to Test Covenant Effectiveness," Land Economics, University of Wisconsin Press, vol. 87(4), pages 559-581.
    9. Ryan M. Goodstein, 2014. "Refinancing Trends among Lower Income and Minority Homeowners during the Housing Boom and Bust," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 42(3), pages 690-723, September.
    10. Dan Immergluck, 2011. "The Local Wreckage of Global Capital: The Subprime Crisis, Federal Policy and High‐Foreclosure Neighborhoods in the US," International Journal of Urban and Regional Research, Wiley Blackwell, vol. 35(1), pages 130-146, January.

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