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Foreclosure Contagion and REO versus non-REO Sales

  • 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)

Registered author(s):

    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.

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    Article provided by Asian Real Estate Society in its journal International Real Estate Review.

    Volume (Year): 15 (2012)
    Issue (Month): 3 ()
    Pages: 307-324

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    Handle: RePEc:ire:issued:v:15:n:03:2012:p:307-324
    Contact details of provider: Postal: Asia Real Estate Society, 51 Monroe Street, Plaza E-6, Rockville, MD 20850, USA
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    Order Information: Postal: Asian Real Estate Society, 51 Monroe Street, Plaza E-6, Rockville, MD 20850, USA
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    1. Tammy Leonard & James Murdoch, 2009. "The neighborhood effects of foreclosure," Journal of Geographical Systems, Springer, vol. 11(4), pages 317-332, December.
    2. 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.
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