The Relationship between Foreclosure Status and Apartment Price
Empirical studies disclose that foreclosed residential properties sell at a discount from the expected market price for non-foreclosed residences. This investigation shows that prior findings on residential properties can be extended to include income-producing properties. In addition, it employs market rent to control for variation in property quality. An analysis of apartment sales in Phoenix, Arizona, demonstrates that foreclosure-status apartments sell at a 22% discount when compared to non-foreclosure apartment sales. The rationale for accepting discounted process may be atypical seller motivations such as a need to satisfy regulatory capital requirements, to mitigate negative stock price effects, or to protect credit ratings.
Volume (Year): 12 (1996)
Issue (Month): 1 ()
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- Fred A. Forgey & Ronald C. Rutherford & Michael L. VanBuskirk, 1994. "Effect of Foreclosure Status on Residential Selling Price," Journal of Real Estate Research, American Real Estate Society, vol. 9(3), pages 313-318.
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