Effect of Foreclosure Status on Residential Selling Price: Comment
In this comment we examine the conclusion by Forgey, Rutherford, and VanBuskirk (1994) "that the foreclosed properties sold at a 23% discount," using a sample of nearly 2,000 residential property sales from the Las Vegas, Nevada area. We found that when not controlling for location with a set of dummy variables for ZIP codes, HUD foreclosed properties sold for between 12.18% and 13.96% below a random sample of properties not within one block of foreclosed properties. When controlling for location, using a set of thirty-one dummy variables for ZIP codes, the foreclosure discount fell to between 8.45% and 9.72%. When controlling for the common characteristics between foreclosed properties and their neighbors, we found foreclosure discounts are very small (between 0.17% and 2.48%) and no longer statistically significant. We conclude that foreclosure does not provide an opportunity for arbitrage profits, and this study does reinforce the findings of other studies that conclude real estate markets operate efficiently.
Volume (Year): 13 (1997)
Issue (Month): 1 ()
|Contact details of provider:|| Postal: |
Web page: http://www.aresnet.org/
|Order Information:|| Postal: Diane Quarles American Real Estate Society Manager of Member Services Clemson University Box 341323 Clemson, SC 29634-1323|
Web: http://pages.jh.edu/jrer/about/get.htm Email:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- James D. Shilling & John D. Benjamin & C.F. Sirmans, 1990. "Estimating Net Realizable Value for Distressed Real Estate," Journal of Real Estate Research, American Real Estate Society, vol. 5(1), pages 129-140.
- George W. Gau, 1985. "Public Information and Abnormal Returns in Real Estate Investment," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 13(1), pages 15-31.
- 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.
When requesting a correction, please mention this item's handle: RePEc:jre:issued:v:13:n:1:1997:p:95-102. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (JRER Graduate Assistant/Webmaster)
If references are entirely missing, you can add them using this form.