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A Low Cost Methodology for Correcting the Distressed Sales Bias in a Downward Spiraling Housing Market

Author

Listed:
  • Craig A. Depken, II

    (UNC Charlotte)

  • Harris Hollans

    (Auburn University)

  • Steve Swidler

    (Auburn University)

Abstract

This paper examines the impact of distressed sales on single family house prices during a housing market collapse. The innovation here is a methodology to create a proxy for distressed sales when such sales are not identified in the data but are commonplace in the market. We apply our methodology to publicly available data from Las Vegas, Nevada. We find that, during the market collapse in that city, the price impact from REO transactions was greater than other distressed sales, but the difference narrowed over time. Moreover, not identifying distressed sales lowers the measured price impact of REO sales.

Suggested Citation

  • Craig A. Depken, II & Harris Hollans & Steve Swidler, 2015. "A Low Cost Methodology for Correcting the Distressed Sales Bias in a Downward Spiraling Housing Market," Journal of Real Estate Research, American Real Estate Society, vol. 37(1), pages 151-172.
    • Handle: RePEc:jre:issued:v:37:n:1:2015:p:151-172
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    Citations

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    Cited by:

    1. William M. Doerner & Andrew V. Leventis, 2013. "Distressed Sales and the FHFA House Price Index," FHFA Staff Working Papers 13-01, Federal Housing Finance Agency.
    2. Marcus T. Allen & Justin D. Benefield & Christopher L. Cain & Norman Maynard, 2024. "Distressed Property Sales: Differences and Similarities Across Types of Distress," The Journal of Real Estate Finance and Economics, Springer, vol. 68(2), pages 318-353, February.
    3. Alexander Bogin & William Doerner & William Larson, 2019. "Local House Price Dynamics: New Indices and Stylized Facts," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 47(2), pages 365-398, June.

    More about this item

    JEL classification:

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

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