IDEAS home Printed from https://ideas.repec.org/a/taf/rjerxx/v48y2026i2p235-278.html

Bargain or Bust? Prices, Discounts, and Returns in Berlin’s Real Estate Foreclosure Market

Author

Listed:
  • Alexander Daminger
  • Simon Wiersma

Abstract

This paper investigates foreclosure discounts and their impact on property appreciation rates in Berlin’s housing market from 1984 to 2022. Utilizing a comprehensive dataset of 391,420 transactions, we document substantial foreclosure discounts ranging from 20% to 50%, linked to regional business cycles and displaying modest variations between East and West Berlin. Employing hedonic regressions and repeat sales analysis, we find that foreclosed properties in later transactions yield excess returns, with appreciation rates 20.5 percentage points higher than matched non-distressed properties. Conversely, properties auctioned off in foreclosures underperform by 9.6 percentage points. Importantly, the analysis reveals that foreclosure effects are primarily transaction-specific, with no long-term stigma on properties. Our findings highlight the role of Germany’s auction format in shaping discounts, suggesting that institutional investors achieve higher returns due to superior expertise. These results underscore the need for policy reforms to enhance auction transparency and competition, offering insights into market design and efficiency in distressed property markets.

Suggested Citation

  • Alexander Daminger & Simon Wiersma, 2026. "Bargain or Bust? Prices, Discounts, and Returns in Berlin’s Real Estate Foreclosure Market," Journal of Real Estate Research, Taylor & Francis Journals, vol. 48(2), pages 235-278, April.
    • Handle: RePEc:taf:rjerxx:v:48:y:2026:i:2:p:235-278
    DOI: 10.1080/08965803.2025.2516889
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/08965803.2025.2516889
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/08965803.2025.2516889?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:rjerxx:v:48:y:2026:i:2:p:235-278. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/rjer20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.