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The accumulation of foreclosed properties: trajectories of metropolitan REO inventories during the 2007–2008 mortgage crisis

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  • Daniel Immergluck

Abstract

A key concern among policymakers and community developers during the ongoing mortgage crisis has been the extent to which lender-owned homes, often called real-estate-owned or ?REO? properties, have been accumulating in different local housing markets. This paper describes the accumulation of REO properties in metropolitan areas across the United States from August 2006 to August 2008. I examine the differences in both changes and static levels of REO activity across metro areas and compare changes in REO levels to changes in home values over the same period. Special attention is paid to a set of large metro areas with substantial levels of REO. I also examine differences across metro areas in the aging or duration of how long properties are held in REO. Cluster analysis is used to identify a typology of metropolitan regions based on REO levels and home price changes. REO exit rates for prime and subprime loans within these three clusters are then compared.

Suggested Citation

  • Daniel Immergluck, 2008. "The accumulation of foreclosed properties: trajectories of metropolitan REO inventories during the 2007–2008 mortgage crisis," FRB Atlanta Community and Economic Development Discussion Paper 2008-02, Federal Reserve Bank of Atlanta.
    • Handle: RePEc:fip:fedacd:2008-02
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    References listed on IDEAS

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    1. Anthony Pennington-Cross, 2006. "The Value of Foreclosed Property," Journal of Real Estate Research, Taylor & Francis Journals, vol. 28(2), pages 193-214, January.
    2. Dan Immergluck & Geoff Smith, 2006. "The external costs of foreclosure: The impact of single‐family mortgage foreclosures on property values," Housing Policy Debate, Taylor & Francis Journals, vol. 17(1), pages 57-79.
    3. Kristopher Gerardi & Adam Hale Shapiro & Paul S. Willen, 2007. "Subprime outcomes: risky mortgages, homeownership experiences, and foreclosures," Working Papers 07-15, Federal Reserve Bank of Boston.
    4. Schuetz, Jenny & Been, Vicki & Ellen, Ingrid Gould, 2008. "Neighborhood effects of concentrated mortgage foreclosures," Journal of Housing Economics, Elsevier, vol. 17(4), pages 306-319, December.
    5. Michelle A. Danis & Anthony Pennington-Cross, 2005. "A dynamic look at subprime loan performance," Working Papers 2005-029, Federal Reserve Bank of St. Louis.
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    Cited by:

    1. Christopher Niedt & Isaac William Martin, 2013. "Who Are the Foreclosed? A Statistical Portrait of America in Crisis," Housing Policy Debate, Taylor & Francis Journals, vol. 23(1), pages 159-176, January.
    2. Ryan M. Goodstein, 2014. "Refinancing Trends among Lower Income and Minority Homeowners during the Housing Boom and Bust," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 42(3), pages 690-723, September.
    3. Dan Immergluck, 2011. "The Local Wreckage of Global Capital: The Subprime Crisis, Federal Policy and High‐Foreclosure Neighborhoods in the US," International Journal of Urban and Regional Research, Wiley Blackwell, vol. 35(1), pages 130-146, January.
    4. Ingrid Gould Ellen & Josiah Madar & Mary Weselcouch, 2015. "The Foreclosure Crisis and Community Development: Exploring REO Dynamics in Hard-Hit Neighborhoods," Housing Studies, Taylor & Francis Journals, vol. 30(4), pages 535-559, July.
    5. Prabal Chakrabarti, 2009. "Massachusetts’ efforts to address foreclosed properties," Community Development Innovation Review, Federal Reserve Bank of San Francisco, issue 1, pages 65-72.
    6. William H. Rogers, 2010. "Declining foreclosure neighborhood effects over time," Housing Policy Debate, Taylor & Francis Journals, vol. 20(4), pages 687-706, September.
    7. Lynn Fisher & Lauren Lambie-Hanson & Paul S. Willen, 2010. "A profile of the mortgage crisis in a low-and-moderate-income community," Public Policy Discussion Paper 10-6, Federal Reserve Bank of Boston.
    8. Jeremy R. Groves & William H. Rogers, 2011. "Effectiveness of RCA Institutions to Limit Local Externalities: Using Foreclosure Data to Test Covenant Effectiveness," Land Economics, University of Wisconsin Press, vol. 87(4), pages 559-581.
    9. Kathe Newman, 2010. "Go Public!," Journal of the American Planning Association, Taylor & Francis Journals, vol. 76(2), pages 160-171, April.
    10. Daniel Immergluck, 2009. "Intrametropolitan patterns of foreclosed homes: ZIP-code-level distributions of real-estate-owned (REO) properties during the U.S. mortgage crisis," FRB Atlanta Community and Economic Development Discussion Paper 2009-01, Federal Reserve Bank of Atlanta.

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