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Distressed Sales and the FHFA House Price Index

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  • Doerner, William
  • Leventis, Andrew

Abstract

Trends in residential house values can be expressed by changes in House Price Indexes (HPIs). Since the recent housing crash, distressed sales have increased in numbers and have led to concerns about how they affect HPIs. This paper has three parts. First, FHFA’s standard HPIs are compared to HPIs constructed without distressed sales. Second, FHFA’s identification of distressed sales is validated against a public data source. Third, the distressed sale discount is shown to vary across time and place. The magnitude of the discount also depends on whether the current or prior recent sales are distressed.

Suggested Citation

  • Doerner, William & Leventis, Andrew, 2014. "Distressed Sales and the FHFA House Price Index," MPRA Paper 61022, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:61022
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    References listed on IDEAS

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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. 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.
    3. Schorno, Patrick J. & Swidler, Steve M. & Wittry, Michael D., 2014. "Hedging house price risk with futures contracts after the bubble burst," Finance Research Letters, Elsevier, vol. 11(4), pages 332-340.

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    More about this item

    Keywords

    property value; house price index; HPI; repeat sales; distressed sales;
    All these keywords.

    JEL classification:

    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General

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