An Analysis of Foreclosure Rate Differentials in Soft Markets

27 Pages Posted: 18 Dec 2008  

Francisca Richter

Federal Reserve Bnk of Cleveland

Date Written: November 16, 2008

Abstract

A quantile regression model is used to identify the main neighborhood characteristics associated with high foreclosure rates in weak market neighborhoods, specifically for two counties in Ohio and one in Pennsylvania. A decomposition technique by Machado and Mata (2005) allows separating foreclosure filing rate differentials across counties into two components: the first due to differences in the levels of neighborhood characteristics and the second due to differences in the model parameters. At higher than median rates, foreclosure rate differentials between counties in Ohio are mainly explained by the levels of these characteristics. However, foreclosure rate differences between counties across states are mainly explained by the parameter component, suggesting that state level effects might have contributed to shape foreclosure rate outcomes.

Keywords: foreclosure, quantile regression, decomposition analysis

JEL Classification: G21, R23

Suggested Citation

Richter, Francisca, An Analysis of Foreclosure Rate Differentials in Soft Markets (November 16, 2008). FRB of Cleveland Working Paper No. 08-11. Available at SSRN: https://ssrn.com/abstract=1316978 or http://dx.doi.org/10.2139/ssrn.1316978

Francisca Richter (Contact Author)

Federal Reserve Bnk of Cleveland ( email )

East 6th & Superior
Cleveland, OH 44101-1387
United States

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