Foreclosure Contagion and REO Versus Non-REO Sales

27 Pages Posted: 16 Mar 2010

See all articles by Stephanie Rozelle Yates

Stephanie Rozelle Yates

University of Alabama at Birmingham - Department of Finance, Economics, and Quantitative Methods

Norman G. Miller

University of San Diego - Real Estate Institute

Grant Ian Thrall

University of Florida

Michael Sklarz

Collateral Analytics

Date Written: March 15, 2010

Abstract

Using ZIP code-level data on foreclosure rates, distressed and non-distressed sales in Chicago, Illinois we examine the REO discount. We find significant differences in the difference in price between distressed and non-distressed properties in high- versus low-foreclosure rate neighborhoods. We expand this analysis to determine if trends in the REO discount can be explained by trends in foreclosure rates and if this correlation can be used to identify a ‘tipping point’ in foreclosure rates. We identify key relationships between trends in the REO discount, the proportion of REO sales to total sales and sales volume.

Keywords: REO, foreclosure, contagion

JEL Classification: G21

Suggested Citation

Yates, Stephanie Rozelle and Miller, Norman G. and Thrall, Grant Ian and Sklarz, Michael, Foreclosure Contagion and REO Versus Non-REO Sales (March 15, 2010). Available at SSRN: https://ssrn.com/abstract=1572074 or http://dx.doi.org/10.2139/ssrn.1572074

Stephanie Rozelle Yates (Contact Author)

University of Alabama at Birmingham - Department of Finance, Economics, and Quantitative Methods ( email )

Birmingham, AL 35294
United States

Norman G. Miller

University of San Diego - Real Estate Institute ( email )

San Diego, CA
United States

Grant Ian Thrall

University of Florida ( email )

Gainesville, FL 32610-0496
United States

Michael Sklarz

Collateral Analytics ( email )

United States

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