Impact of Investors in Distressed Housing Market

Posted: 16 May 2018

See all articles by Marcus T. Allen

Marcus T. Allen

Florida Atlantic University - Finance & Real Estate

Jessica Rutherford

University of South Florida

Ronald Rutherford

University of South Florida - College of Business - Department of Finance

Abdullah Yavas

University of Wisconsin - School of Business - Department of Real Estate and Urban Land Economics

Date Written: May 2, 2018

Abstract

We examine a recent trend in the market where investors purchase residential properties. We find that investors purchase at a discount of 9.5% compared to individuals purchasing in the same period and geographic area. More specifically, we find that small investors purchase at a discount of 8.0%, medium investors purchase at a discount of 11.1%, large investors purchase at a discount of 13.6%, and institutional investors purchase at a discount of 7.7%. We also find that the presence of investor buyers in a market helps improve house values. A 10% increase in the percentage of houses purchased by investors in a census block leads to a 0.20% increase in house prices.

Keywords: Investors; Distressed Markets; Housing Prices; Externalities

Suggested Citation

Allen, Marcus Tillman and Rutherford, Jessica and Rutherford, Ronald and Yavas, Abdullah, Impact of Investors in Distressed Housing Market (May 2, 2018). Journal of Real Estate Finance and Economics, Vol. 56, No. 4, 2018. Available at SSRN: https://ssrn.com/abstract=3172233

Marcus Tillman Allen

Florida Atlantic University - Finance & Real Estate ( email )

2912 College Ave
Davie, FL 33314
United States
954-236-1063 (Phone)
954-236-1298 (Fax)

Jessica Rutherford

University of South Florida ( email )

Tampa, FL 33620
United States

Ronald Rutherford (Contact Author)

University of South Florida - College of Business - Department of Finance ( email )

Tampa, FL 33620
United States

Abdullah Yavas

University of Wisconsin - School of Business - Department of Real Estate and Urban Land Economics ( email )

School of Business
975 University Avenue
Madison, WI 53706
United States

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