Foreclosure Contagion and REO versus non-REO Sales
Author
Start Page / End Page
Volume
Issue Number
Year
Publication
Stephanie Y. Rauterkus, Norman G. Miller, Grant I. Thrall, Michael A. Sklarz
307 / 324
15
3
2012
International Real Estate Review
Abstract
We examine the real estate owned (REO) discount by using ZIP code-level data on foreclosure rates, distressed and non-distressed sales in Chicago, Illinois. We find significant differences 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