Explaining the Pace of Foreclosed Home Sales during the US Foreclosure Crisis: Evidence from Atlanta

Abstract

As the US foreclosure crisis approached its climax in 2007 and 2008, the buildup of lender-owned homes had been building for some time. Around this time, however, lenders began selling homes, especially low-value properties, at a much faster pace, releasing them into local housing markets. This paper examines the sales of foreclosed single-family homes into the Atlanta market from January 2005 through early 2009. A primary goal is to understand the drivers of such sales. A proportional hazards model is used to identify factors affecting the time that homes spend as ‘real estate owned’ properties, with a special focus on low-value properties. We find that the pace of sales of low-value properties accelerated during 2007 and, especially, in late 2008 and early 2009, and the rate varied based on lender type, neighborhood characteristics, and submarket location. These findings have implications not simply for understanding real estate markets more broadly, but especially for housing market recovery and neighborhood stabilization policies.