Abstract
This article examines home price spillovers associated with the number of nearby current and former real estate owned (REO) properties. The effect of active REOs is decomposed into the contributions of properties owned by the government sponsored enterprises (GSEs), US Department of Housing and Urban Development (HUD), and private entities to assess impacts associated with differences in managing REO inventories. The impact of former REOs is decomposed into spillovers associated with investor and owner-occupied properties. This study draws on home sale price data in the Detroit tri-county area 2008–2013. Results indicate REOs owned by HUD and private entities are associated with substantial discounts, with the largest effects appearing after remaining in REO inventory for more than one year. Investor-owned properties are associated with sustained and growing negative price effects through more than three years of ownership. Policies ensuring adequate oversight of REOs and sales to owner-occupants and non-speculative investors are encouraged.
Published Version
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