The Relationship between Foreclosure Status and Apartment Price

William Hardin and Marvin Wolverton

Journal of Real Estate Research, 1996, vol. 12, issue 1, 101-109

Abstract: Empirical studies disclose that foreclosed residential properties sell at a discount from the expected market price for non-foreclosed residences. This investigation shows that prior findings on residential properties can be extended to include income-producing properties. In addition, it employs market rent to control for variation in property quality. An analysis of apartment sales in Phoenix, Arizona, demonstrates that foreclosure-status apartments sell at a 22% discount when compared to non-foreclosure apartment sales. The rationale for accepting discounted prices may be atypical seller motivations such as a need to satisfy regulatory capital requirements, to mitigate negative stock price effects, or to protect credit ratings.

Date: 1996
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DOI: 10.1080/10835547.1996.12090837

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