Foreclosed and Sold: An Examination of Community and Property Characteristics Related to the Sale of REO Properties

Abstract

Foreclosure affects not only the foreclosing homeowner but also the surrounding residential neighborhood. Prior work has found that the negative neighborhood impacts of foreclosed properties that remain as real-estate-owned (REO) properties persist until the property is resold. Furthermore, negative neighborhood price externalities are more substantial the longer a home spends in REO stock. This article used foreclosure data from Dallas County, Texas, to examine how both housing and neighborhood characteristics are related to the possibility of the sale of a foreclosed property out of REO stock. The findings from the Cox proportional hazard model indicate that homes in low-income minority neighborhoods and homes with property characteristics associated with a need for more preventative maintenance were slower to sell. Results have the potential to provide insight into how housing and neighborhood characteristics might help to explain part of the uneven geographic distribution of foreclosure impacts following the 2007–2009 financial recession.