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Who Buys Foreclosed Homes? How Neighborhood Characteristics Influence Real Estate-Owned Home Sales to Investors and Households

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  • Andrew McMillan
  • Arnab Chakraborty

Abstract

This study examines the trajectory of real estate-owned (REO) sales in the Chicago metropolitan statistical area from 2009 to 2013, roughly the first few years of the housing market recovery. Using a data set of property transactions, it tracks property sales to investors and owner-occupiers, and examines the neighborhood characteristics that contribute to an investor’s decision to purchase an REO property. Neighborhood characteristics include social and physical variables as well as housing and transportation affordability variables. Findings are consistent with previous studies in that investor activity is high in neighborhoods with higher proportions of African American and older residents. In addition, investors are more likely to purchase homes in neighborhoods that offer more affordable transportation options. Our findings can help planners identify areas where they may need to target programs that help reduce barriers to REO sales, particularly to owner-occupiers. By understanding the neighborhood-level determinants of REO dispositions, planners can help promote an equitable recovery and affordable homeownership for low- and moderate-income families.

Suggested Citation

  • Andrew McMillan & Arnab Chakraborty, 2016. "Who Buys Foreclosed Homes? How Neighborhood Characteristics Influence Real Estate-Owned Home Sales to Investors and Households," Housing Policy Debate, Taylor & Francis Journals, vol. 26(4-5), pages 766-784, September.
    • Handle: RePEc:taf:houspd:v:26:y:2016:i:4-5:p:766-784
    DOI: 10.1080/10511482.2016.1163277
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    1. W. Scott Frame, 2010. "Estimating the effect of mortgage foreclosures on nearby property values: a critical review of the literature," Economic Review, Federal Reserve Bank of Atlanta, vol. 95(3).
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    Cited by:

    1. Sahar Khaleel & Bernadette Hanlon, 2023. "The rise of single-family rentals and the relationship to opportunity neighbourhoods for low-income families with children," Urban Studies, Urban Studies Journal Limited, vol. 60(13), pages 2706-2724, October.
    2. Sidong Zhao & Kaixu Zhao & Ping Zhang, 2021. "Spatial Inequality in China’s Housing Market and the Driving Mechanism," Land, MDPI, vol. 10(8), pages 1-33, August.
    3. Sidong Zhao & Weiwei Li & Kaixu Zhao & Ping Zhang, 2021. "Change Characteristics and Multilevel Influencing Factors of Real Estate Inventory—Case Studies from 35 Key Cities in China," Land, MDPI, vol. 10(9), pages 1-29, September.

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