Examining price appreciation in foreclosed properties

This thesis examines foreclosure sales of single-family homes in eight communities in the Boston Metro area and the price appreciation from purchase of a foreclosed property through to a subsequent fair market, arms-length sale. The post foreclosure sale price appreciation of the foreclosed properties is compared with price appreciation of fair market, arms length sales to discern the effects of a foreclosure on future price appreciation. RESULTS The magnitude of the price appreciation may be positively influenced, or in part, caused by investment to remediate defects in the property or to cure problems due to endemic disinvestment. On the other hand, it is quite probable there is a negative effect due to intractable problems and or stigma which cannot be cured with money or sweat equity; i.e. socio-economic factors such as changes in crime and poverty rates, macroeconomic conditions, floods or other natural mishaps. Price appreciation, as measured through actual repeat sales, from 8 cities in the Boston Metro area, indicate foreclosed properties appreciate more rapidly than normative, arm's length transactions in those same markets. The results were unclear for sales pairs initiated in 1991-1994, during a relatively flat market. However results are significant with sales pairs initiated in 1995-1997 and 1998-2000, during the real estate recovery and over various holding periods up to five years, using repeat sales data from 1987 through 2007. The Foreclosed Sale Pairs initiated from 1995-2000 dominated the Market Sale Pairs initiated during the same years over the two to five year holding periods.

Department dc:contributor.department

Massachusetts Institute of Technology. Center for Real Estate

Grantor dc:publisher

Massachusetts Institute of Technology

Year dc:date.issued

2008

Author dc:creator

• Loth, Eric, Jr

Advisor dc:contributor.advisor

• Henry Pollakowski.

• Urban Studies and Planning.
• Center for Real Estate.

Statement dc:rights

• M.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See provided URL for inquiries about permission.

Licence dc:rights.uri

• http://dspace.mit.edu/handle/1721.1/7582

Language dc:language.iso

eng

Handle dc:identifier.uri

http://hdl.handle.net/1721.1/58653

OAI identifier oai:identifier

oai:dspace.mit.edu:1721.1/58653