Skip to main content

FHFA Examines Impact of Short Sales and REOs on Overall Housing Market

Aug 13, 2013

The Federal Housing Finance Agency (FHFA) has released a Working Paper that evaluates the impact of distressed sales—sales of bank-owned properties and short sales—on the FHFA house price index (HPI). The study details recent and historical price discounts associated with such sales and provides statistical evidence supporting the validity of the approach FHFA has used to form its “distress-free” house price indexes. Such indexes, which were first released in the summer of 2012, show price trends free of the direct effects of distressed sales. As the Working Paper notes, "homes sold in distress tend to sell at significant discounts relative to other transactions. Given this discount, even without looking at the empirical data, it would be reasonable to assume that such sales would have a significant impact on aggregate measurements of home price trends." The paper, “Working Paper 13-01: Distressed Sales and the FHFA House Price Index,” was authored by FHFA Principal Economist Andrew Leventis and FHFA Economist Will Doerner in FHFA’s department of Housing Finance Research and Analysis. FHFA Working Papers are preliminary products circulated to stimulate discussion and critical comment. The analysis and conclusions are those of the authors and do not imply concurrence by other staff at the Federal Housing Finance Agency or its Director.
About the author
Published
Aug 13, 2013
Fed Rate Could Be Down To 4.6% By Year's End

Inflation must hit its 2% goal for Fed to reduce rates.

New Compliance Requirements Add Challenges

Latest changes arrive at an already disruptive time in the mortgage industry

Changes Coming For Investment Properties

Using leases to qualify will require Proof

FCC Adopts New Rules To Close The 'Lead Generator Loophole'

Mortgage lead providers respond, saying this will "wipe out" several small and mid-tier businesses

Trade Associations & Lenders Stand Behind Trigger Leads Bill

Major trade associations like The MBA, NAMB, and BAC, urge action on S. 3502.

Supply And Demand Are Still Alive And Well

Treasury auctions may face weaker demand but they’re still getting done