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Title: Price premium and foreclosure risk
Authors: Ong, S.E. 
Neo, P.H. 
Spieler, A.C.
Issue Date: 2006
Citation: Ong, S.E., Neo, P.H., Spieler, A.C. (2006). Price premium and foreclosure risk. Real Estate Economics 34 (2) : 211-242. ScholarBank@NUS Repository.
Abstract: Many previous studies identify loan, property, borrower and environmental factors that impact the probability of foreclosure. Implicit in these studies is the assumption that the property was purchased at fair value. We question this assumption based on several empirical findings regarding property value uncertainty. In contrast to previous research, we explicitly quantify the price premium from a hedonic pricing model. Using a comprehensive database of real estate transactions in Singapore during 1989-2000, we document a price premium associated with properties that are subsequently foreclosed based on actual sales transactions. In addition, we find that the premium paid at purchase significantly increases the probability of foreclosure. These results are robust and continue to hold after controlling for other property-specific factors, time-varying macroeconomic conditions, alternative model specifications and definitions of price premium. © 2006 American Real Estate and Urban Economics Association.
Source Title: Real Estate Economics
ISSN: 10808620
DOI: 10.1111/j.1540-6229.2006.00165.x
Appears in Collections:Staff Publications

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