International Real Estate Review

Hungria‐Gunnelin, Rosane

doi:10.53383/100174

Cited by 12 publications

(2 citation statements)

References 37 publications

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“…Therefore, one possible explanation for the foreclosure discount related to the auction is the limited pool of bidders, who are mostly specialized investors. The literature on auction theory (e.g., Bulow and Klemperer 1996) and the empirical evidence from (non-distressed) real estate auctions support the idea that a higher number of bidders increases the likelihood of a higher maximum bid (Ong, Lusht, and Mak 2005;Ooi, Sirmans, and Turnbull 2006;Levin and Pryce 2007;Hungria-Gunnelin 2013;Stevenson and Young 2015;Chow, Hafalir, and Yavas 2015). Focusing on foreclosure auctions, Mazzola (2022) shows that introducing an electronic bidding system eliminates a previously existing foreclosure discount by increasing the number of bidders.…”

Section: Discussion and Limitationsmentioning

confidence: 94%

Bargain or Bust? Prices, Discounts, and Returns in the Market for Real Estate Foreclosures

Wiersma,

Daminger

2024

30th Annual European Real Estate Society Conference

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We examine foreclosure discounts and their subsequent impact on investor returns in Berlin's housing market from 1984 to 2022. Utilizing hedonic regression models and matching techniques on a data set of housing transactions, we determine that foreclosure discounts, ranging from 20 to 50 percent, are significant and persist over time. In a repeat sales approach, in which we explicitly account for the sequence of transactions, we show that initial investments in foreclosed properties yield average annualised returns surpassing matched non-distressed counterparts by 20.5 percentage points. However, when a foreclosure follows a regular sale, the average annualised returns are 9.6 percentage points lower than in matched non-distressed transaction pairs. Novel to the literature, we further show that this markdown is only associated with the foreclosure transaction, rather than putting a permanent stigma on the foreclosed apartment. Our ability to control for both observed and unobserved property characteristics suggests that this discount may be attributed to both a foreclosure stigma and the format used for foreclosure auctions in Germany. Consequently, our paper not only advances the foreclosure literature with new insights from a global city but also contributes to the discourse on auctions in a real estate context.

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Section: Discussion and Limitationsmentioning

confidence: 94%

Bargain or Bust? Prices, Discounts, and Returns in the Market for Real Estate Foreclosures

Wiersma,

Daminger

2024

30th Annual European Real Estate Society Conference

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“…The more bidders a property attracts, the higher the expected selling price. This fierce competition also legitimises the broker's pressure exerted on the bidding winner to commit to the purchase on the very same day their bid has been accepted (Hungria-Gunnelin, 2019). It gives buyers little time to contact their bank and ensure that the property is accepted as collateral to be granted a mortgage, but makes brokers, who reduce uncertainty by adequately formulating contractual clauses, indispensable in the process.…”

Section: Empirical Insights Into Potential Change Processesmentioning

confidence: 99%

The blockchain challenge for Sweden's housing and mortgage markets

Proskurovska

Dörry

2022

Environ Plan A

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This paper investigates how blockchain technology may alter the defining mechanisms of residential real estate transactions in Sweden. It departs from the assumption that blockchain applications do not merely change complex socio-economic, organisational and governance arrangements of mature housing and mortgage markets. Rather, they may trigger resistance among incumbents in the current organisational model, which will drive incremental change. This analysis shows that housing transactions in Sweden are long and complex endeavours, underpinned by exclusivity, uncertainty and information inequalities. A public-private consortium led by Lantmäteriet – a Swedish government agency – has pioneered the use of blockchain technology for the conveyance of a house to address these deficiencies. This project has not moved beyond the proof-of-concept phase, while the socio-technical organisation of transactions has evolved. Insights from institutional and evolutionary approaches help conceptualise how technologically induced and qualitatively different structures and functional effects may change the way housing and mortgage markets will work, thereby highlighting both disruptive potentialities and limitations of blockchain applications for the legacy design underpinning the current Swedish housing transaction system. Following a forensic empirical approach, this paper dissects the organisational architecture, key practices and the linked network of actor groups running Sweden's property and mortgage markets. Results illustrate that understanding concrete blockchain-induced changes and their unintended consequences requires closer scholarly attention at the scale of actor networks, the types of knowledge and technologies, and the micro-geographies in which they are embedded. Such in-depth understanding enables better-informed assessments of the blockchain challenge for complex housing and mortgage markets.

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