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Market Updates

Distressed Property and Eminent Domain Issues Inside the Beltway

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newsThe Federal Housing Finance Agency (FHFA) – the government agency overseeing the conservatorship of Fannie and Freddie – released a report this month analyzing the impact of distressed property sales on FHFA’s Home Price Index (HPI).

While the report does not call for any immediate policy changes, it does contain several important facts bolstering the arguments we have made to FHFA and Congress for the past several years.

The study examines distressed sales within the state of Florida, and future studies may take a broader view of the market.

Here are several conclusions that can be reasonably drawn from the study:

  1. Distressed property sales do not have a long-term negative impact on HPI. While initial discounts obviously lower HPI, the resale values are substantial enough for HPI to recover quickly. This dispels the myth that distressed sales have a lingering negative effect on the long-term values of homes.
  2. Discounts for distressed properties generally fall into the range…

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