Housing Data: Possibly Distorted by Foreclosures

Real estate analysts who have been watching the market closely for any signs of recovery from the foreclosure crisis are worried that the data being collected is not as reliable as one would hope. This is because there could be a considerable number of foreclosed properties being left out. In addition, the fire-sale prices of these foreclosure homes can be affecting volume figures.

For these reasons, many experts are saying the current situation in the housing market may be worse than it actually is, crushing hopes for everyone who believes that the market has already hit rock bottom.

Homeowners, who are already having trouble with their mortgage payments, are having a much more difficult time these days, thanks to the declining home prices, growing inventory of foreclosure houses and tightening credit guidelines. In the end, many of these distressed borrowers find themselves giving up their homes to foreclosure since they could not sell or even refinance.

Last month, national foreclosures rate jumped by 55 percent compared to one year ago according to RealtyTrac. There were over 272,000 foreclosure filings for July alone including notices for default, auctions as well as bank repossessions.

According to an analyst from Deutsche Bank, the surge in foreclosure filings is making it difficult to provide any accurate analysis about how the housing market really is. For instance, in 9 out of the 33 markets studied, it was observed the number of distressed properties is significantly larger than those in MLS listings.

The said difference is believed to be due to what is referred to in the industry as “Shadow Inventory”. This inventory is composed of bank foreclosures or real estate owned properties not included in the foreclosure MLS listings.

Without accurate analysis of foreclosure data, it will be difficult to determine whether market conditions are improving or not especially since foreclosures strongly influence market prices and sales data.

Related Posts:

• Demand Up in Areas With High Bank Foreclosure Listings
• Bank Foreclosure Listings Auctions in Various Cities
• Foreclosure Properties: Bill to Have Centralized Data
• Bank Owned Property Listings Surged in 12 Counties in Colorado
• New York’s Foreclosure Data Inaccurate?