Did you know that 47% of statistics are made up on the spot?
That old joke holds especially true with what passes for local published “foreclosure rates.”
Take RealtyTrac.com. Please.
This closely followed web site does a pretty decent job tracking “foreclosure activity” in various ZIP codes. But I know that its numbers are greatly misinterpreted by many – and probably most.
For instance, RealtyTrac is currently reporting that San Clemente had 47 notices of default filed with the County Recorder in September. It also says that there were 30 notices of trustee sale recorded in the same period and 12 actual trustee sales completed.
Adding these numbers, RealtyTrac reports a total “foreclosure activity” of 89 properties. Divide 89 by the number of “housing units” in San Clemente (about 22,058) and you get a September “foreclosure rate” of 0.40 percent – or one in every 248 housing units in the city, according to RealtyTrac.com.
Wow. Scary September. Makes you wonder what happened in August, and what’s going to happen in October… If we get an average 89 such properties every month, that would be 1,068 “foreclosure” properties annually – or almost 5 percent of city properties in trouble, one in every 20 housing units!
But of course, none of this is true. RealtyTrac’s numbers need to be explained.
First all, there’s a kind of “triple counting” going on here The 47 notices of default filed in September will result in something fewer than 47 notices of trustee sales being recorded on the same properties three months from now in December. Those properties will therefore be “double counted” in the ‘foreclosure activity.”
Worse, about a dozen or so of the same properties will yet again be included in January’s “foreclosure activity,” when those homes are actually sold by the trustee on the proverbial court house steps in Santa Ana. That’s triple counting.
It would be less misleading to use just the 47 original notices of default filed in September to calculate the maximum magnitude of the foreclosure problem at only 0.21 percent, or one in every 469 housing units. And they should change the name to a “default rate”
It could then be explained that, of those original notices of default, only a percentage were not cured and became notices of trustee sales.
And finally, the true “foreclosure rate” will end up being based on only the dozen homes actually foreclosed on. This would produce a much less dramatic picture of the local problem, with an actual “foreclosure rate” of only .05 percent, or one in every 1,838 San Clemente housing units.
Question: How does 47 homes in default become only a dozen homes lost to foreclosure within a four-month period of time?
Answer: Sellers have learned to “short sale” their distressed properties, and thereby avoid foreclosure.
For more about the local real estate picture, check out the latest San Clemente market trends at MCotter.com, especially latest market statistics and neighborhood stats.
