Recently the Statesman Journal and Salem-News.com spread the word that foreclosures in Salem Oregon had increased. They used CoreLogic as their source of data and they are reporting an increase for Salem. I disagree with their presentation of the data and here is why…
Interpreting the foreclosure data
First of all CoreLogic and I look at different things. First, they have their foreclosure rate calculation. This is a calculation based on the number of mortgages involved in the foreclosure process at any given point in time. Think about their data this way. In January, 10 loans get served with a notice of default. 5 works things out with the bank, 5 don’t. Those 5 homes are slated for auction in April. April comes and 2 of the 5 delay their auction to do a short sale. The other 3 go to auction and 10 more people get served with a notice of default. So CoreLogic says that there are 12 homes (the 2 short sales plus the 10 new properties) in their foreclosure rate in April which is a 20% increase over January. It isn’t that 20% more homes got served with defaults, it is just that there are 20% more homes in the system. CoreLogic’s “foreclosure rate” isn’t a foreclosure rate the way more lay people think about it. There wasn’t an increase in the number of homes that went into foreclosure in Salem Oregon. There was an increase of the number of homes in the system. Essentially, CoreLogic’s foreclosure rate is really a shadow inventory rate.
The other difference in our data is that my data is Salem Oregon proper. I don’t include Keizer, Gervais, Turner, etc in my calculations. Just Salem. They include a wider birth of zip codes in their data, where I pull by address and not zip code. In fact, the CoreLogic data showed a 16.4% increase in the foreclosure rate for the zip of 97307, which is the zip for PO boxes. What I don’t know is if they have any doubling up of their data with two addresses (the physical address and the PO address). Apparently, people with PO boxes in 97307 are late on their mortgage payments lately.
Salem Oregon foreclosures
While I do think shadow inventory is important because at some point it will hit the market, I also care about how many physical properties are being served with default notices. At some point we have to sell a real house and my data is showing that the number of properties being served with defaults in Salem Oregon has in fact decreased for the second quarter in a row….by 14.3%.
So what does my data vs. CoreLogic mean for the Salem Oregon real estate market? Pretty easy interpretation, I think. Short term…not so hot. That shadow inventory being tracked by CoreLogic will hit our real estate market at some point and continue to keep prices down and inventories up. Long term…we are going in the right direction and we are starting to decrease the amount of properties feeding into the shadow inventory black hole.
If you want to see the homes for sale in Salem Oregon that are in foreclosure, just click the link, then contact me for a showing.
Data provided in this post was calculated from information received from Fidelity National Title Company.