I recently read an article in the Portland Business Journal about the spike in foreclosures in Oregon. As I read it, I was dumbfounded by the statistics they quoted. Most of you know that I track and have written about our Salem Oregon area foreclosures on several occasions. In the article it stated:
Salem ranked No. 64 with 1,724 actions, affecting one in every 69 households.
This statistic quoted refers to foreclosure actions as stated by RealtyTrac. What you need to know is that the statistic quoted is poor statistics in my opinion…and here’s why…
It’s not unique.
What am I talking about? Anyone who has an online presence tracks unique visitors. We don’t care that we had 10,000 hits if only 3 people caused them. We want to know how many individual people are looking at our online marketing at any point in time. We care about unique hits.
What you need to know is that RealtyTrac isn’t reporting unique. So if you live at 123 Main street and get served with a notice of default by lien holder #1, one by lien holder #2, AND then it becomes bank owned, RealtyTrac counts this as 3 separate notices…for one property. So what this does it make the data seem astronomically high.
I read the fine print today for RealtyTrac
The RealtyTrac U.S. Foreclosure Market Report provides a count of the total number of properties with at least one foreclosure filing reported during the first six months of 2009. Data is also available at the individual county level and MSA level for Midyear 2009, Q2 2009 and June 2009. Data is collected from more than 2,200 counties nationwide, and those counties account for more than 90 percent of the U.S. population. RealtyTrac’s report incorporates documents filed in all three phases of foreclosure: Default — Notice of Default (NOD) and Lis Pendens (LIS); Auction — Notice of Trustee Sale and Notice of Foreclosure Sale (NTS and NFS); and Real Estate Owned, or REO properties (that have been foreclosed on and repurchased by a bank). If more than one foreclosure document is filed against a property during the month or quarter, only the most recent filing is counted in the report.
I don’t know about any of you, but I haven’t seen a property issued a notice of default and then become and REO in the same month or quarter. So how many unique properties were served with a foreclosure notice in Salem Oregon MSA (all of Marion and Polk counties) in the first half of 2009?
979 according to the data I get from Fidelity National Title here in Salem Oregon. That is a difference of 745. If you don’t read the fine print about how they report their data, you would think that there are 43.2% more distressed properties somewhere out there in the Salem Oregon MSA. They’re aren’t…at least not according to the information I get.
So if you are one of those bargain hunters bent on trying to find some of that “shadow inventory” be aware that it might be more appropriately called “mirage inventory.” If you really think that there are 745 more unique distressed homes on the Salem Oregon real estate market…look ahead, I think I see something a mirage an oasis.