Here’s an interesting chart given to me by someone (not a Realtor) who attended a presentation by the Leslie Appleton-Young, Chief Economist of the California Association of Realtors in July.

It is using data provided by ForeclosureRadar.com, the firm featured in that CBS 60 Minutes piece a while back and shows broad disparity within Sacramento, California by area divided by a highway. On the left features new developments, peppered with the damage of speculators and subprime.

I have long said that there is “no national housing market” and that macro real estate data can be misused or misinterpreted.

Let’s take foreclosures.

Are they are growing problem? Yes.
Can they represent as much as half the sales in a market (ie Sacramento)? Yes.
Is it a serious issue that will get worse before it gets better? Yes.
Will millions of homes be foreclosed in the next few years? Probably.

Is every town (are most towns) in America experiencing massive foreclosure activity right now? No.


5 Comments

  1. Sean OToole August 6, 2008 at 5:27 pm

    We see a really high correlation between new developments and foreclosure – especially those new developments completed at the peak. In fact price declines from the peak are a far better indicator of the likelihood of foreclosure than subprime, speculation, etc. (though those things likely are what drove the peak so high). I really love this image because it shows that stable older neighborhoods with low turnover are hardly affected. Something to think about when you buy your next home or invest in rentals.
    Best,
    Sean O’Toole
    ForeclosureRadar.com

  2. Will August 6, 2008 at 5:41 pm

    Macro real estate information is great if you plan to buy property in every market in America simultaneously.

  3. Joseph Reiner August 6, 2008 at 6:05 pm

    I think this would be more interesting if you explained what the green, red, and blue flags stood for.

  4. John Wake August 6, 2008 at 6:12 pm

    Sean,

    “… stable older neighborhoods with low turnover are hardly affected.”

    Huh!?

    All those foreclosures across the road are going to have a huge impact on the value of the homes in their older neighborhood.

  5. Edd C Gillespie August 6, 2008 at 10:38 pm

    John said
    “All those foreclosures across the road are going to have a huge impact on the value of the homes in their older neighborhood.”

    Does that happen because the two neighborhoods are competitive or when you combine the two neighborhoods and calculate an average for the combination?

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