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Foreclosed Homes: We're Not Getting The Full Picture

A home is advertised for sale at a foreclosure auction in Pasadena, California.
Reed Saxon
A home is advertised for sale at a foreclosure auction in Pasadena, California.

This morning, in response to a question from one of our anchors, I said that the bulk of foreclosed homes are not included in the existing home sales report from the National Association of Realtorsbecause they don’t land on the MLS.

Many of you have written in to refute that statement (do y’all need to be quite so hostile??). Anyway, Lawrence Yun, the chief economist for the NAR told me what I reported, but after your notes, I went back at the NAR. This from their media relations folks:

They're not significant in our data, but can't directly measure - guess is low single digit percentage. Most are handled through auctions and select brokers who specialize in foreclosure - some market independently and some place in MLS, but we don't have a data field to capture in the collection methodology.

Obviously that’s a tad less firm than what Yun told me this morning. That said, Ken writes to the blog:

I guess I can't fault you for reporting what NAR tells you, but I think they are wrong. Houston's MLS is the nation's largest, and I can tell you that here, the percentage of total MLS sales that are foreclosures is large and rising. (I don't have the exact number, but I believe it will be 30% of the total, maybe even 50% very soon).

Also, 18% of our reported "resales" are actually new homes listed with realtors. NAR does not back those numbers out either, so there has been a huge double counting of actual resales all the way up.

Ken, who seems to be a real estate agent--but I don’t know that for sure--then went on the Houston MLS and found that of the 1,751 Single Family closings in January, 2008, 412 of those were foreclosures. Thanks Ken for the info, and I’m hoping the NAR will start to look more closely at the number of foreclosed property in their data, as that would be a great number to know.