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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.

Negative numbers often conjure up negative images for me.

-40 degrees…means you are freezing your hiney off in some insanely cold part of the country.

-$50 means you just bounced a check at the local grocery store.

You know sometimes a negative number is a good thing….

-10 pounds…there aren’t too many people in the country that wouldn’t sign up for that.

-11% drop in Salem Oregon foreclosure notices…give me more of that, pretty please.  I’ll be nice…well, I’ll try anyway.  No guarantees.

I don’t think it is a big secret that foreclosures have been pulling home prices downward.  It isn’t a secret, right?  I don’t want my special real estate agent card revoked because I gave out classified information here…BUT for the first time in 5 quarters, the number of notice of defaults dropped by 11%, at least according to the information I get from Fidelity National Title Company.

Now that number is still…oh,  say…four times more than normal, but a drop now means that in a year from now we will see fewer of these properties hitting the market.   With our drop in unemployment here in Salem from the 11′s to the 10′s, it is possible that this downward trend will continue.

Right now 12.2% of Salem Oregon  listings on the WVMLS are designated as distressed properties (ie a short sale or foreclosure) and 11.1% of properties that sold in Salem last month were distressed properties.  It will take several quarters to bring these numbers back to normal, but it is nice to think of the possibility that we might be past the worst of those foreclosure numbers.  Unfortunately, one quarter doesn’t make a trend and we’ll have to see what happens in the next two quarters.

We’ll have to see how the rest of the small towns faire, but Dallas only experienced a 50% jump in foreclosures notices from 2008-2009.  It’s pretty sad when a 50% increase is good…Now I think part of that is that some of the builders out there were much smaller builders and went into default in 2008 because they couldn’t hold out as long as some of the larger Salem builders could, but I also think that homes there are just more affordable for most people.

Dallas Oregon Foreclosure Rates

This chart shows notice of defaults that were served in Dallas Oregon in 2009, according to Fidelity National Title Co.

In Dallas Oregon, there were 140 notice of defaults served in  2009 compared with the 94 served in 2008.   

How did that translate into the real estate world in Dallas Oregon this year?

Of the homes (regular single family and acreage properties) listed in 2009 according to the WVMLS,  35 were listed as short sales or bank owned homes.  That is 8.1% of listings.  This is one of the lower percentages of distressed properties in the area, and unlike Silverton which had a huge bump in Notice of Defaults served, Dallas’ jump is more proportional with the increase in foreclosure notices.

The future of distressed properties in Dallas Oregon?

Right now distressed properties make up 7.4% of the Dallas Oregon real estate market.  Like all of the metro cities, I would expect this number to rise due to the ongoing unemployment problems in Oregon. Unlike some of the other metro cities where I think the higher end houses will push home prices down, I think just the ongoing supply and demand problems here due to the excessive building (even moderately priced homes) will continue to pull prices down here.

If you are interested in foreclosures or short sales and want to start watching the foreclosure market, just email me to get on the list.