Foreclosure, statistics vs reality
I don't think a day goes by when I don't get an inquiry from someone wanting to buy a foreclosure in the Charleston real estate market. Let's forget about short sales, as I've said before, the seller can list the property and even accept a contract subject to bank(s) approval (even though you're unlikely to even get a response) but in the case of a foreclosure, the bank is the seller and you can write a contract and expect a successful closing (although you should expect the condition to be horrible at best).
The other day, the media headlines were typically negative regarding housing market conditions. When the foreclosure statistics are released, look for even more frightening headlines. But the reality is that 2 million foreclosures are only 4% of all the mortgages in the United States and only 2.6% of all homes in the country. Sure, that is too many but the headlines might have you think that since foreclosure activity surged by 90% year over year, that 90% of all homes were at some stage in the foreclosure process.
At year end, South Carolina had a 2.2% foreclosure rate and was ranked 39th in foreclosure activity. There are foreclosures of Charleston homes available to purchase (there are one or two in my neighborhood) but the Charleston real estate market is not as distressed as California, Florida, Nevada and some of the Midwestern states. It's important to read beyond the headlines.
Jonathan Miller, writing at Matrix addresses the the perception that almost every home is in foreclosure and puts the statistics into context.
"We see huge percentage increases every single month and yet the typical reader doesn’t really know what these stats mean in the context of all mortgages outstanding other than…it’s getting worse. I don’t think I am alone in getting the feeling that 87.4% of all houses are under foreclosure (left-handed people only, while it’s 92.3% if you include right-handed people)."
Please read Jonathan Miller, [OTS] Foreclosures: From Malaise to Disarray.
Despite these facts, I do expect a government bailout paid for by the taxpayers who continue to pay their mortgages on time to rescue those who did not. Remember, it is an election year.