Effor.com

Wow, here’s an interesting tidbit that you should keep in mind when you hear something about home sales increasing.   According to an article published in the San Francisco Chronicle today, 4 out of every 10 home sales in the state were foreclosures.

Among the California homes sold in June, 41.9 percent were foreclosure resales, compared with 6.6 percent a year earlier, DataQuick said. The Realtors group noted that sales of homes priced under $500,000 represented 67 percent of all sales, up from 40 percent.

So if you read that home sales jump (as this article also states) keep in mind how many of those sales are foreclosures.   It evidently counts as a sale when a bank repo’s your house, and then again when the bank sells it at auction or via a traditional sale using a realtor.

In other words, the number of sales may increase, but is it really increasing if almost half of the sales are fire sales because the owner couldn’t make their payments?  I know that technically these sales do count, but it’s something to keep in mind as these types of numbers turn up more frequently in the next year or two.

BTW - I tried to find the percentage of home sales nation-wide that were foreclosure sales, but I haven’t found that number yet.  I’ll add to this post later if I find it.

gk