My explanation would mimic Rich’s. I will add a short run through some numbers though. January REO sales correlate with November or earlier NOTs. November NOTs correlate with July NODs (a quick regression shows that NODs lag NOTs by 4 months more accurately than 3 months).
There were 2033 NODs in July 07. Of these, about 50% become NOTs, meaning there should be about 1,000 foreclosures potentially being sold in January. This is what is TRYING to be sold. My question is what’s a standard ratio of what sells vs. what is for sale? Maybe 1/4, if those listings are priced aggressively? 1000*.25=251
This last ratio is key. Even if there was 1 foreclosure per sale, that only means maybe 1 REO sale per 4 other sales.
I believe the data is correct, but the assumptions/projected implications are shortsighted.