He implies that falling $/sq ft is due to price drops, but in fact, it is due to a shift in the mix of homes sold. Although prices are dropping, it is not reflected in $/sq ft. That measure suffers from the same problems as median. As the distribution of homes sold changes, and we sell fewer entry level homes, the median rises, the average rises, and the $/sq ft falls. This occurs even if prices are flat.
He wrote that NODs are must-sell inventory, but in fact most homes in NOD status are not even listed for sale on the MLS, and even REOs are still listed too high. Few people in foreclosure list their homes for sale; they just don’t have the equity to care, or to pay a realtor. Consequently, the rise in NODs and REOs is not yet affecting prices. REOs seem to be among the worst, as lenders in faraway places think the San Diego market is still on fire; after all, the hear the median is rising! (I emailed him about this as soon as I read the story.)
He wrote that high NODs could be due to duplicate entries for the same home from piggyback loans, but there is no proof. foreclosure.com shows only 1 entry per home. (I emailed him about this as soon as I read the story.)
Brooke, if you really want to help Rich, then encourage him to improve his analysis and stop jumping to conclusions. Push him to do better.
