I’ll check in to the foreclosure issue, but I think that these are included. There are several factors that might hide declines. First, there is not capture of rebates, covering of closing costs, ect. as far as I can tell. Home builders are clearly using these and there is certainly some action in the resale market as well. Second, resales that occur in less than six months are not used. The reasoning is that such transactions may represent something other than arms lengths transactions (e.g. a parent buys a house and then “sells” it to his/her kid a short time later). I was not totally happy to see this because I think it downplays the speculative aspect of the market. However, it may well be that by not including these six month or less sales that the CS index actually failed to fully capture the extent of the boom in the run-up to the summer softening. All of the crazy “buy in march, sell in april” sorts of sales were not included in the weighted index. The third thing to remember is that it is a rolling index of the last three months of sales…as FSD states above, the fourth quarter awaits.
If I could put in my own two cents…I do sometimes think that folks on this board and other bubbleblogs have a mirror image mentality with regard to the boom. Many expect the bust to be sharp, fast, and exciting. I admit I find myself harboring the same hopes. However, this is a form of speculative thinking. Housing busts generally seems to be slow, boring, long affairs in which much of the downturn occurs from inflation eating away value. As an LA professional earning nearly 100k and not able to afford to buy, I too wish for a fast 40% correction. I just don’t think its going to happen that way. (ps. addendum to my first post, I should say “data” are plural…since I work with data every day, its an embarassing mistake!)
