Continuing the train of thought about foreclosures, here’s a real estate agent, John Keith, who compares the increase in condo sales to foreclosure rates, andtherefore doesn’t see a problem. (Hat tip to Universal Hub.)I have some honest questions about that: What do theforeclosures have to do with the sales? Are they necessarily related?
Hehelpfully admits, "Now, of course, I realize, people going into foreclosure this year mayhave bought their homes in the past year, but very well could havebought them two, five, ten or twenty years ago. But, I think it isstill a good comparison to use."
Why is it still a goodcomparison? Is there a typical year-to-year correlation between salesand foreclosures? Or are the two similar-seeming jumps caused bydifferent things? Just because the data points seem to move nearly intandem this year doesn’t mean that they always do.
It seems unlikely to me that folks are buying properties and immediatelyfacing foreclosure. In fact, my hypothesis would be that theforeclosures are mostly people who have bought in the last few years atrelatively inflated prices, possibly using risky credit products, andhave run into financial/personal/health problems in the meantime. (That hypothesis is much the same as the Globe article, I suppose.)
If John (or anyone) has more data on this, I’d be interested to seeit. But his use of the one-year data point doesn’t convince me thatthere isn’t a big problem afoot.
By the way, see blogger Ben Day’s thorough response here. (I don’t see it as a blog war, BTW — just a chance for folks to subject their ideas to scrutiny.)
And as for the Globe’s reporting: There is a realhuman-interest story here, and it’s typical for a reporter to findindividual stories that fit the analysis. The story of the pizza-shop owners is anecdotal evidence, andas such it probably deserves John’s caveats. But people are reallysuffering; and when I hear stories of foreclosure, I feel a lot of"There but for the grace of God go I." Just sayin’.
