The Foreclosure Report

High Foreclosures Means Big Discounts

A report looks at foreclosures and the effect on home prices. "The study by Christopher Cagan, Ph.D., quantifies the correlation between foreclosures as a percentage of total sales and the size of the discount buyers typically receive when purchasing foreclosure properties."

"For example, in Maricopa County, Ariz., where foreclosure sales accounted for 1.6 percent of total sales during the first half of 2005, the median discount was 6.3 percent. Whereas in St. Louis, Mo., foreclosures made up 7.9 percent of sales for the same time period, with a median discount of 29.5 percent."

"'The prevalence of foreclosures and the depth of discounts are sensitive indicators of the present and future state of a real estate market, regardless of geographic location or market type,' said Cagan."

"Among the areas with few foreclosure sales and little or no foreclosure discounts during the first half of 2005 were California, the District of Columbia, Hawaii, New Mexico, Virginia, Nevada, Florida and Arizona. States where foreclosures were most prevalent and discounts were deepest included Michigan, Missouri, New York, Ohio, South Carolina and Tennessee."

posted by Ben Jones @ 11:25 AM