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Today’s Real Estate Headlines – True or False?

Almost every day, as I do my research, I come across a headline that grabs my attention. Many times it leads me to believe that there is a contrarian view to one that I currently hold on an issue in real estate. I immediately read the article only to find out that the headline and even the first few sentences of the story have nothing at all to do with the actual conclusion of the author or the report being sited.

An example of this happened just a few days ago. The New York Times ran a story with the headline Fewer People Late Paying Mortgage which was derived from the Mortgage Bankers quarterly delinquency report. That had me excited as I was hoping that someday soon the American economy would turn the corner.  People regaining the ability to pay their mortgage would definitely be proof of that. As I read the article I was buoyed by the first few paragraphs:

Even as the Obama administration stepped up efforts to aid homeowners facing foreclosure, data released Friday indicated that the housing crisis might finally have stopped getting worse.

The number of homeowners falling behind on their mortgage payments almost always rises with the start of winter. But late last year, the total fell slightly…

“We’ve got fewer new problems coming into the system,” Jay Brinkmann, the group’s chief economist, said in a briefing. The improvement in the fourth quarter, he added, “frankly surprised us.”

Had we turned the corner?

Will we not have a wave of foreclosures which could cause a double-dip in home prices?

Alas, I just had to finish reading the article to find out the true essence of the news:

First came the caveat:

The mortgage bankers’ group defines its broadest delinquency category as those who have missed at least one payment but are not yet in foreclosure. That number fell to a seasonally adjusted rate of 9.47 percent in the fourth quarter, down from 9.64 percent in the third quarter.

Much of the improvement was because of a drop in the mildest category of default, those who have missed only one payment.

Then came the reality:

Owners who missed two payments increased to 6.89 percent in the fourth quarter, from 6.25 percent in the third quarter, TransUnion said.

We definitely saw things getting worse,” said F. J. Guarrera, TransUnion’s vice president for financial services. “Our forecasters are projecting it will now take longer for us to emerge from the housing crisis.”

The bankers’ data showed the number of owners missing at least three payments was up significantly. By that point, foreclosure is often inevitable.

The number of owners in this category rose in the quarter, to 9.67 percent, from 8.85 percent. Since the fourth quarter of 2008, the number of seriously delinquent owners has risen by half.

The percentage of loans in foreclosure went up in the fourth quarter, rising to 4.58 percent from 4.47 percent in the third quarter, the Mortgage Bankers said. In the fourth quarter of 2008, the rate was 3.30.

Did the headline accurately reflect the entirety of the news on foreclosures? No!

I am seeing this far too often. Does everyone want to believe that the foreclosure epidemic in this country will soon be over? Of course.

But, let’s remember what Albert Einstein said:

“A man should look for what is, and not for what he thinks should be .”

What does this mean to you?

Foreclosures will be a part of the American housing market in 2010. If you are thinking of selling, do it now before the discounted prices of that distressed inventory have their impact on your house’s value.

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