Realtor's Home Sales Numbers are Inflated

CoreLogic is reporting that the National Association of Realtors measure of existing home sales is overstated by 15% to 20% since 2006.  This also means that the NAR inventory of homes on the market was also understated.  CoreLogic also stated that the home price declines are driven by the high inventory levels of listed homes and the continued effect of high numbers of Foreclosures, Short Sales and other distressed properties.  They expect the home prices will be down 10% over last year by the Spring of 2011.

The volume of foreclosures and shorts sales has increased to 28% of all the home sold in 2010. This is up form 27% in 2009 and 20% in 2008.  The share of REOs (foreclosures that are bank-owned) fell from 22% to 21% while short sales increased from 6% to 7%.  Although this is a small shift in the type of distressed properties, it does have an impact on prices as short sales typically sell for more than similar REOs.

The supply of visible inventory is at 16 months in November 2010, the highest level since February 2009.

Link to the report:  CoreLogic Housing Trends 2010. 

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