The latest C-L HPI came out on Tuesday, reporting the price increases in each market. They have two categories, the full-market number that includes “distressed sales” (short sales and foreclosures), and then another index that excludes “distressed sales”.
We don’t know the mix or types of properties, so this is pure speculation. But if the indexes are properly weighted to give an accurate depiction of the pricing, can we conclude a couple of things from this data?
|City/Area (CSBA)||HPI (excl. distressed)||HPI (incl. distressed)|
1. Investors have gone wild in Phoenix, with pricing of distressed properties going up faster than non-distressed. If they have more REO listings that are priced well, are easy to see, and have a fair bidding process, they should sell faster and for more money than those that are priced incorrectly, are difficult to see, and struggle to create a fair bidding process.
2. The other areas show slower price gains in the distressed-properties category, which is what people expect – that distressed properties sell for less. But not for much less.
3. San Diego has the biggest negative difference between distressed and non-distressed categories. Every REO sale that I see looks like a fair bidding process and a full-value sales price – it must be that the short sales are dragging down the pricing in that category. With the push towards fewer foreclosures and more short sales, don’t be surprised if this category suffers – because realtor manipulation of the short-sale process is wide-spread in San Diego County.
The +0.8% sticks out like a sore thumb. The index isn’t measuring just distressed sales only – they are mixed in with the full market. Yet look how they skew down the data – how can distressed sales cause a right turn in the springtime data when, without them, the trend was full tilt boogie?