Experts Say Media Are Using Inflated Foreclosure Data
It is hard to miss the grim news about everyone losing his home from an inability to pay the mortgage. But what if the critical data in those stories were inflated?
âNow we switch to the housing market and the U.S. economy and this is a big story,â said NBC âNightly Newsâ anchor Brian Williams on August 23. âListen to this number on mortgage foreclosures in this country. Theyâre up 93 percent nationwide last month from the same period last year. This situation is dire. Itâs creating a lot of anxiety about how thatâs going to affect a great many homeowners and the economy as a whole.â
The mortgage foreclosure data Williams referred to is from RealtyTrac, a publisher of databases on foreclosures. But there are several voices throughout the industry that think the RealtyTrac numbers are over-inflated.
âI believe the reason that a lot of media sources use the RealtyTrac press releases is because it makes a good headline since the numbers are so negatively high,â Steve Dutra, a real estate industry expert for John Burns Real Estate Consulting, told the Business & Media Institute. âThe news is not good but this grabs the attention.â
The problem? RealtyTrac has a tendency to count some foreclosures more than once, said another industry analyst.
âRealtyTrac is run by people who have no expertise in real estate,â said Alexis McGee, founder of a competing Web site, ForeclosureS.com, to BMI. âThey donât understand the numbers. So what they were doing that was getting them in trouble is every time a foreclosure was recorded, they were adding them all up and saying this is how many foreclosures there are, when foreclosures are a process. And, a person goes from being delinquent to being in default to going to auction to becoming a REO [Real Estate Owned Property] and each step they were counting â so one person they may count three times and I donât think they understood it.â
Multiple calls to RealtyTrac were not returned, but Rick Sharga, vice president of marketing for RealtyTrac, told the (Newark, N.J.) Star-Ledger in June the company was going to fine-tune its figures because too many people, including the media, were misinterpreting the foreclosure numbers.
âWe stand by our numbers and always have, because they are exactly what is in the public record,â Sharga said to the Star-Ledger. âBut we want to provide a greater level of detail.â
McGee isnât sure they have fixed it, and one newspaper reporter who closely follows the New Jersey housing market is convinced it still isnât right.
âRealtyTrac's monthly foreclosure data is still inflated, because they haven't changed their methodology on a month-by-month basis,â Sam Ali, a reporter for the Star-Ledger, told BMI. âSo a single property may still get counted several times based on the number of filings it has accrued over time. They did release a six-month (January-June) roundup where they did include what they described as âUnique Households.â They claim this figure eliminates the double and triple counting of the same properties.â
But even with the adjustments in the RealtyTrac data, Ali determined it would not be possible to compare their âtweakedâ data of this year to last yearâs and come up with an accurate number of increased foreclosures.
âIn New Jersey that reduced the number of foreclosure filings from January through June from something like 27,000 to 13,000 â so it cut the figure in half, but for some reason they do not break down âUnique Householdsâ on a month-by-month basis,â Ali said. âNor did they include a âUnique Householdâ number for January through June 2006, so itâs impossible to compare year-over-year figures.â
Yet the media continue to use RealtyTracâs questionable numbers.
âSadly, I think all of us in the media are to blame for that,â Ali said. âCall it the lemming factor. RealtyTrac has been pretty aggressive about sandblasting their press releases to every media outlet on the planet with catchy, eye-popping headlines. When one person reports the figures, pretty soon, everyone starts reporting the figures. RealtyTrac first and foremost is not a research firm â itâs a company that sells foreclosure lists to real estate investors.â