Written By:
Ingo Winzer, President
Local Market Monitor
Beware the
recent data on home prices. Has the value of homes in Phoenix really risen 25
percent in the past year? Atlanta, up 13 percent? Las Vegas up 15 percent? Is a
new boom underway in markets that just a couple of years ago were epicenters of
the real estate crisis?
Or are the
home price figures skewed in these markets by the large number of foreclosures
finally working their way through the system? Foreclosure law varies from state
to state, but in Arizona foreclosure sales go to the highest cash bidder except
that the mortgage lender can make a "credit bid" that usually is much
higher than the actual market value of the home, often the full amount of the
mortgage.
If foreclosure
sales are now a bigger portion of all home sales than before, these
"credit bids" will give the illusion that market prices are rising.
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