How Many Foreclosures Have Happened Since the Housing Market Crashed?

How Many Foreclosures Have Happened Since the Housing Market Crashed?

Posted By Sulaiman Law Group, Ltd. || 6-Aug-2012

Frighteningly enough, nobody knows. I spend a lot of time absorbing data about the housing market. More often than not, when one news outlet reports, "Foreclosures at All Time Low," another is reporting, "Foreclosures in Chicago Up 20% Since Last Year."

How is this possible?

One of the main problems, as Matt Stoller's article (linked above) points out, is that there is no one entity that is responsible for collecting data regarding the housing market, and foreclosures in particular.

Many news articles are based upon numbers provided by RealtyTrac, the Woodstock Institute, or another third party source. However, there's no government agency that keeps track of foreclosure data on a national level. The Consumer Financial Protection Bureau is supposed to have a foreclosure database, pursuant to the Dodd-Frank Act. Unfortunately, Congress has never appropriated funds to build it, so it remains a mere mandate. CFPB and HUD are now working on a joint database, but without funding and no mandated deadlines, there's no telling when that will be completed.

So why does this matter? Is there a point beyond the accuracy of statistics spewed in news reports?

Yes, actually. We are attempting to develop housing policy to address the current housing crisis without any data upon which to base policy choices. Imagine trying to plan the menu and shopping list for a party where you have no idea how many guests will arrive. Now, multiply that difficulty by a million or so. That's the current state of housing policy decision-making.

In the past, the U.S. had one stated policy towards housing: "Increase home ownership." Now, we have to adjust housing policy towards a market where foreclosures continue to depress property values and where the number of available rental units cannot keep up with the number of prospective renters. Knowing how many foreclosures have been processed, how many are currently in the pipeline, and how many imminent defaults or non-foreclosed defaults exist would be immensely useful in planning this strategy.

Yet we don't have solid numbers. So, the next time you see conflicting news reports about the rise (or fall) in the number of foreclosures or the stabilization (or continued depression) of housing values, you'll know why. In a world of lies, damn lies, and statistics, the man with no data is king.