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July-to-August Cape home foreclosures up 122 percent

September 7, 2018
By BOB & GERI QUINN - Homing In , Cape Coral Daily Breeze

We bet that headline grabbed your attention! Just to quickly clarify, there is no looming foreclosure crisis, as our distressed home sales went from only nine in July, to 20 in August, for an increase of 122 percent. We are using this headline to help illustrate the point that when it comes to numbers and statistics, the manner in which they are presented matters, a lot. So as we mentioned briefly in our column last week, when we saw a new foreclosure report that came out on an Internet post several weeks ago indicating there was a 59 percent year-over-year surge in July foreclosure starts in the Cape Coral-Fort Myers market, it caught our attention as being worthy of additional research. As we looked into it, we found what looks more like a teachable moment, than the next real estate crisis.

As we have mentioned in the past, one of the big problems faced by consumers is massive information overload, and getting your attention for a few seconds is a marketing challenge that has turned into a click by click science. In today's world of Internet news and information distribution, being able to attract headline "clicks" can be a critical component in redirecting traffic to a business webpage. Generating more "click throughs" from a headline brings more eyeballs into a webpage for advertisers, which can translate into more revenue for that website. To accomplish this, the use of sensationalized or misleading headlines to create "click throughs" has taken the old newsroom maxim of, "if it bleeds, it leads," to new levels as a business model on the Internet, where using tricks for clicks has become a big business.

This brings us back to our headline for today's column, which despite being sensationalized in the way it was framed, has an element of truth in it. We looked at the number of all homes sold in Cape Coral as recorded in the Multiple Listing Service as of Sept. 2, and then adjusted it for foreclosures and short sales. Based on the preliminary numbers for August, we found that the number of foreclosures and short sales increased by 122 percent from this July to August. However, as stated above, where this headline falls flat is in the actual numbers, which went from 9 distressed sales in July, to 20 in August. This would come off as being even more misleading if we failed to put the current numbers into proper perspective by telling you that based on the MLS data from back in 2009, there were an average of 474 distressed home sales per month sold through a Realtor in the Cape through Aug. 31 of that year, compared to an average of 11 per month sold over the first eight months of this year.

Now we'll turn our attention to the main reason we are writing this column, which was the Internet post in question from several weeks ago, written by ATTOM Data Solutions, stating there were large increases in foreclosure starts in our real estate market over the last three months. But instead of providing the actual numbers, along with clarifying analysis to support their data, they only provided their information based on percentage changes, and as we have illustrated above, that can be a sensationalized and very misleading way to present data.

Before digging further into the details, here is some background about ATTOM Data Solutions. According to their website, they are "a leading provider of publicly recorded data on more than 155 million U.S. properties," and their stated mission is to "increase real estate transparency by arming businesses and consumers with the property data needed to make wise decisions." Through "RealtyTrac Powered by ATTOM," they claim to be the nation's number one source of foreclosure data and the leading marketplace for foreclosed and defaulted properties. They are a widely known source for information in the real estate industry and they claim to be cited by thousands of media outlets monthly. Just to be clear, we have no reason to doubt the accuracy of the percentage increases as stated in their report, it's just the manner in which it was presented and what they left out of their report that we would question.

The headline of their post was, "Foreclosure Starts Increase in 44 Percent of U.S. Markets in July 2018," which peaked our curiosity. Their report went on to say the U.S. real estate market was in the midst of a "summer foreclosure heat wave," while also pointing out that, "Nationwide foreclosure starts in July increased less than 1 percent from a year ago, (which was) the first year-over-year increase following 36 consecutive months of decreases, but some local markets reported much more extreme foreclosure weather." Their report stated, "foreclosure starts were 35 percent higher in the State of Florida," while also citing they had found a "notable change" in foreclosure starts over the past three months in four Florida real estate markets, including Miami, Jacksonville, Orlando, and Cape Coral-Fort Myers.

In our market, they indicated that year-over-year, foreclosure starts increased by 11 percent in the month of May; by 64 percent in June; and by 59 percent in July, versus the same months in 2017.

Here are some of the things they left out of their report. First, they were reporting about an increase in "foreclosure starts," which involves the beginning of the foreclosure process, and while worthy to track, some of these foreclosure starts will almost certainly be resolved before they result in actual foreclosed properties. Another detail not mentioned in their article was the fact that on September 13, 2017, in the immediate aftermath of Hurricane Irma, there was a 90-day moratorium placed on foreclosures in areas hit by the storm. This foreclosure moratorium was then extended for an additional 90 days, through March 9 of this year. So there was actually a decline in the foreclosure numbers following the hurricane, which would have likely caused a spike in foreclosure starts at this point in time, as the foreclosure process rebalanced itself in a return to more "normal" activity after the moratorium was lifted.

Looked at in this report in the form of a percentage increase on a short-term three-month basis, the foreclosure starts can appear to be startling. However, when the actual numbers are viewed in comparison to the numbers over a longer time frame, the recent increases barely register as a blip on the radar screen at this point in time. This is where the actual information, numbers and context of the analysis matters, a lot.

(The sales data for this article was obtained from the Florida Realtors Multiple Listing Service Matrix for Lee County as of Sept. 2, 2018. It was compiled by Bob and Geri Quinn and it includes information specifically for Cape Coral single-family homes, not including condominiums, foreclosures or short sales. The data and statistics are believed to be reliable, however, they could be updated and revised periodically, and are subject to change without notice. Also, please note, that on a national level, RE/MAX is a client of ATTOM Data Solutions. The Quinns are a husband and wife real estate team with the RE/MAX Realty Team office in Cape Coral. They have lived in Cape Coral for over 38 years. Geri has been a full-time Realtor since 2005, and Bob, who also holds a Certified Financial Planner designation, joined with Geri as a full-time Realtor in 2014. Their real estate practice is mainly focused on Cape Coral residential property and vacant lots.)

 
 
 

 

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