ASU director of real-estate studies uses bogus stats

The Arizona Republic reports today that Arizona State University's director of real estate studies at the Morrison School of Management and Agribusiness has been presenting an unrealistically rosy picture of home resales in Maricopa County by including trustee sales as resales.

Trustee's sales are when banks take possession of a property from a borrower in default. As readers of this blog are aware, trustee's sales have been going through the roof--Einzige has been reporting notices of trustee's sales, issued when borrowers fall 90 days past due on their mortgages. The most recent such report was for April.

By including trustee's sales, Butler's numbers showed home resales up 15 percent in April 2008, year over year, the first uptick for year-over-year resales since July 2005. The Arizona Regional Multiple Listing Service, on the other hand, showed a 12 percent decrease.

Apparently Butler failed to notice--or didn't see the point in telling--that over a third of his reported resales were trustee's sales (2,025 of 5,585). The corrected number for actual sales was 3,565 (lower than ARMLS's number of 4,874).

Compare that to April's notices of trustee's sales--6,184--and you see the the immediate future prospects are bleak, not rosy. Homes are going on the resale market much faster than they are selling, which means further inventory growth and home prices have farther to fall.

Butler has agreed that he made a mistake and will report trustee's sales separately from now on.