Contrary to statements by the media, the Maricopa County foreclosure rate dropped in August. There were 2,914 trustee sales for single family homes in Maricopa County in the calendar month of August. There were 2,701 similar sales in July. You might think that this indicates trustee sales were increasing. However you would be wrong.
There were only 20 working days on which trustee sales could be held in July, while there were 23 in August. This means that we should have expected the August number to be 15% higher if the daily foreclosure rate was flat. In fact the daily rate of foreclosure fell by 6% from 135 per working day in July to 127 per working day in August, continuing the strong downward trend we have seen since March.
This indicates how overly-simplistic mathematical logic can send entirely the wrong message that foreclosures are increasing when they are not. Our calendar is a strange device that can distort our view of the market unless we take its idiosyncrasy into account. That’s why we measure 7-day, 30-day and 90-day moving averages rather than relying purely on calendar month totals.
As of September 12 we have seen only 912 trustee sales recorded for all property types since September 1. This is an exceptionally low number. If trustee sales continue at this rate throughout September (with its 21 working days), then the total for September will be close to the total last November (with only 19 working days) when we had several institutions including Bank of America doing no trustee sales at all while they addressed the national robo-signing controversy. September looks very likely to be a very weak month for foreclosures, measured on both a calendar month and daily rate basis. In fact the 90-day average for the daily rate of foreclosure is today at the lowest level since July 2008, over 3 years ago. When correctly measured, the rate of foreclosures is currently falling fast. Do not let the stories in the media mislead you!