First American Real Estate Solutions’ New Study Investigates Residential Real Estate Foreclosures
Correlation Established Between Depth of Discount and Prevalence of Foreclosure Sales
SANTA ANA – Nov. 16, 2006 – First American Real Estate Solutions (RES®), the nation’s largest provider of advanced property and ownership information and a member of The First American Corporation (NYSE: FAF) family of companies, today announced that it has released its 2006 nationwide foreclosure study that investigates the increasing prevalence of foreclosure sales and the depth of discounts in 705 counties in 43 states, including the District of Columbia.
Entitled “A Ripple, Not a Tidal Wave: Foreclosure Prevalence and Foreclosure Discount,” the study by Christopher Cagan, Ph.D., director of research and analytics at First American Real Estate Solutions, investigates the trends in the number and prevalence of residential foreclosures and the discounts that are offered to sell properties that are repossessed by lenders. The study finds that foreclosure prevalence and discounts have been increasing, but this trend remains a ripple that has not become the tidal wave some expected would overwhelm the market.
Cagan’s research investigates the correlation between foreclosures as a percentage of total sales and the size of the discount buyers typically receive when purchasing foreclosure properties.
For example, in Orange County, Calif., where foreclosure sales accounted for 0.5 percent of total sales during the first half of 2006, the median discount was 3.8 percent; whereas in Baltimore, Md., foreclosures made up 8.9 percent of sales for the same time period, with a median discount of 20.0 percent.
By a careful process of data aggregation and analysis, the study also finds a strong tendency toward increased foreclosure prevalence and deeper discounting for properties in the lower price tiers within their markets and communities.
“The prevalence of foreclosures and the depth of discounts can be correlated,” said Cagan. “Discounts tend to be deeper in markets where foreclosures comprise eight percent or more of all sales, regardless of geographic location or market type.”
Among the areas with few foreclosure sales and little or no foreclosure discounts during the first half of 2006 were Arizona, Nevada and Virginia. States where foreclosures were more prevalent and discounts were deeper included Colorado, Missouri, Michigan, Ohio and Pennsylvania.
“Foreclosure rates and discounts are key factors that impact real estate transactions and the performance of mortgage investments,” said George Livermore, president of The First American Corporation’s Property Information and Services Group. “By closely monitoring and analyzing patterns of default nationwide, we help our clients refine their insight into risks and opportunities as they emerge.”
First American RES has compiled the nation’s largest database of property and mortgage information and utilizes it in conjunction with proprietary processes to help its clients improve operational efficiency and manage risk.
Access to an electronic copy of the study is available at www.firstamres.com/pdf/Foreclosure_Study_2006.pdf. For more information or to arrange an interview with Dr. Cagan, please call (714) 250-6759.
About First American RES
First American RES, a member of The First American Family of Companies, is
America’s largest provider of advanced property and ownership information,
analytics and services. First American RES’ database covers more than 2,900
counties representing 98 percent of the United States population. With more
than 600,000 users nationwide, First American RES products are used by
companies to improve customer acquisition and retention, detect and prevent
fraud, improve mortgage transaction cycle time and cost efficiency, measure the
value of residential and commercial properties, identify real estate trends and
neighborhood characteristics, track market performance and increase market
share. First American RES is a joint-venture company 80-percent-owned by The
First American Corporation and 20-percent-owned by Experian. More information
about First American RES can be found on the Internet at
www.firstamres.com.
About The First American Corporation
The First American Corporation (NYSE: FAF), a FORTUNE 500® company that traces
its history to 1889, is America’s largest provider of business information.
First American combines advanced analytics with its vast data resources to
supply businesses and consumers with valuable information products to support
the major economic events of people’s lives, such as getting a job, renting an
apartment, buying a car or house, securing a mortgage and opening or buying a
business. The First American Family of Companies, many of which command leading
market share positions in their respective industries, operate within five
primary business segments, including: Title Insurance and Services, Specialty
Insurance, Mortgage Information, Property Information, and Risk Mitigation and
Business Solutions. With revenues of $8.1 billion in 2005, First American has
approximately 2,100 offices throughout the United States and abroad. More
information about the company and an archive of its press releases can be found
at www.firstam.com.
Contact:
David Schulz
Corporate Communications
The First American Corporation
(714) 250-3298
dschulz@firstam.com
