For the first two years of the real estate market slowdown our local paper, The Des Moines Register did a pretty poor job of accurately reporting on the housing crisis and its effect on the local economy. This year however it has been putting out some pretty good stories about how the Des Moines market has been affected. Two recent articles that did a great job of not glossing over the facts and showing the depth of the issue were Karen Mraceks September 4th piece Defaults, Foreclosures send bank holdings soaring, and Donelle Eller's top of the fold front page story Sunday September 6th  Foreclosures Seen Hurting Home Values.

Donelle Eller's story was complete with a graphic showing foreclosed properties mapped out across the county. It added a very visual dimension to a subject that is often treated only with line type. On the map one could see huge clusters of foreclosed homes in certain areas, but one could also see that the problem really covers the entire metro area and suburbs, not just traditionally blighted inner city areas. Some key points cited in from the article from local and national sources were (quoting):

"Foreclosed houses in Iowa will reduce the value of 317,552 neighboring homes by $323 million this year"

"Foreclosed homes, mostly sold by banks after a sheriff sale, accounted for about 9.5 percent of last year's $4.5 billion in Iowa home sales. So far this year, foreclosed homes account for about 8.3 percent of Iowa home sales, compared with 3.4 percent two years ago"

"About 15 percent of all Polk County home sales from January through July were of homes owned by lenders. In Dallas County, the sales were 12 percent."

"Lender-owned homes typically were sold about 35 percent below market value in Polk County from January through July, and 22 percent below market in Dallas County."

"The gap between the market value and the sales price is the largest on properties selling for $150,000 and less - ranging from about 20 percent to 60 percent below market values, 2009 data from the Polk County assessor's office show."

"Nearly 130 lender-owned homes in Polk County and 29 in Dallas County sold for less than $50,000. The lower-priced sales made up about 30 percent of foreclosure sales in both counties"

An interesting fact that I learned from the article was that, quoting, "Distressed sales may be considered when private appraisers determine a home's market value to secure a mortgage, but excluded when the assessor considers a home's value for tax purposes."

So, foreclosures drive down market values, the price a home actually sells for, but that reduction in value does not give you a break on your property taxes! I'd call that a quadruple whammy: Lower values due to foreclosures, increased competition for buyers from foreclosed homes, less equity for homeowners from appraisals, no benefit to homeowners affected by lower values in the form of reasonable taxation. I'm sure there's a really good reason why the assessor won't consider foreclosed homes when determining your tax bill. I'm sure there is.

All rancor aside, the Register has been putting out some good information for the public this year despite massive layoffs and scathing cost cutting. It's no fun for anyone to read these things but it's better than having the reality swept under the carpet. Lets just hope the recovery we're all hoping for is on its way. Property owners in Polk County would love to see it.