Tumbling prices and foreclosure sales by banks may be helping to form a bottom for the housing market, said Brian Bethune, chief U.S. financial economist at Global Insight Inc. in Lexington, Massachusetts.
“People who have been waiting on the sidelines — and there have been quite a number of them — are starting to see prices come down to the point where they perceive good value,” Bethune said in an interview. “Foreclosures do provide opportunities and induce some people to come back into the market.”
Sales of previously owned homes rose 3.1 percent in July to an annualized pace of 5 million, boosted by foreclosures that accounted for about a third of all transactions, the National Association of Realtors said in an Aug. 25 report.
The Mortgage Bankers report is based on a survey of 45.4 million loans by mortgage companies, commercial banks, thrifts, credit unions and other financial institutions.

from Bloomberg

How it’s possible to begin an article stating foreclosures have accelerated to the fastest pace in almost three decades and conclude with the concept that the market is bottoming is beyond my understanding. Yes, some areas are experiencing increased sales volume due to people actively seeking out “deals” in the marketplace and yes, investors will be the ones that lead to a leveling of price declines. Of course, everyone is playing with national statistics, but I don’t believe that increased sales volume in Riverside, CA is going to have much of an impact on sales prices in Detroit, MI. Knowing your local market is a much more significant factor for prudent investing rather than reliance on industry spin.

One significant part of their article was the reporting of seriously delinquent prime ARMs at 6.78%, rising from 2.02% a year ago. That’s a number that’s likely to rise as more prime ARMs reset over the next few years and it’ll probably have it’s greatest impact in the areas that were bubbly.