Finally someone wrote an article talking about the impact of foreclosures on prices and even included median home prices of non-foreclosures, REOs, and Short Sales (at a national level). Article is here.
Here’s the last sentence…
Since distressed properties sell for so much less, using them as comparables drags the appraised values of regular homes way down.
“It’s the No. 1 reason why transactions fall through,” said Cecala. “If you can’t get an appraisal to support the price, the deal will won’t close.