Yesterday the Minneapolis Area Association of Realtors released a new report: Foreclosures and Short Sales in the Twin Cities Housing Market to members and today that report was released to the press. The report is an attempt to tease apart what is happening in this huge sea of the Twin Cities housing market. There are definitely different streams that make up the sea - sorting them out can be tricky.
Here is my take on the key points in the report:
Lender-mediated sales (foreclosures or short-sales) are definitely making up a larger portion of the market. In the 13 county metro area lender meditated homes made up 3.5% of closed sales in first quarter (Q1) of 2006, they made up 9.3%of closed sales in Q1, 2007, and jumped to 27.6% of closed sales in Q1 2008.
The actual number of "traditional" seller new listings has fallen dramatically. New "traditional" listings are down 27.4% over the last two years. Home owners are holding onto their homes longer and new construction starts are definitely down. This decrease in ready to go "traditional" listings provides an opportunity for rehabbers as there is a decrease in supply in homes that are "move-in ready". Lender mediated homes tend to have more deferred maintenance and work than your average home buyer is ready to take on. The process of buying a lender-mediated home is also much more difficult for most first time home buyers who are likely moving out of a rental situation.
Declines in value are weighted towards lender-mediated sales. It has been widely reported that median sales prices of homes in the Twin Cities was down 10.3% from Q1 of 2007 to Q1 of 2008. When you tease the markets apart, you find that the median sales price of "traditional" homes showed a 3.9% one year decline, and a 3.5% two year drop. However, lender-mediated median sales price had a 10.4% one year decline and a 15.9% two year drop.
The number of lender-mediated listings are heavily weighted toward lower listing prices. Lender-mediated inventory makes up 51.8% of listings under $120,000 and 38.2% of listings $120,001 - $150,000. The percentage of lender-mediated inventory steadily declines as the listing price increases. Lender-mediated listings make up 10.5% of the $250,001 - $350,000 price range.
To see the report for yourself click here. I would be interested in hearing your comments!
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