Who knows the truth about this but we do know things are not getting any better, anytime soon! With the foreclosure mess amongst us the low prices and high inventory is here to stay.
On Wednesday, research firm RealtyTrac said 12 percent of all home sales in Minnesota during the third quarter were houses that have been through foreclosure. Nationwide, a quarter of all sales were foreclosures. Statewide, that number is down from last year, but at the current pace of foreclosure activity, the Home Ownership Center estimates that by the end of the year there will be a 13 percent increase in the number of foreclosures.
Likely to be the second worst year on record for home foreclosures and at a time when homeowners are facing increasingly dire circumstances. An extension of unemployment benefits has expired and Congress has yet to renew them. Home prices have continued falling. And lenders are swamped with an unprecedented supply of houses that owners can no longer pay for.
Real estate research firm Realtytrac found that in Minnesota the average sales price of properties in some stage of foreclosure was more than 32 percent below the average sales price of properties not in the foreclosure process.
--Daren Blomquist from Realtytrac said foreclosures accounted for about 25 percent of all residential sales.
"We are seeing in the third quarter basically what the true market is like without the artificial stimulus of the tax credit," Blomquist said. "If you look at overall sales numbers from other sources, overall sales are down as well quite a bit."
Blomquist said that he believes the sharp drop is largely because of the homebuyer tax credit that basically pulled forward a lot of demand to the second quarter.
A slate of data releases shows the Twin Cities residential and commercial real estate markets are still struggling to recover. The Standard & Poor's Case-Shiller home price index indicates Twin Cities home prices dropped 2.1 percent from August to September. Among the 20 cities the index tracks, that drop was the second worst. Cleveland had the biggest decrease. The Twin Cities index showed home prices had been ticking up in the spring and early summer before starting to drop again. In an email, David Guarino, a spokesman for Standard & Poor's, says the Minneapolis market's volatility "is due to foreclosure sales (as a proportion of total sales) increasing rapidly over the past 3 years." Foreclosed properties sell at a lower price relative to comparable non-foreclosed properties. "Increasing and more volatile volumes of foreclosure sales generate more volatility in the Case-Shiller price index," Guarino noted. But Scott Anderson, an economist with Wells Fargo, has another explanation for the apparent volatility in the Twin Cities Case-Shiller numbers for September. "The drop in housing demand has been more severe in the Twin Cities than it has been nationally, so I guess I am not surprised that the Twin Cities had some of the largest home price declines in the nation," Anderson said in an email. Anderson says housing demand has been weak since May, while housing inventory -- the number of homes for sale -- has been on the rise. That dynamic of greater supply and lower demand pushes home prices down. Anderson projects home prices will continue to drop over the coming year."This will increase the financial pressure on households, and prolong the credit problems in the banking system, sapping the vitality of the economic recovery again next year," he said.
Good time to buy if you need to move and build long-term equity but dangerous time to flip with a lack of qualified buyers and over-supply of active listings!
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