We’re talking about foreclosures and short-sales folks, or, as a new report from the Minneapolis Area Association of Realtors terms it: Lender-Mediated Sales.
Jeff Allen, research director at the MAAR and Aaron Dickinson, Edina Realty agent (and blogger) are responsible for this tight little report, entitled "Foreclosures and Short Sales in the Twin Cities Market" which gets to the heart of some questions that have been on a lot of minds lately.
Chief among them: Just how much of the current market activity is foreclosure/short sale related, and what are the broader impacts?
The report itself confirms a fact that many of us tracking the issue anecdotally have suspected: Almost 30% of closed sales (Q1 2008 – see graphic above) are/were in some stage of foreclosure or other "lender-mediated" status, such as a short sale.
One surprising data point gleaned by Jeff and Aaron was the fact that there is a fairly stark dichotomy between lender-mediated and traditional real estate activity in our market. Check out this graphic:
The key takeaway from this is that Median sales prices outside the universe of lender-mediated properties have only deteriorated by 3.9% over the last year. One possible conclusion to be drawn from this is that the rising tide of
foreclosures and short sales lender-mediated listings and sales are not putting as much downward pressure on prices of traditionally marketed properties as we would have imagined, and has been reported.
This obvious good news is also seasoned by this fact, from the report:
The actual number of traditional seller new listings has fallen by 27.4 percent over the last two years…So clearly, homeowners are holding steady in their current residences with greater frequency and home builders are producing far less new inventory.
In other words, many sellers, sensing a bear of a market, are simply opting out, while those that are selling, aren’t taking nearly the bath that one would expect.
Though it is still early on, and we have a lot of ground to cover before the real estate contraction is over, this report presents a far more optimistic view of the state of our housing market than we, and many others, would have expected.
Yes, prices are falling dramatically in the aggregate, but the bulk of the carnage is occuring in the lender-mediated market, and the traditional market is holding up rather well, all things considered.
Anyway, go read the report – too much good stuff to list it all here – and kudos to Jeff and Aaron for putting this together.