While you could certainly make the case that it’s metastasizing — even Edina now has some foreclosures — from my perspective, it still seems that foreclosures have a pretty definite geographic concentration. Obviously, once foreclosures surround you on a give block, it’s pretty hard to overlook them and instead grab a “traditional” sale miles away as a comp (believe it or not, that what the tax assessors do!).

Bottom line: lumping foreclosures together with traditional sales is a “bruised apples to oranges” comparison.

We had our first quarter of fewer new “lender mediated” listings coming on the market in Q4 of 2008 and we see in many communities that Q4′s new listing activity was down substantially while sales were still very strong. That’s led us to 600 fewer lender mediated properties from the end of Q3 to the end of Q4… also a first for the data.

The way I look at the lender mediated sales is to compare it to Circuit City and Best Buy. The lender mediated sales are a relatively short-term product and once they are all gone they are all gone. Traditional sellers are like Best Buy in that they will be the only thing left standing when this housing cycle is completed. I’m sure Best Buy’s sales are hurting some today and that they’ve adjusted some prices to compete, but there are still many consumers that will go to Best Buy and pay a higher price for a better product and/or experience.

I suspect that Traditional Sellers’ prices still have a little further to fall… particularly in neighborhoods where there isn’t a lot of competition from lender mediated sales. Only time will tell on these things but the dialog is good for everyone to hear and hopefully participate.

I am watching primarily for the shift in percentages – once the lender mediated share of the market is trending down, and inventory numbers are doing the same, then we are going to be much closer to a balanced and healty market.

So, by meaningless, we of course mean that the notion that “if you take foreclosures out of the market, things actually don’t look so bad” – which isn’t at all what the folks at MAAR are saying, but we’ve heard this line trotted out by a more than a few real estate professionals.

If you want my honest opinion, there should be some regulation that doesn’t allow the banks to sell their homes for less than a certain percentage off what they “thought” it was worth to begin with. Since they can sell their assets for pennies on the dollar without any serious hit on their balance sheets (since we will either bail them out or they will go bankrupt), what incentive do they have to ask fair market value? None. Since MY balance sheet (bank account!) cannot suffer such a big hit, I have to sit here and suffer the consequences of their bad behavior.