2011 Twin Cities year end Distressed Sales snapshot



Foreclosure auction signs

Image by niallkennedy via Flickr

2011 may have marked the bottom of the real estate market in the Twin Cities, or at least we hope so.  The Minneapolis Area Association of Realtors 2011 year-end report is out and this is the report on the Distressed Sales for 2011.

An astonishing 50% of the properties sold in 2011 were Distressed, meaning Short Sales or Foreclosures.   It is little wonder why the Median Sales Price seemed to plummet in the Twin Cities in 2011.

The top area for distressed market share were primarily the “exurbs”.  A couple of theories for this might be, those areas may have a lot of the Trades people there – carpenters, HVAC, roofers, drywallers etc.  The housing industry was hit hard, and so were the Trades people’s income as a result.  The price of gasoline soaring also might have played a role in this making the commute less desirable.  I don’t believe those areas were subject to any different loans than the other areas, but I could be wrong.

 

Below shows us a better picture of the Median Sales Price plummet we kept reading about from Case Shiller and other home price indexes.  A brutal -33.3% drop in median sales price over the last 4 years.  If you break this apart by sale type like MAAR did here, it makes a little more sense.  Traditional Sales median prices are down -14.1% over the same 4 year period while Short Sales are down -29.3% and Foreclosures median prices down -32.5%.

This reflective of Condition of the Home as well as the bargaining position of the buyers.   I don’t expect 2012 will be nearly as bad, as I expect we will work off more foreclosures and begin to see prices stabilize.  There are areas in the Twin Cities that may begin to see prices increase this year.

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About Craig Kamman

Realtor. Twin Cities Area specializing in New Construction, Development and Investment Properties.

About

Realtor. Twin Cities Area specializing in New Construction, Development and Investment Properties.

Comments

  1. Great job Craig, I hadn’t gotten around to going over their report yet. It would be interesting if someone actually did a study on why the “Exurbs” got hit so bad. A lot of speculation as to why, I do believe that some areas had more “funky” stuff going on.

    • I haven’t seen any reports, only speculation like you said. There are reports for banks that I was trying to get access to, but they wanted $50,000 – so I opted not to invest in those… Those are the reports that will tell us the exact figures of the “shadow inventory” and would probably show us if there is a pattern in the financing that is being foreclosed on.

  2. I can answer the question why the hicks in the sticks got hit so badly.

    Small community banks in those towns wanted to get in on the action that the big city banks were benefiting from. The WORST banks I ever saw were your small community banks, where there was no skilled or talented credit staff, and were typically headed up by a former high school football star as the commercial lending president. So since “housing always goes up” the local yokels at the local community banks thought it was free money, free business and just lend lend lend. If you look at the bank closings and cease and desist orders you’ll see a TON of small fry community banks getting pounded and shut down out in the exurbs.

    Also, when 90% of the males living in the exurbs or the sticks are employed as “contractors” or “home builders” every one of them wanted to build 40 spec homes and make enough money to buy a new, cool sled. Rockford is a great place to look at even semi-experienced developers who lacked the financial or economic accumen to study the basics of supply and demand.

    • Thanks Cpt. You worked in the industry and with some of these banks and even wrote the book on it! (Behind the Housing Crash). So you saw more of what was going than I did…

    • Now that I think about, I always used to joke that anyone who swung a hammer was now a builder, and they had no clue to what they were doing. Developers were no different; right now there is a 420 months (give or take a few months) supply of 2-3 acre lots in Sherburne County.

      • WOW! 420 months supply… I wonder if an investor could buy those – grow corn on it for a few years and then open it back up after the market corrects??

        • Oops, I think a calculated wrong, I added other lot sizes also. There are 111 active listings, and only 7 sales over the past 12 months for 2-3 acre sites; which is 16 years supply, or 192 months for just 2-3 acre sites. Let me know if my math is wrong.

          The price per acre doesn’t make it worth buying for corn, but I like your thinking.

          • I thought there was a Government Program on leasing agricultural land – where the leaases don’t necessarily reflect the value of the crop anymore. This is why the ag land is going through the roof… For example, corn doesn’t support $5,000 per acre – but farmers and investors are paying that per acre because of the subsidies. I don’t do much with ag land and just hear stories, so take it with a grain of salt..

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