Real Estate. Economics. Business
Check out the latest from the Minneapolis Area Association of Realtors with regard to Foreclosures and Short Sales in the Twin Cities. The big take aways are that inventory is falling in all segments – traditional sellers, foreclosures, and short sales.
There has been lots of press lately about the declining inventory of bank owned property as well as notices of foreclosure across the country as well as in the Twin Cities. Banks have absolutely driven the market the past 3 years but perhaps that tide is about to change. If inventory is any judge, that may be the case.
I just looked at the bank owned inventory in Plymouth, MN and all I can say is it’s dreadful! There are only 18 properties currently for sale. 2 of them are under contract right now. A total of 10 are single family homes and 8 are townhomes/condos. None of them are over $300,000 with the exception that one of them is an auction property that should sell for well over $300,000 when it’s finally auctioned. (The last purchase on it was a few years ago for over $900,000).
If you’d like this search that I just ran, please send me an e-mail and I’ll forward it to you on e-mail. Otherwise, I’ve set up a custom search for Plymouth bank owned properties.
Anyone who has spent much time in North Minneapolis, or at least read about it, knows that it is a very troubled area infested with run down buildings and high crime. The tornado that came through North Minneapolis 6 weeks ago severely damaged many, many buildings. Lots of the buildings are bank owned. The challenge has been what to do as far as fixing all the broken and damaged properties.
Now the City of Minneapolis is considering making this a redevelopment project complete with tax increment financing. Perhaps this will be a good opportunity to start over in a large part of North Minneapolis. I know there are upstanding citizens who continue to live there despite the crash in home values and ongoing criminal activities. Part of me says they should bulldoze block after block but what do you do with those long time residents who really want to stay put?
It will be interesting to see how this develops. One big question is what will happen with all the criminals? Where will they be go if this gets redeveloped and they get pushed out?
The news today is more of the same…Case-Shiller Index points toward double dip in housing. That might be so, I don’t know. Are prices soft. Yes. Is it difficult to sell a home today? It depends. Where is it located? What’s the price point? How updated is the home?
Here’s the challenge for the market concerning inventory particularly in some of the bigger, more populated western suburbs of Minneapolis:
So, what happens when you’re out showing property? We look first at the BANK OWNED homes as they generally represent the best deals in the market. We then very selectively choose some of the TRADITIONAL SELLERS to go see IF the home is priced decently and IF it appears to be nicely updated. The others sit. SHORT SALES…for the right buyer with a certain pain threshold and tolerance, we’ll go take a look…if only to have some fun just to see what it looks like. We then have to factor in the difficulty and likelihood of getting a deal done.
So all of that is the precursor to the article I saw in The Wall Street Journal today entitled, “Buyer’s Market? Stressed Sellers Say Not So Fast?“ Everyone thinks it’s a buyers market until they try to put an offer in on a house. Often times those homes are ending up in multiple offer situations today.
Here’s a quote that readily articulates the biggest challenge in today’s market:
Many sellers may be unable or unwilling to lower their home prices – mostly because they may be underwater on their mortgage – so buyers are increasingly finding lower offers than list price denied. Buyers, on the other hand, may be reluctant to agree to a deal if they don’t feel like they are getting it at a deep discount, industry insiders say.
If you are a TRADITIONAL SELLER and you do have the equity and financial wherewithall to sell, please don’t fool around with your asking price by pricing it over the market. You will hurt yourself in the end with a lower sales price. Price it right immediately. If you and your agent get it wrong (and you’ll know almost immediately with the exception of luxury properties), then adjust your price quickly. Your home is worth the most those first few days on the market. As days on market increase your value drops accordingly. Best to err on the side of being overly aggressive on your price – i.e. at or just below market.
For more on pricing your home properly, please see my video (albeit not high production quality) on pricing your home properly in today’s market. You’ll at least get the point I’m making.
One of the things I will try to be more diligent about is to publish data on new listings as it relates to traditional sellers, bank owned property and short sales. For the week of January 17 – 23rd, 2011 in Hennepin County, there were 397 new listings that came on the market. The listing inventory broke down as follows:
Total listings: 397
Bank Owned: 78
Short Sales: 49
Non-distress: 270
Distress sales have been taking more and more marketshare the past couple of years in the Twin Cities market. It’s expected that the number of foreclosures and short sales will continue to increase in 2011.
Source: RMLS 13 County Metro – Hennepin County, new listings from 1/17/11 – 1/23/11. Search performed by John Murphy, RE/MAX Results
There are currently 20 banked owned properties for sale in Plymouth, MN right now. These are not short sales, but rather they have gone all the way through the foreclosure process and are back on the bank’s balance sheets. These are much easier to buy than a short sale, but the buyer’s must beware that often times they may be in competition with others and the banks tend to price their properties on the low side in order to get multiple bids and sell the properties quickly.
For a free list of bank owned homes in Plymouth MN visit www.PlymouthBankOwned.com.
Calculated Risk has an excellent chart showing the continual growth in REO (real estate owned) properties at Fannie Mae, Freddie Mac, and the FHA. The foreclosures clearly have not yet peaked. I’ve also heard on the street that the loan modification program is not helping as many people as the government had hoped. It appears that has just merely delayed the inevitable foreclosures.
The New York Times recently published an excellent article for those considering buying bank owned property. Tara Siegel Bernard of the New York Times is to be commended for writing a thorough and straight forward piece on the pros and cons of buying bank owned homes. She also briefly touches on the challenges with short sales.
Thanks Tara!
