One third of all home sales in Minnesota during the first quarter were paid for with cash - a significant increase over last year, according to a new survey by the National Association of Realtors. That increase, in Minnesota and across the country, is somewhat perplexing to the experts. From January through March in Minnesota, 34 percent of all sales were cash compared with just 19 percent two years.
Last year many cash deals were foreclosures that were being bought be investors with plenty of money to spend, but those distressed sales have been waning. Lawrence Yun, NAR's chief economist, said the findings are counterintuitive.
“Distressed home sales, most popular with investors who pay cash, have declined notably in the past two years, yet the share of all-cash purchases has risen,” he said. “At the same time, investors have declined as a market share, indicating other changes have been underway in the marketplace.”
Those distress sales declined from 26 percent of the national market in 2012 to 17 percent in 2013 and 15 percent in the first quarter of this year; NAR projects distressed homes to drop to a single-digit market share by the fourth quarter. All-cash purchases rose from 29 percent in 2012 to 31 percent in 2013 and 33 percent in the first quarter of 2014.
A new monthly report shows that house prices in the Twin Cities metro, including foreclosures and short sales, increased by 9.0 percent in March 2014 compared with last year,according to CoreLogic's House Price Indicator. From February to March house prices in the Twin Cities increased by 0.7 percent.
That was the ninth-biggest year-over-year gain among the nation's largest metro areas and only slightly below the national average, which stood at 11.1 percent.
CoreLogic's HPI is a unique look at what's happening to house prices because it tracks repeat-sales of the same homes over time, including single-family attached and single-family detached homes. Stay tuned for the April sales report from the Minneapolis Area Association of Realtors, which we'll publish here on May 12. That report will include closings, pending sales and a detailed look at what's selling in this area.
With house prices on the rise, the number of homeowners who owe more than their house is worth has been steadily declining - good news because more people are able to sell their houses without taking a loss. In Minnesota, only 9 percent of all homeowners with a mortgage are still "seriously underwater," which means the debt on the property is exceeds the property's estimated market value by 25 percent higher, according to a first-quarter report from RealtyTrac. That's compared with 17 percent nationwide and much higher averages in Sunbelt states, including Las Vegas, where the negative equity rate was 37 percent.
The report also reveals a somewhat troubling and surprising trend: 35 percent of all homeowners nationwide who are in foreclosure have equity in their home, a slight increase from last year and the previous quarter. Minnesota tied with the Boston metro-area for the highest level of foreclosures, topping out at 58 percent. RealtyTrac's Darren Blomquist's speculates that foreclosure equity is on the rise because homeowners aren't aware that they have any equity at all, so fail to attempt selling the house before it's too late.
“Many distressed homeowners with equity may not realize they have equity and in some cases have vacated the property already, assuming that foreclosure is inevitable,” he said.
I recently wrote that with home prices on the rise and the economy on the mend, the foreclosure crisis in Minnesota was nearing its end, and today there's more evidence that fewer Minnesota homeowners are headed towards that terrible fate. The Minnesota Homeownership Center issued a new report that says the number of preforeclosure notices sent during the first quarter fell 41 percent compared with last year. Though foreclosures are still happening all too often in Minnesota and beyond, the decline in notices is important because it's an indicator of how many houses will end up being sold at sheriff's sales.
Here's a graphic look at what happened:
Twin Cities real estate agents say that a shortage of listings and harsh weather put a lid on home sales during March, but with fewer foreclosures in the mix and limited options for buyers in some areas, prices were up compared with last year. And those higher prices helped draw more sellers into the market. All of that is according to a monthly report from the St. Paul Area Association of Realtors. Here's a quick look at the Twin Cities housing market during March:
Twin Cities homeowners appear to be in far better financial shape than they were last year.
CoreLogic, a national real estate research firm, said that the foreclosure rate in the metro was 0.63 percent during January, a decrease of 0.58 percentage points compared to January of 2013 when the rate was 1.21 percent. Nationwide, the foreclosure rate dipped to 1.97 percent.