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Foreclosure pain rises
A report from Minneapolis-area Realtors shows that rising foreclosures are lowering marketwide prices.
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Read the Minneapolis Realtor report, including a city-by-city breakdown, at startribune.com/pdf. And you can research Twin Cities home prices at startribune.com/infocenter.
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The number of foreclosed and other bank-controlled homes on the market in the Twin Cities area has nearly doubled from last year, while the number of traditional listings has fallen 16 percent, according to a second-quarter report issued Thursday by the Minneapolis Area Association of Realtors.
The report focuses on homes in the Regional Multiple Listing Service that have been foreclosed or for which the lender has agreed to a sale for less than the mortgage amount, called a "short sale." More than 20 percent of all houses on the market in the metro area are foreclosures or short sales, up from a little more than 10 percent a year ago.
In general, the lower the price, the more likely it's a foreclosure or short sale.
Aaron Dickinson, an agent with Edina Realty who helped process the data, said it appears that lenders are offering larger discounts to buyers. The median sale price of lender-controlled listings has fallen 11.7 percent during the past two years, while the median price of traditional listings fell 3.4 percent.
"The banks are becoming more motivated to get those properties cleared out," Dickinson said. "They're starting to price more aggressively to get this inventory off the books."
Nationwide, in many communities hit hardest by foreclosures, home sales rose during the second quarter, while sale prices fell dramatically -- suggesting that lenders are indeed working harder to unload those listings.
In Nevada, for example, the number of sales during the second quarter rose 18 percent from a year earlier, while the median sale price in the Las Vegas area fell 24 percent, according to quarterly data released Thursday by the National Association of Realtors. The report said that median home prices fell in more than three-quarters of all U.S. cities.
Locally, second-quarter home sales in Minnesota fell 10.8 percent, while the median sale price of existing single-family homes in the Twin Cities area fell 7.2 percent, according to the report.
Foreclosure rates across the nation continue to increase. RealtyTrac reported Thursday that nationwide, the number of foreclosure notices sent in July rose 55 percent compared with July 2007 -- that's one in every 464 households. Minnesota had the 33rd-highest foreclosure rate in the nation.
The Associated Press contributed to this report. Jim Buchta • 612-673-7376
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