Re: Impossible process due to overwhelming volume and...

Posted by steele in minnesota on November 03, 2008 at 05:18:41:

In Reply to: Re: Impossible process due to overwhelming volume and... posted by dr on November 02, 2008 at 21:50:28:

Maybe a clarification for those who actually read the posts as opposed to half reading them and then twisting what was said to fit their "opinion".

I never said REOs coming down the pike is a good thing. Are there more? Yes. And in many markets they will influence pricing as they make up about a quarter to a third of the market. REOs have been a part of every market for the 19 years I have been working with them. Real Estate has cycles and I have seen several as they relate to foreclosures. We don't factor them out of the market to get a "real market" because they are part of the market, period. Usually a small number of total sales. Now about a third in most of the larger markets.

Now the figures we use in our area compare quarters so we are not going to do any kind of "seasonal" adjustment. Summer vs summer. Winter vs Winter. Etc. Etc.

Statistics can be played with. Unfortunately the media tends to grab the most dire ones. Afterall, "Blood sells". But there have been a number of reports showing things are not as bad as suggested. And some of us "with boots on the ground" can confirm this.

You need real numbers? Here they are for the third quarter for the nine country Minneapolis/St Paul metro (the Twin Cities).

REOs and short sales (otherwise known here as "lender mediated") made up 28.1% of all the active listings. 34.1% of the third quarter new listings. And 34.5% of the third quarter closed sales.

Now these numbers are not strictly REOs. We don't have those. It is estimated that of the numbers above some 40-50% are potential short sales.

Sorry, you'll have to do the math if you want to know the REO factor. But traditional sales are quite easy. About 2/3 across the board.

But what is interesting is that the figures include median pricing for various property types and do break down the lender mediated vs traditional (homeowner) sales. Single family houses showed an interesting factor. The traditional sales were down pricewise 5.3% since a year ago. REO and short sales showed a price decline of 10.3%.

But what is especially interesting to me is that comparing third quarter of 2006 to 2007 for the traditional sales is that there was no decline (there was for the lender mediated), but rather a slight appreciation. Never reported in all the gloom and doom.

Short story long, real estate is local. Preaching national stats needs to be tempered with your local figures.

It may not be as bad as you were led to believe.

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