3rd Quarter Foreclosure and Short Sale Market Update

The total number of lender-mediated homes for sale has dropped by about 60% since third quarter last year, but they still make up about one quarter of total inventory (25.2% vs 26.6% last year) because the number of traditional homes for sale is also down.

Q309-MAARlendermediatedinventory What is perhaps most notable is the difference between lender owned and short sale properties. The supply of lender owned properties has fallen precipitously while the supply of short sale properties is still high, as dramatically illustrated in this chart published by the Minneapolis Area Association of Realtors.

As first-time homebuyers have scrambled to take advantage of the $8,000 tax credit they have passed over short sales because of their uncertainty and potentially long time frame. If the properties don't sell as short sales, they will eventually become lender-owned (foreclosure) properties.

Last week, in reviewing September stats, I talked about how "there usually is an arc in the number of homes on the market, as it surges up in the spring and back down in the fall and winter. This year's arc is so flat it's almost unrecognizable as 'traditional' sellers have been holding back."

The charts below, also from the Minneapolis Area Association of Realtors, clearly illustrate this distinction. You can see that the normal seasonal arc in traditional listings and sales going back to 2005 is totally absent in lender-mediated listings. While the arc of traditional listings is still there, the number has been decreasing each year since its peak in 2006. Conversely, lender-mediated listings and sales started increasing at about the same time.


It is interesting that traditional sales actually increased last quarter, while past third quarter sales have dropped or held steady with the second quarter. It could have to do with foreclosure inventory being down and first-time home buyers passing over short sale properties for traditional ones.

Median sale price for traditional sales continues to be higher than for lender mediated sales, which is also influenced by a higher percentage of lender mediated homes in the lower price ranges. While the overall median sale price for third quarter was $174,000, it was $125,000 for lender mediated sales and $207,500 for traditional sales.


Compared to last quarter, the percentage of lender mediated inventory is down slightly for houses and up for both condos and townhomes, which has the largest share of lender-mediated homes for sale of the three property types.


Click here to see the full report compiled by the Minneapolis Area Association of Realtors…and click here to see interactive, sortable data by localized area.

Sharlene Hensrud, RE/MAX Results – EmailMinneapolis-St. Paul Realtor


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I love what I do! Highly insightful, analytical and creative, there is nothing I love more than helping you find the right solution for your real estate transition. My mission is to serve my clients with honesty and integrity, exceeding their expectations in service and support… and to help others by donating a portion of every transaction to Habitat for Humanity.

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