51% of Recent Local Home Sales Were Foreclosures
More than 51 percent of Twin Cities home sales during the past four months were foreclosures, according to rather dire data released on Thursday by Truckee, California-based Clear Capital.
The national trend was nearly as bad as local sales: About one-third of all home sales during the period were foreclosures, resulting in what Clear Capital calls a national “double dip.” In fact, home prices from across the nation were 0.7 percent below the previous low reached in March 2009. All metro areas tracked in the report experienced a quarterly drop in home prices.
Local home prices slid 8.6 percent from the previous quarter and close to 7 percent from the same period a year ago. But Clear Capital analyst Sean McSweeney said in a Friday phone interview that the Twin Cities has not yet experienced a double dip, as current prices remain about 7.7 percent above the previous low.
McSweeney said that the 7 percent buffer may be eroded in the coming weeks, but as we move into the warmer months-in which more homeowners are expected to put their homes on the market for traditional sales-the decline in prices will likely slow and perhaps level out. Current local home prices are down about 47 percent from their peak in mid-2006, McSweeney added.
Seven of the worst-performing metro areas are located in the Midwest. Although the region fared worse than the rest of the country, the Midwest is the only region that hasn't yet “double dipped.” McSweeney said that this is due primarily to the significant gains experienced during the last two years when Midwest homebuyers “responded very positively” to a federal tax credit.
In addition to the Minneapolis-St. Paul metro area, Detroit and Fresno, California, also saw foreclosures account for more than half of total sales during the past few months.
The local market has been increasingly dominated by foreclosures during the past couple of years. Foreclosures in Minnesota jumped 11 percent in 2010-reaching the second-highest level since peaking in 2008, according to the Minnesota Home Ownership Center.
The struggling local housing market is also proving difficult for residential construction. Last month was the slowest April for housing construction in the Twin Cities in at least the last five years, according to data from the Builders Association of the Twin Cities.