Foreclosures rise, housing market remains lackluster
WILLMAR -- Among the recent new listings of Willmar homes for sale is one with a swimming pool and a location in what Realtor Mary Peterson describes as "a beautiful secluded area."...
WILLMAR -- Among the recent new listings of Willmar homes for sale is one with a swimming pool and a location in what Realtor Mary Peterson describes as "a beautiful secluded area."
It also happens to be a house that's been foreclosed on -- a fact that helps explain why pricing has become so critical in the current housing market.
Buyers right now can almost name their price, said Peterson, of All-Star Realty. "If you have a house on the market, it needs to come out of the gate as the best value for your price range. And you're going to take a major hit on price if the buyer thinks there's work to do."
The number of foreclosures has reshaped the market, agreed Earl Rich of Edina Realty.
"That's driving the prices of the homes down. You've really got to be competitive," he said. "I think the biggest thing right now is correct pricing."
Although the recession appears to be easing, home foreclosures are not.
New figures from HousingLink, released Friday, show there were 7,254 home foreclosures in Minnesota during the third quarter of this year. That's the second highest level, after the 7,349 foreclosures recorded in the second quarter of 2008.
The number of foreclosures in Minnesota during July, August and September was 15 percent higher than the previous quarter, and 23 percent higher than one year earlier.
According to HousingLink, most of the increase was driven by a rising number of home foreclosures in the seven-county metro area. Foreclosures in rural Minnesota rose at a slower pace.
Peterson does most of her work with foreclosed properties, which often end up being sold to first-time homebuyers or to investors.
"I don't see that slowing any time soon," she said.
The figures from HousingLink show there were 33 home foreclosures in Kandiyohi County during the third quarter of this year. During the third quarter of 2009, there were 28.
Meeker County has seen a similar trend, with foreclosures rising from 30 just one year ago to 33 in the most recent quarter.
Even less-populated rural counties in western Minnesota are seeing five, six or seven home foreclosures per quarter.
Peterson, who does pre-foreclosure inspections for a Twin Cities company, said she has been averaging 80 to 90 of these inspections a month in Kandiyohi County.
In most cases, these are homeowners who have missed three mortgage payments, she said. "Most people do pull out of that situation. Some of them don't."
In the meantime, the market favors those who are buying.
"This last month has been pretty good," Rich said. "There has been a little movement on Green Lake and the lakes. ... If the price is right, it's going to move."
An $8,000 federal tax credit offered to first-time homebuyers injected some spark into the housing market, but activity tapered off when the credit expired April 30, Rich said.
New home construction also has been sluggish. From January through October, the city of Willmar issued only 12 building permits for single-family homes, said Randy Kardell, city building inspector. For the same period a year ago, it was 16. Just four years ago, in 2006, 28 single-family home construction permits were issued by the city
"Commercially we've got lots of work going on," Kardell said. But home construction might not pick up until late 2011, he said.
Figures for September from the Minnesota Association of Realtors showed that home listings and sales have mostly been flat.
The median sale price for homes in the southwestern region of the state has declined from $114,600 in 2009 to $110,750 this year. On average, sellers have been receiving about 10 percent less than the original list price for their house.
Rich said he's encouraged that the local market has registered some improvement in recent weeks, but he's remaining cautious.
"You just take one day at a time," he said.