The number of houses in financial distress for sale in the Twin Cities has dropped sharply as buyers took advantage of falling prices, area Realtors said Tuesday in a quarterly report.
By itself, that's good news for the Twin Cities-area market. But another key piece of the housing recovery puzzle still hasn't fallen into place: the rate of foreclosures pushing homes onto the market. New "lender-mediated" listings -- foreclosures and short sales, where homes are sold for less than the amount of the mortgage -- remain well above year-ago levels.
Market-watchers fear that rising unemployment will push more prime mortgages into foreclosure in the coming months, putting continued pressure on the market.
The number of distressed properties on the Twin Cities market dropped 2,100 from Feb. 1 to the start of July, to 6,685, according to the Minneapolis Area Association of Realtors, which said it's the fewest available since March 2008. When looking at the same number between July 2008 and this month, the drop was 18 percent.
The Realtors group attributed the drop to falling mortgage rates, an $8,000 federal tax credit for first-time buyers and near-record affordability.
"We're very pleased that the lenders are getting to the price points where they have sold very quickly, even some with multiple offers," said Steve Havig, president of the group and owner of Lakes Area Realty in Minneapolis. It's a sign, he said, that "we're inching to a balanced market."
The group said that distressed inventory is down in every price category, except the $1 million-plus, where it has increased 60 percent.
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