Jeff Byrd

If you look deep enough in the real estate market statistics you will find some encouraging signs.  For those of you gazing into your crystal ball for answers about the real estate market make sure you don’t miss this.

Traditional non-distressed properties actually saw a 1.9% increase in their Median Sale Price from a year ago according to the Minneapolis Area Association of REALTORS.  It is important to view this statistic outside of the negative bundled statistics because it shows what is happening to the average property that is not upside down with their mortgage.

There was also a year over year increase in pending sales of 3.7% according to the Minneapolis Area Association of REALTORS.

While these “year over year” statistics do not mean a complete turnaround it does show there are some signs of stability.  And don’t forget last year there was a tax credit spurring on sales.

With all of the statistics being thrown around today it is hard to tell what is really happening to values.  To understand the real estate market it is important to realize it is made up of different 3 main types of sales.  Bundling these types of sales together may not present a complete picture of what is happening for individuals.

First there are “Traditional” sales.  These are sellers selling their home normally.  Second there are “Bank Owned” sales.  These are properties that have gone through the foreclosure process and are now owned by the bank and the bank is selling them.  Third are “Short Sale” sales.  These are properties that are being sold by the seller who owes the bank more than what they can sell the home for.  In order to sell they need the bank to agree to accept less than what they are owed.

Buyers can make an offer on the first two types of sales (Traditional and Bank Owned) and find relatively quickly if they get the house.  Buyers trying to buy the third type of sale (Short Sale) may not find out for many months whether they get the house, because the banks can take a very long time to decide if they will accept less than what they are owed.  Many serious buyers avoid short sales because they need to know if and when they can move into their new house.  They also know that a good percentage of these transactions do not get to close.  Finding out after 4 or 5 months of waiting that they are not getting the house is not an option to many serious buyers.  As these properties sit on the market,  maybe getting closer to being taken over by the bank the only option they have to attract a buyer is to keep reducing the price until someone will take a shot at it and wait to see if the bank will accept less. If these properties are being avoided by enough serious buyers there is an argument to be made that “Short Sales” sell for less than “Traditional” or “Bank Owned” sales, in other words less than market value.

By bundling “Short Sales’ into the statistics it seems to be making the market appear to be worse that it really is.

Lastly it is important to note that interest rates and affordability are exceptional now.  If you are thinking about buying and the time is right for you start looking.  If you are in a position to sell and are not in a negative equity position your home is more appealing to buyer’s than a “Short Sale” property is.