The best way to look at foreclosures?

Posted at 11:00 PM on January 28, 2010 by Paul Tosto (2 Comments)
Filed under: Housing & mortgages

MPR's Annie Baxter highlights the ongoing debate over how many foreclosures there really are in the Twin Cities. It's an important question for anyone trying to figure out how fast this housing market will really recover.

From Baxter's story:

RealtyTrac's numbers indicate the Twin Cities had 29,000 foreclosures last year, up nearly 60 percent from the previous year. But data from Minneapolis-based HousingLink suggest there were half as many foreclosures in '09 as RealtyTrac shows -- roughly 14,000. That represents a drop from 2008. HousingLink surveys all 87 county sheriffs for foreclosure data.

Foreclosures are problems for lots of reasons. They push down home values, of course. For most of us our house is our single biggest asset, the root of American wealth. Every foreclosed home holds a story of a person or family struggling to make it through the recession.

But did we have 29,000 foreclosures in 2009 or half that? The RealtyTrac data's been used and questioned for the past month.

Post below or drop me a line if you have some insight into the data. Tell me what numbers you trust the most.

Better yet, tell me what the housing market is like around you these days. Better than a year ago?

The reality is that the housing market's recovery in 2010 will be linked pretty closely to the to Minnesota's job growth in 2010 and right now the experts are not upbeat about jobs in Minnesota roaring back this year.

That's likely to keep talk of a Twin Cities housing rebound subdued, no matter the foreclosure count.

2/11 UPDATE: MPR's Baxter has a story this morning that puts it all into perspective.

Click on the play button below to listen:

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Click on the map icons below to read what Minnesotans in MPR's Public Insight Network have been telling us about the housing market where they live. Then share your story.

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Comments (2)

Your recent blog on foreclosure numbers has Housing Link reporting “roughly 14,000” foreclosures in Minnesota for 2009. That is considerably lower than the number a Housing Link data actually shows and suggests a much steeper decline in foreclosures during 2009 than is warranted.

The most accurate number of foreclosures for 2009 based on Housing Link’s data is actually 22, 638. While this is a decline from 2008, it still remains higher than any year other than 2008, twice as high as in 2006 and about 3.5 times the number in 2005. So unless the “new normal” in Minnesota is foreclosure of 22,000 homes a year, this number should be alarming.

Here is Housing Link’s table showing full year foreclosure figures for 2005, 2006, 2007, and 2008 and figures for the first three quarters of 2009: http://www.housinglink.org/Research/ForeclosureResearch.aspx

As this data shows, there were 16,979 foreclosures (sheriffs sales) in the first three quarters of 2009 alone. Housing Link has not posted the number of sheriff sales for the 4th Quarter, but assuming a foreclosure (sheriff sale) rate is the same as for the first three quarters, the figure for the 4th Quarter would be (1/3 of the Q1-Q3 2009 Foreclosures) or 3,548 Twin Cities Metro foreclosures; 2,111 Greater Minnesota foreclosures; and 5,659 Total foreclosures for the 4th Quarter of 2009.

To get a complete picture of foreclosures for 2009 (all 4 quarters), the 4th quarter foreclosures must be added to the first three quarter figures which Housing Link has reported.

Since the inaccurately low foreclosure figures restated in your report for 2009 (“roughly 14,000”) may be cited by opponents of realistic legislative redress of the foreclosure crisis to minimize and eventually dismiss the foreclosure problem facing our state, I’d ask that you take another look at that aspect of your report and adjust accordingly.

Posted by Peter Brown | January 29, 2010 11:03 AM

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MN Homeownership Center's numbers come straight from the nonprofits that are required by state statute to be notified when foreclosure action starts and thus I would put confidence in their numbers. Given how dramatically different the RealtyTrac numbers are in 2008 vs. 2009 and how wildly they have varied by month in 2009, I don't trust their numbers and don't think we need them.

A lot of this debate is really an issue of the definition of foreclosure. If you define a foreclosure as a bank owned home, that only comes at the end of a very long process. Others define a foreclosure as a property in the foreclosure process - something that often can take 12 months or more in Minnesota before it is in the hands of a bank.

Some pre-foreclosure property notices received by MNHOC may never become sheriff sales due to mortgage modifications, short sales, traditional sales and owners coming current. Sheriff sales that actually occur (tracked by HousingLink) are a specific point in the process and are an endpoint for mortgage modification programs. In the Twin Cities, the Mpls Assoc of REALTORS tracks new bank owned MLS listings and their sales, which I'd consider the end of the process.

Where and how RealtyTrac collects its information is unclear. The three reports that I have listed above are all specific points in the process, are verifiable, and all come from entities from Minnesota that understand our foreclosure process in Minnesota.

The other report worth watching is the mortgage delinquency rates published by the feds and the MBA. Until delinquencies start to decline we will see pressure from foreclosures. That is the leading indicator and when you combine all four of these reports together you can get a good feeling for where our market has been and is going in terms of foreclosures.

Posted by Aaron Dickinson - Edina Realty | January 29, 2010 3:26 PM

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