The foreclosure juggernaut is just starting to pick up steam here in Mud Duck land. The Saint Paul Pioneer Press is reporting that there are 325 foreclosed properties begin auctioned off later this month. The properties in question range from $1,000,000 + estates all the way down to run-down tenements in the inner city.
As this chart shows, the general trend for the last few years hasn’t been that great:
We’re 1,000 foreclosures ahead of 2006 with 2.5 months left to go this year. Not a good sign at all, especially when you add it to the somber news about falling US home sales coming from the National Association of Realtors. For readers who aren’t familiar with the Twin Cities area, Hennepin and Ramsey Counties contain Minneapolis and Saint Paul respectively. The rest of the counties listed are the suburban ring. I live in Washington County.
One interesting trend I’m seeing in the local real-estate market is that new home developers are listing more of their unimproved lots on the MLS in addition to dropping prices on both spec homes and new construction. In my immediate vicinity the new construction market is still moribund, and housing prices seem to be closer to the 2003/2004 timeframe versus 2005/2006. Houses in my neighborhood that sell are doing so for a good 10-15% lower than their original listing price. My obstinate neighbor a few doors up is still sticking to his guns and asking full 2006 pricing for his home, and I see him periodically dusting the cobwebs off of his ‘for sale’ sign and checking the front door lock to make sure it still works. Supposedly we’re not going to see the bottom of the local real estate market until 2009. I’m just hoping I don’t have to sell until 2012 or later… any sooner than that and most of my equity in my house will evaporate.
With more ARM resets coming, I’m afraid that this is just the leading edge of the foreclosure wave that will hit most areas of the country. Combine this with a declining dollar and uncertainty on Wall Street and you get a recipe for a depressed Christmas Holiday shopping season and all of the hand wringing (from business) that comes with that. Since the USA has more-or-less morphed into a consumerist economy, any signs that we are going to buy less will scare the hell of out the Wall Street. So, is it any wonder that the Christmas ad blitz has already started while Halloween is still weeks away? As President Bush told us in the days following 9/11, one of the most patriotic things good Americans can do is go shopping.
It will be really interesting to see how the fall unfolds economically. Madison Avenue already starting to beat the drum for Christmas shopping while Wall Street is still keeping a nervous eye on the mortgage and credit markets. Compared to the last few years, millions of American are now unable to fuel their shopping via home mortgage re-fi’s. If the early numbers for retail sales come in low, I’m guessing there will be significant sales opportunities to be had as December 25th gets closer.
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