Summer has arrived but unfortunately, the Summer Sales aren't as good at the temps.  Read the Mpls Area Association of Realtor's report for a quick recap & have a Happy & Safe 4th of July.

Weekly Market Activity Report


The Twin Cities housing market continues to adjust to a world without a fancy tax credit. Pending sales leveled off following the slight gains seen the prior week, squatting at 645 signed contracts for the week ending June 19.

While that's steady compared to last week, it's anemic compared to last year at this time when the market posted 1,156 signed contracts. If you're keeping track of percentages, that means we're down 44.2 percent from a year ago—the sixth consecutive week of year-over-year declines exceeding 30 percent.

New listings are also down from a year ago, posting a drop of 8.4 percent from a year ago to 1,712 for the most recent reporting week. Any sort of "return to normalcy" is going to take some time.

Fannie Set to Penalize Defaulters

Wall Street Journal
JUNE 24, 2010
By NICK TIMIRAOS

Fannie Mae said Wednesday it would "lock out" borrowers from getting a new loan for seven years if they default on a mortgage they could afford to pay.

The move represents the latest effort by the mortgage industry to prevent a new wave of losses that could result if more borrowers who can afford their monthly payments instead opt to "strategically" default on loans, because they owe far more than their homes are worth.

"Walking away from a mortgage is bad for borrowers and bad for communities, and our approach is meant to deter the disturbing trend toward strategic defaulting," said Terence Edwards, Fannie's executive vice president for credit portfolio management.

The government-owned mortgage-finance titan also said it planned to step up legal actions to pursue deficiency judgments in states that allow lenders to go after borrowers' other assets. In addition, Fannie said it would instruct its lender partners to monitor delinquent loans owned by Fannie, and recommend cases that warrant attention.

Fannie's move comes amid greater concern that it has become socially acceptable for borrowers to stop paying their loans, and that such a shift could exacerbate the housing bust. Those worries are particularly acute in Arizona, Nevada, Florida and other hard-hit housing markets where it could take years for borrowers to return to positive equity.

Nearly one in four homeowners with a mortgage is underwater, or owes more than their home is worth, according to CoreLogic, a real-estate data firm. A Morgan Stanley report estimated that around 12% of all mortgage defaults in February were strategic.

In 2008, Fannie revised to five years from four the period that borrowers with a foreclosure must wait before they are eligible for a new loan.

Under the new rules, the five-year waiting period is eliminated. Borrowers who can't document "extenuating circumstances" or show that they made an effort with their lender to avoid foreclosure will have to wait seven years to get a new loan; those who can demonstrate hardship or attempted a workout with their lender may have to wait only three years.

Its smaller sibling, Freddie Mac, also requires borrowers with a foreclosure to wait at least five years. Foreclosures can stay on a credit report for up to seven years.

Even as it steps up penalties, Fannie is preparing to reduce waiting periods for borrowers facing hardship who surrender their homes and avoid foreclosure. Under previously announced rules that take effect next month, Fannie will reduce waiting periods to two years for borrowers who agree to transfer their homes to the company through a "deed in lieu of foreclosure," or who complete short sales, where homes are sold for less than the amount owed.

Monthly Skinny: May 2010

Weekly Market Activity Report
As the weeks following the tax credit expiration unfold, buyer demand continues to slow. The 600 purchase agreements signed for the week ending May 29 were 34.6 percent below the previous year—the fourth consecutive week of year-over-year decline in Pending Sales.
Refreshed supply is also in decline, as New Listings posted a fifth consecutive week of year-over-year decline, landing at 1,474 for the most recent reporting week—a 5.9 percent decrease from a year ago.
Two other metrics for this week:
Days on Market – This stat continues its year-over-year downward trend, resting at 118 days for May 2010.
Percentage of Original List Price Received – This continues to grow, up 2.8 percent above last year at this time to 94.1 percent of the list price.

Weekly Market Activity Report
Home sales in the Twin Cities housing market took another dip as the hangover from the tax credit expiration continued. For the week ending May 22, there were 624 pending sales—a precipitous drop of 42.5 percent from a year ago.
The biggest drops in sales since the credit ended can be seen in the traditional seller market (i.e., anything that's not a foreclosure or short sale) and in the middle price ranges from $150,000 to $350,000. Pending sales have dropped in those ranges from 1,085 the week the credit ended to 384 for the week ending May 22. In sum, it may be a difficult summer market for home sellers.
The good news is that new supply is also slowing, which means the market is already self-correcting to avoid a surge in unneeded inventory. New listings fell to 1,581 for the same reporting week, a decline of 15.8 percent from this time last year.
The Supply-Demand Ratio has been updated for June and shows a figure of 5.05, which means there are 5.05 homes for sale for each buyer in the month. That's a 10.9 percent increase over the mark seen a year ago and is a result of the decline in buyer activity.