Eden Prairie Foreclosures
I have spent a lot of time over the last 3 years working with buyers looking at foreclosed properties. When we first started, just about all the foreclosed properties were in the core of Minneapolis and Saint Paul. It was rare to see one even outside the 494/694 loop. As the housing crisis continued, the wave of foreclosures started to expand from the epicenter (North Minneapolis on the west side) into neighboring communities. As 2009 hit, we started to see a couple foreclosure in the suburbs such as Eden Prairie occasionally, but usually they were older homes that had issues and they were also sold in minutes of hitting the market.
Fast forward to mid-2010, we are seeing many more Eden Prairie homes hitting the market as foreclosures. Short sales continue to also be very popular in this area, although many buyers are getting frustrated at the uncertain nature and time that most of these deals take. The bank-owned properties that we are seeing hit the area in Eden Prairie are mostly made up of townhouses and condos. Owners of these properties are seeing that these were both overbuilt and overpriced in this part of the cities. They are looking at 40-60% losses in property values and they simply have little choice but to get out . I am seeing townhouses that sold in 2005 for $200k, now on the market for less than $100k.
I had lunch with a very seasoned REO agent today and he had some interesting things to share with me. He said that many banks are simply sitting on foreclosed homes waiting for the market to recover. The bank has winterized the home, they cut the grass and shovel the snow, but otherwise they are simply waiting. He also stated that they learned their lessons in 2008 when they flooded the market with foreclosures and drove the prices of everything down so fast. This phenomenon is what many experts call the the “shadow inventory” of homes. While I didn’t really want to believe it when I heard it, I trust this agent and his experience.
So what does this mean for Eden Prairie home buyers? I think the message is that don’t rush to make a bad decision on buying that new home because you think the good deals will be gone in 6 months. I have no doubt that interest rates will be higher in 12 months, but I really believe that if this shadow inventory exists in any volume (and my agent friend said that most of these homes were in the suburbs), you will still be able to find good deals on nice homes a year from now. Keep in mind that I hate to say that since I get paid by selling homes now! But, I think it needs to be said that I would rather see a home buyer wait, get their lives and financing ready, and then make a good choice on a new home, instead of rushing.
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