When Homes Are Like Fruit

Foreclosed homes continue to wreak havoc on the single family housing market with foreclosures increasing a startling 120 percent from just a year ago. For those of us who track these grim statistics, we had A LOT of foreclosed homes last year at this time, so this is doubly troubling news.

Nationwide, Minnesota is ‘average’ in the number of foreclosures, sitting at 27^th place out of 50 states with 5,673 foreclosures in the second quarter of 2008.

This was a modest increase of 34 percent from the first quarter of 2008. All of these statistics are from Realty Trac Inc, an organization that tracks foreclosures and other news about the real estate industry.

With that said, I would like to partially dispute the notion that foreclosed homes are significantly depressing the value of the homes of everyone else.

I liken a foreclosed home to a bruised banana, as they are often sold ‘as is’ and are in less than perfect condition. When a grocer has a bruised banana, he marks it down for quick sale. Once the bruised bananas are gone, they have no impact on the sale of good bananas. Furthermore, the demand for bruised bananas is quite a bit lower than the demand for good bananas, as the same folks that buy bruised bananas are not likely the same who shop for the more expensive good bananas.

The faster we can move through all the foreclosed homes on the market, the faster we will return to a more level playing field. Until then, doubt and uncertainty may just rule the real estate market.