Governor Walz’s first executive order regarding the coronavirus in March of this year banned filing of new foreclosures and evictions except in emergency cases. That order will lift on Friday, June 10, and these actions will be allowed again in state courts. Many experts predicted in March that this ban would cause an uptick in non-payment of rents and mortgages. Thus, they feared that once the order was lifted, there would be a wave of new filings in state court.
Luckily, the problem has not been as bad as initially feared. While some predicted that rent and mortgage non-payment could reach as high as 25%, it appears that the actual number is far less than that. The Minnesota Multi-Family Association recently reported that rent-owed in May was collected at a rate of 95%, down from 97% pre-COVID. In units where occupants receive rental assistance, rent collection has been reported right around 90%, compared to 95% prior to the lockdown.
Still, we expect to see a slight bump year-over-year in these filings. And as such, we expect to see a corresponding increase in the number of bank-owned homes on the market as well as former rentals. As it takes time for these filings to work their way through court, I would expect that this uptick occurs in the middle to later part of the third quarter (mid-August and September).
This activity will be combined with the traditional slight cooling of the market that we see around this time to flatten out the market more than usual. Many buyers try to purchase homes prior to August/September so that they are settled in time for the new school year.
I’ve already recommended in previous articles that, if you’re looking to sell, that you do so in June or July if possible. This is true even if it means skimping on repairs that would normally be recommended to maximize value. The surge in buyer activity that we’ve seen since late April has been very strong, and even homes that aren’t “show ready” are selling very well. This additional inventory is just one more reason not to wait.
As always, if you’d like to talk more about listing your home or buying in this market, please contact me at 612-269-1902 or firstname.lastname@example.org. You can get a free home valuation as well on my website.