This morning I talked to Mark Allen, the CEO of the Minneapolis Area Association of Realtors, about those abysmal Case-Shiller numbers for March that I wrote about yesterday--a 6.1 percent single-month drop in local sale prices that set a record not only for the Minneapolis/St. Paul metro but for all markets in the 20-city CS index in its 21-year history.

According to Allen, "The primary reason is the impact of distressed, lender-mediated properties on the marketplace. It's got a lot to do with a shift in where the buyers are. In April, the most recent month we've got numbers for, the activity in the under $200,000 range was much higher than it had been a year earlier, and over $200,000 it was much lower.

"Right now," he continues, "we really have two marketplaces going on. There are the lender-mediated sales"--foreclosures as well as short sales in which the lender agrees to take an equity hit--"and in April, that was 46 percent of the business being done. Then there are the traditional sellers, which is a very different marketplace." April MAAR figures show lender-mediated sales at a median price of $120,000, down 21.5 percent from a year earlier, while the median for traditional sales was $205,000, down a comparatively modest 8.5 percent from the previous year.

Allen thinks the volume of lender-mediated sales may be peaking now, though he says it's also possible the peak is still as much as a year away. Despite that, he says he believes the local residential market overall has reached a floor and started to stabilize. As evidence, Allen cites the consistency of monthly median prices since the start of 2009: $155,000 in January, $150,000 in February, $154,000 in March, and $153,000 in April. "The question," he adds, "is when will they start to rise again? It's going to be very slow and very gradual when it happens, but it should begin late this year or early next year."

A longtime local realtor who wishes to be anonymous concurs with Allen about the glut of distress sales driving the Case-Shiller numbers: "As far as I can tell, the reason for any kind of decline now--my guess is that that accurately reflects what's happening in the foreclosure market.

"If you look at what's happening in Brooklyn Center, Brooklyn Park, even Robbinsdale--any of the first-ring suburbs--and then look at the base in north, near-north, and south Minneapolis, properties are coming on the market and being scooped up in two to three days for $25,000, $30,000, that a year ago would have been on the market for $60,000. Banks are doing fire sales now trying to clear out as much as they can, because there's a whole other wave of foreclosures coming in the 3rd and 4th ring suburbs as Alt-A mortgages start to adjust."

All this leaves one question unanswered, though: If lender-mediated sales are driving what turned out to be a record decline, why is their relative weight so much greater here than elsewhere? This is a near-universal phenomenon. I'll keep casting around for ideas on that count. Anybody here have ideas?