From the category archives:

Minneapolis Luxury Market Stats

Days on the Market for Twin Cities Luxury Homes

The Difference in Days on the Market

Days on the Market for Twin Cities Luxury HomesReal estate agents in the Twin Cities metro area are pretty lucky. We have Realtor associations that produce outstanding market statistics, which other cities across the nation lack. One bit of data that is extremely important to us agents, and our seller clients, is the number of days that a home is actively for sale before a buyer produces an acceptable offer – otherwise knows as DOM, “Days on the Market”.

When these numbers are compiled, they are usually presented in generalities. We might have a number that is averaged out for a certain county, city, or neighborhood, but usually the detailed numbers per zip code are over looked. All price points are usually included, so the statistics can be skewed depending on how many high-end, or low-end homes are included.  For instance, the current DOM for the Twin Cities market is 118, so an agent that comes into a luxury listing appointment using this generic stat in their CMA (Comparative Market Analysis) could be doing the seller a disservice. 

Instead, the agent should be taking into account the area the seller lives in, and presenting those statistics. As an example, in Excelsior, where homes are much more expensive, the average days on the market is around 79. Wayzata is 144. Around Long Lake, it’s up to 173. The difference is staggering for luxury homes, especially if there is a lake nearby, or if the number of homes available to purchase is less. My main point is that when dealing with upper bracket real estate, sellers should be making sure they get the most accurate and detailed market statistics available for their home. And the only way to do this is choose an agent who specializes in the luxury home market.

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Heading in the Right Direction? Recent Market Stats Might Say So.

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It’s Going to take Longer to Sell That Luxury Home

If you are planning on putting your luxury home on the market, or you have it listed already and wonder why it hasn’t sold yet, then you might want to take a look at the current market statistics for the Months of Supply for Current Inventory.

To put it simply, as shown in the graph above, homes priced at and above $1 Million price point are taking quite a bit of time to sell. In order to sell the current amount of luxury real estate, for the last month around 814 homes in the Twin Cities Metro area, according to the Minneapolis Association of Realtors, it will take almost 40 months! A year ago, the time frame was “only” 27 months.

So be prepared to have your home on the market for a while, or price it aggressively to sale, either way, it might not be your agents fault that your home has not sold yet….it most likely is due to the market.

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the Luxury Real Estate Market in Minneapolis and Saint Paul

It appears that the luxury market in Minneapolis and Saint Paul has seen an increase in market action since May, although not what was seen a few years ago. While we have been going up, the Market Action graph tells us it is still a hot buyer’s market…we are currently at 12.75. A score above 30 would transition to a seller’s market. I don’t see us obtaining that level for quite a while. Sorry.

But to give you a better idea of how the Twin Cities luxury market is fairing, I have included some Year-to Date market graphs through the end of August. Sadly, for sellers, the average median luxury sales price for the area has been in a state of decline and fluctuation. Since January of this year, the average price of a luxury home has fallen $60,000, or 7% overall.

At the same time, the number of homes priced above $600,000 has increased over the last year. The spring buying frenzy helped clean out a lot of the winter inventory, but as summer progressed, new listings were brought onto the market. With less buyers purchasing, the inventory has had no where to go but up. Currently the inventory for homes priced over a million dollars has increase 42.8% since last August.
Thankfully, there is some good news. The time it takes for a home to clear the real estate market has declined in the last few months. While I don’t expect it to get much lower since winter is on the way, let’s hope it doesn’t get any worse. The ninety day rolling average for luxury homes is currently about 170 days, roughly six months.

For homes priced above $1 Million, the year to date monthly housing supply, as reported by the Minneapolis Area Association of Realtors is at 40 months! (meaning it will roughly take over three years to sell the current inventory of homes priced above $1 Million.) Yikes!

So what does this all mean for you? If you have a single family home to sell, and the fair market value falls between $500,000-1,000,000, you have a better shot of selling your home in the next 20 months. If you are priced above $ 1 Million, then expect your home to sit on the market for a while…extreme prices will have to wait even longer. Some high end, over the top luxury homes could even wait three years before they attract the right buyer.

Don’t fret though. Please, if you are looking to sell a home, make sure you choose an agent that not only has experience in the luxury home market, but make sure they have a web presence as well. It will take creative marketing to get your home sold, for the days of sticking a home in the MLS to see it sell in a few day are long gone.

P.S. Don’t forget to have professional photographs taken of your luxury home. Ask your agent what they provide. If they take the pictures themselves, please don’t hire them!

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This Weeks Most Expensive Homes

New construction homes were the top real estate hitters to close this week. At the condo development in Minneapolis, The Bridgewater, two units were combined to make a 4000 square foot space, with four bedrooms and sweeping views of the Guthrie and Mississippi River….all for a measly $1.789 Million.

Not to be beat, in the private community of North Oaks just north of Saint Paul, TJB Homes recently completed a luxury home in Rapp Farm. Since the sold price of $1.656 Million looks to not include the lot price, the home’s value is somewhere near $1.9 Million.

As always, random homes across the Twin Cities have sold above the one million mark, but I only highlight some of the top ones each week. Tune in next week to see you tops the list in luxury home sales for Minneapolis and St. Paul.

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This Weeks Most Expensive Homes

It looks like this past week saw a high end luxury home sell in minutes. Well, not literally. But the home sold “before print”, which in Realtor speak, means the home sold before it was placed into MLS. Us Realtors, when a home is sold this way, place it into the MLS database to not only supply information about the home’s amenities, but also get credit for the sale.

The home, located at 1695 Hunter Drive, in Medina sold for $1.85 Million. What land lover would hate this home, especially since it sits on almost 10 acres?

As for the most expensive home to be placed onto the market? Well, the winner of that award goes to a Wayzata home, 722 Widsten Circle, for a cool price of $3.2 Million (Remax listing). Clicking close on its heals is a Shingle inspired home built in 1940, 1446 Delaware Ave, in West St. Paul, coming in at $2.995 Million (Coldwell Banker listing).

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Comparing Twin Cities Luxury Real Estate to National Luxury Real Estate Market

It appears that the luxury market in Minneapolis and Saint Paul is seeing alot more action the last two months, compared to the national market which has been in a steady decline for the last year. And while affluent Americans may not think of the Twin Cities as a final destination (the cold issue in the winter always seems to get in the way), it is a well known fact that real estate is cheaper here, than in other parts of the country, where a home would cost about double of a mansion here in Minnesota.

The average cost of a high end home in the Twin Cities hovers between $800,000-850,000, while at the same time, the national average comes in a little above $1.15 Million. About the only downside to selling a home here in Minnesota is the fact it takes longer to sell here than in other parts of the country.

While we wonder how anyone could pass up the chance to buy on Lake Minnetonka, others in the country are drawn to highlights in their neck of the woods, and neglect to see the natural beauty of Minnesota. Having lived in San Diego, I quickly grew to love the constant temp of 70 degrees and all the sunshine. But after a few years, the constance of the weather began to bore me. Call it the Midwest born in me, but I longed for Spring and Fall. Florida was great for a while, too, but the horrible humidity and lack of Peonies, made me a little home sick. Of course, I didn’t realize how much I missed the Midwest until I moved back a few years ago and rediscovered the joy of snow.

We know what we have here in the Twin Cities, and I love telling people about the area through my blogs. So if you are sitting on that bubble of indecision about Minnesota, give me a call and I’ll convince you. 🙂

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Update Your Listing or It Will Never Sell

Every couple of days I sift through various areas of the MLS, taking a look at new million dollar homes that have hit the market, and others that have sold. Believe it or not, there are plenty of high priced homes selling…it just depends on how they are marketed.

This week I saw two very pretty million dollar listings that caught my eye and I wondered why they haven’t sold yet. After further investigation I discovered a couple of things:

  1. Photography: Believe or not, one of the homes had ZERO interior photos. The house sits on a lake and has some great views, but after five different angles, you kind of get the picture – this house sits on a lake. What buyers really want to see is interior photos of the rooms, kitchen, and bathrooms. Now this home had just sold in early 2007, so I was able to look at the previous listing and see what the home looks like, but the public can’t view old listings. For $1.4 Million, an agent should really be getting interior photos taken of the home by a professional, even if the home is vacant.
  2. Time on the Market: Amazingly, both of these homes have been on the market since summer of 2007. This isn’t necessarily a kiss of death, but neither listing has ever expired…they both have had the same MLS number the whole time. Now one thing buyers look at is the time on the market. While the homes have been on the market a long time, a new MLS number every six months refreshes the listing and puts it back on top, so to speak. These two listings are STALE.
  3. Price Reductions: in over 450 days, neither listing has reduced their price. If you have your home on the market for the same price as almost two years ago, and you have not reduced the price (nor sold it for that matter) then you are living in la-la land. Yes, I hate to be the bearer of bad news, but someone has to speak the truth. I refuse to sugar coat the market, but the reality is, if your million dollar home has not sold in a six month period, then you MUST reduce the price.

I have to ask the question of what the agents holding these listings are doing. They don’t appear to be guiding their clients in the right direction…getting the home sold. With market conditions for upper tier homes declining over the last two years, it is amazing to see a home still on the market for the same price as in 2007.

The fact is, if you are not updating your listing to current market conditions, keeping it fresh, or having top notch photos taken of the home, then no one is going to buy your home. If your home hasn’t sold with your current agent of two years (and no price reductions) then maybe it is time to go shopping for a new agent to represent you.

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Builders Association Releases Year End Report

A few days ago the Builders Association of the Twin Cities released their report for 2008, and no big surprise, the numbers were not great. Permit requests came in at 5397 compared to 8971 in 2007, a 40% drop! If you take a look at the report, the five year report of permitted units is hard to fathom. In 2004, there were 18,591 total permits issued.

Currently I am working with a few buyers who are considering new construction. Some builders are offering some real deals who understand where the market is trending. However, there are other builders out there holding on, keeping their prices high and refusing reality. And of course there are the builders who hung on too tight and are now out of business. The best thing I can tell you is negotiate. If the builder won’t, then move on to someone else.

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Luxury Home Update for Minneapolis and Saint Paul

Twin Cities Luxury Market stats compared to the National Luxury Home Market

New data is out for the Twin Cities Luxury Home Market and it looks like the upper tier of homes is inching toward the national average. While it is still a buyer’s market, buyer’s are beginning to come out of the woodwork, getting over the fear seen across the national market, and are starting to purchase high priced homes again.

From speaking with some local buyers, they feel now is a great time to buy as luxury home prices have come down drastically in the last two years. While some are still wary, many are looking to negotiate with sellers, and sellers are now willing to listen to their wants and needs.
  • Average Price: $850,615
  • Average Square Feet: 3739
  • Number of Homes for Sale : 781
  • New Listings: 24
  • Sold Homes: 39
  • Average Days on the Market (DOM) : 153

Below are some market graphs, illustrating luxury home trends over the last year for the Twin Cities. Of course, the huge dip at the end is for December, a month which typically always produces a slower market. Stay tuned over the next few months as winter draws to an end, and the Spring buying frenzy begins, to see how the market will change for 2009.

Average prices for the upper tier having been inching up since May 2008

As soon as Fall hit the Twin Cities, available Inventory has declined

Over the last five months, the average days it takes a home to sell has increased by 40 days

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