Check out this months Skinny video from the Minneapolis Area Association of Realtors. The biggest news about the housing market here in the Twin Cities is the fact that housing affordability is the highest it has been in the last 18 years. If buyers are not taking advantage of this market, it isn’t my fault.
From the category archives:
Minneapolis Luxury Market Stats
The Housing Supply Index for Luxury Homes
The Minneapolis Area Association of Realtors puts together really great statistics for the 13 county metro area. One of the best is the Housing Supply Outlook stats that shows how many months it will take to sell the current inventory. A normal market usually has a five month window…that’s a great market. But that time window leans more towards the average home price which is right now at 8.5 months. When you start talking about higher priced homes, especially those in the luxury home market, the housing supply index naturally goes up.
In the above graph, red represents 2007 and blue is 2008. The whole market has slowed down from last year, and none so more than the luxury market. Currently is would take 17 months to sell our entire inventory of homes price between $500,000-1 Million, and 26 months to sell all homes over $1 Million.
To put both these upper tier categories into context, there are currently 3,032 homes for sale priced between $500,000-1 Million, and only 867 homes listed for over $1 Million. If you are thinking of putting your home up for sale in the first price range, even though there is more competition, you possibly will sell your home quicker (based on the supple index) than if you priced it above the million dollar mark.
Now don’t be upset if your home is worth more than a million. It will sell if you price it right, and price it ahead of the market. But know up front that it most likely will not sell in two months. Luxury homes typically take longer, as the housing index shows, so be prepared for your home to sit on the market for a while, and have fewer showings than lower priced homes. The luxury home market decreases the amount of buyers available, and of course, location is one of the major deciding factors when purchasing a home.
Keep your chin up…the market will improve….just make sure you pick an agent to represent you that actually specializes in luxury homes, not one that just wants to list your home so they can get a bigger paycheck.
I haven’t really talked much about luxury condominiums here in Minneapolis. After living in downtown San Diego, which is all condos and high-rises, it is hard to remember that expensive units do exist here in the metro area.
They may not exist in vast numbers, but currently there are 48 units available city wide. Here is the top five countdown for most expensive luxury condominiums in the Minneapolis area:
- The Harrington House in Wayzata – this two bedroom unit has about 3000 square feet, with amazing views of Lake Minnetonka. It is the most expensive condo on the market, topping out at $4.9 Million.
- Phoenix on the River in Minneapolis – trying to live up to its luxury billing, the second most expensive unit is located across the river and has fantastic penthouse views of downtown. Your money will go a little further than #1, with 4 bedrooms and almost 6000 square feet.
- Phoenix on the River – did I forget to mention that this development holds not only the number two and three spot, at $3.5 Million and $3 Million, but also number six?
- Whitney Landmark Residences in Minneapolis – this one level penthouse boasts three bedrooms and 4,500 square feet, not to mention panoramic 360 views of the city and Mississippi River…all for a cool $2.8 Million.
- The Washburn Lofts in Minneapolis – you’ll have to stretch your money a little further with this one. As a one bedroom, 3200 square foot unit, this $2.7 Million listing is perfect for the art lover with its own gallery space. The night time views of the Minneapolis skyline are nothing but stunning.
Today I thought I would give some luxury home updates for the Lake of the Isles area in Minneapolis. The MLS area consists of Lake Calhoun, Cedar Lake, and Lake of the Isles, and of course the immediate surrounding neighborhoods.
Of the 40 homes currently for sale above $1 Million, all but 7 were built between 1895-1919, and so far this year, only three homes over a million have closed. While the homes might be high-end, the lots they sit on are relatively small. Most come in around a quarter of an acre. The draw of the area is of course, the lakes, and the fact that homes here have been “the place to live” in Minneapolis since Thomas Lowry built one of the first mansions on the hill overlooking Minneapolis in the late 19th century.
Below are some of the homes currently for sale. I am one of only two agents that utilize this IDX search for homes. It is one of the best available, and allows for the ability to see large photos of homes, virtual tours, street views, recently sold data, and more. I can even make modules like the one below, that highlight the areas I choose.
Well, since it is the end of 2007, I guess I must sit down and look at the luxury market statistics for the year and let you know how things went.
$1 -2 Million : Throughout the Twin Cities and surrounding suburbs, 395 homes were sold in this price range. While many homes sold, it took on average 190 days to get them new owners, with the average price being around $1.4 Million.
$2-3 Million : No big surprise here but once you hit $2 Million, the number of homes for sale decreases dramatically. Only 49 homes sold this year, but surprisingly they only took about 15 days longer to sell than those price below $2 Million.
$3-5 Million : Most of the homes that get mega-expensive tend to be located near water. The 15 homes that sold in this price bracket are no exception. Eight of these homes were located on Lake Minnetonka.
$5 Million + : Minnesota doesn’t rank high on the national radar for luxury homes, but home magazines most likely have never been here and don’t know what they are missing when it comes to Lake Minnetonka real estate. In 2007, five truly luxurious homes sold above the $5 Million mark, all of them on the largest lake around the Twin Cities. Two of them were all time highs, one at $12 Million and one at $14.5 Million.
Overall, the luxury market for Minneapolis, Saint Paul, and Minnetonka didn’t do too bad for 2007. The best price range to be in for 2008 will be the $1-2 Million dollar range. Around February, the local Realtor association will be coming out with 2007 stats and projections for 2008. Stay tuned over the next few months to see where we were and where we are heading!
Don’t forget to check out my other blog sometime, Minneapolis Real Estate Blog.
The buzz words of 2007 are most likely going to be “bank owned”, “foreclosure”, and “short sale”. As you can imagine, there are thousands on the market right now that are trying to compete with each other, and sadly, no one is buying.
So imagine how difficult it is going to be to sell a Million dollar home that has gone to the bank. The property is automatically stigmatized by the words “bank owned” and any potential buyer of a high-end home is going to want a nice discount to purchase it.
According to the Regional Multiple Listing Service, there are five homes currently for sale,
priced above a million dollars, owned by the bank or subject to bank approval.
- The most expensive is priced just under $3 Million in Edina. The original 1972 home was torn down in 2000 and a huge mega-mansion was built in it’s place in 2003. The home is a prime example of “just because you build it, doesn’t mean they will come“. The “estate” has been on the market for the last four years, originally priced at $6 Million. That’s a pretty hefty price tag, even in Edina. It is a beautiful home, but it has never been lived in and I doubt it will sell any where near it’s current asking price.
- A home in Mahtomedi listed for $1.1 Million was just built in 2006, having replaced a tiny home that was torn down.
- A beautiful Craftsman inspired home is for sale in Inver Grove Heights. Bought just a year ago for $1.4 Million, the current price is at $1.3 Million. Sadly, the price will have to come down a little more to attract a buyer to that area.
- The Wayzata address keeps one listing high at $1.5 Million, but the home was built in 1989 and needs some updating. I hate to say it but the indigo blue kitchen cabinets are going to be a hard sell in the price range. It also doesn’t look good to have been on the market for a full year with a price reduction of $800,000. I think this home will have to come down even more, especially with the bank being involved.
- Lastly, the one that might be the hardest to attract a buyer, is a modern designed contemporary home in Medina. Modern doesn’t do too well in rural Minnesota. It (modern design) has a better chance in downtown Minneapolis. I hate to say it, but it is just plain ugly. Minnesotans that live on lakes and acreage, tend to lean more towards traditional and Craftsman styled homes. This one, priced at $1.3 Million, is going to be a very hard sell.
So there you have it, even Million dollar homes can have a tough or tougher time selling than other homes. Many times, an expensive home has been built in an area that doesn’t support that type of home. Finding the right buyer becomes even more difficult because most will see that they can buy in a more affluent neighborhood for the same price. It will be interesting to see what happens to these homes. Since the banks are involved, I am sure price reductions will be few and far between, and the homes will just start to rot from neglect. That is the one big down side of banks getting involved in real estate.
Recently the Census Bureau released a report about national household incomes. Looks like the number of households earning $100,000 or more has jumped in recent years, coming in at 19% of the 116 million households. Here’s a run down of the numbers, provided by the Institute for Luxury Home Marketing:
One question I have is whether dual income households are taken into account. Many people are pushed above the $100,000 mark because they have two adults working, but that does not mean they have the ability to afford a more expensive home. And for that matter, with the increase of home prices the last five years, many people who make above $90,000, and are considered “rich”, can only afford a home in the lower $300,000’s. Here in the Twin Cities, homes priced between $300,000-500,000 are very average in my opinion. They do not have luxury trends included. The main difference between a $300,000 house and a $500,000 home is location.
Like most areas in the Twin Cities, real estate in Prior Lake has also felt the pinch of the real estate market correction currently underway. So far this year, homes sales are down 30% from 2006 and days on the market has increased, currently an average of 161. Below are some rundowns of market activity for the Prior Lake area for single family residential homes for sale.
$300,000-500,000 – 83 Active Listings, 13 pending, 18 sold. Less homes are being listed and less are selling.
$500,000-800,000 – 94 Active Listings, 8 pending, 6 sold
$800,000-$1 Million – 38 Active Listings, 2 pending, 0 sales The price range with the most new listings, and the least amount of sales.
Upper Tier Homes
$1-2 Million : 25 Active Listings, 1 Pending. There are fewer homes listed for sale in this price range due to eight homes being pulled from the market since May.
$2-3 Million : 4 Active Listings
$3-5 Million : The one listing that was price at $3.999 Million was taken off the market this month, after being on the market since March 2006.
The luxury home side of Prior Lake has 29 listings, but has only had 2 homes sold for the entire year of 2007. While a beautiful lake, homes take longer to sell than on Lake Minnetonka.
Have you ever wanted to know what areas have appreciated the most in Minneapolis? Well, your dream has come true. One reason to love Realtors is that our organization is great at putting together market data for the public.
Below you will find the local real estate markets that have appreciated more than 61% since the year 2000 up to 2006.
Minneapolis Area
- St Louis Park – 61%
- Hopkins – 69.2%
- Camden – 73.8%
- Longfellow – 67.5%
- North Mpls – 97.4%
- Northeast Mpls – 67.2%
- Philips Mpls – 141%
- University – 77.1%
- Lake Minnetonka – 79%
St Paul Area
- St Anthony – 76.2%
- Merriam Park – 77.9%
- Crocus Hill – 64.6%
- Groveland/River Road area – 63.1%
- Downtown St Paul – 73.7%
- Central St Paul – 73.3%
- Phalen area – 70.1%
I have much more appreciation data for other areas surrounding the Twin Cities, including Carver County, Dakota County, Scott County, Washington County, and Anoka County. Just ask me via comments or send me an email with your requested area.
Statistics on Lake of the Isles Historic Homes 2006
This weeks featured Luxury Community is the Lake of the Isles/Lake Calhoun area in Minneapolis. Similar to last weeks snapshot of St. Paul Historic Homes, this one will also only consider those homes listed at $1 Million and above, built before 1940, and single family residential.
In 2006, 60 homes were listed, ranging in price from $1 Million to $5 Million. They break down into the following categories:
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Currently 18 active listings
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17 Homes were sold in 2006
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11 Listings were cancelled and not re-listed for sale
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14 Listings Expired and were not re-listed
The average adjusted days on the market were:
- Current active listings = $1-2 Million, 160 DOM $2-5 Million, 292 DOM
- Homes that sold = 11 Homes sold with in 23 days of list date, whereas 6 took on average 238 days to sell
- all Cancelled/Expired listings =
To sum up the Historic Home Luxury market in the Lake of the Isles area, roughly 42% of the listings were taken off the market because they were not selling. Only 28% sold and the remaining 30% are still active. Of those remaining on the market, it is interesting to note that homes priced between $1-2 Million are selling more quickly than those price at $2 Million and up. But it is still taking a while to sell, anywhere from 6-10 months.
I would have to say that the short selling time of 11 homes was probably due to them being priced correctly from the beginning. If a home is priced too high when it hits the market, it quickly becomes forgotten by buyers. The most important statistic to report is that of listing price vs selling price. Of the 17 homes sold, the final selling price was on average 7% lower than the original list price. Obviously, home owners would like to sell for full price, but affluent home owners have the luxury of being more flexible with the bottom line. In this case, sellers in 2006 were able to sell their homes quickly, and buyers walked away with a home they loved and with a feeling of accomplishment of negotiating the purchase price!
