A pattern is emerging that shows a fresh willingness by sellers to put homes on the market and buyers to enter the market. New listings are on the rise, if not in year-over-year comparison, then certainly in week-over-week views, as we bounce well past the new year. A recent article in the Star Tribune confirms that sales in the Twin Cities are the best seen in the last 10 years.
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Below is snippet of my feature in the Star Tribune.
If you think it’s tough to find a buyer for grandma’s silver and the family china, imagine trying to unload an expensive old house with a butler’s pantry and a foyer too fancy for muddy boots and dirty dogs.
For five years, Mark Perrin has been trying to sell one of the most beautiful houses in Minneapolis, a 10,000-square-foot mansion on Mount Curve Avenue. It is now priced at $3.1 million, half his original asking price and below what he paid for it.
“It boggles my mind,” Perrin said. “You get to the point where it just gets silly.”
More homes changed hands in the Twin Cities this year than ever before, and transactions of $1 million and more also set records. But at that exclusive level — the homes most people can only dream about — something is changing: Houses that couldn’t be replicated today are sitting unsold as well-to-do buyers seek technology over turrets and perfection over patina….
…Jennifer Kirby, the agent who has the Perrin listing, said that selling a house in Minneapolis can be challenging because there’s a perception that when you factor in property taxes and lot sizes, you get a better value in the suburbs. Of the 22 houses that have sold for more than $3 million in the Twin Cities so far this year, 19 have been on Lake Minnetonka.
“Even rich people care about their money,” Kirby said. “There are plenty of people who have the money, but we’re competing with Lake Minnetonka.”
The luxury home market in the Twin Cities has taken quite a beating the last couple of years. Home values have plummeted, putting what were once million dollar homes into lower price ranges. For some home owners who bought 2005-2008, the news has been less than welcome, even devastating. Foreclosure was inevitable for a few, other have been able to refinance. But one thing I have learned from speaking to luxury home owners, they are taking it all in stride and working with the cards they have been dealt.
Currently the inventory of luxury homes has been dwindling across the Metro, good news for home sellers. Less inventory means less choices for buyers, and gives sellers a better chance of selling their home. In Spring 2010, there were about 680 available homes for sale. Two years later, that number is down to around 615. As is typical for real estate in Minnesota, home inventory increases over the summer months, topping out in August and September. It will be interesting to see how the summer progresses and if the overall inventory remains low.
When it comes to how long a luxury home takes to sell in the Twin Cities, real estate agents turn to Days on the Market data. With Spring comes buyers. After waiting through the winter, they come out from the shadows and pluck down money for luxury homes. For reasons you can imagine here in Minnesota, it typically takes longer to sell in the winter. Starting this Spring 2012, the days it takes a luxury home to sell hovers around 170 days. While this may not sound like good news, when you compare it to Spring 2010 which hovered around 235 days, our current real estate market it doing quite well. I am pretty sure home owners would like 2012 market trends over two years ago!
If you are thinking of selling and would like a free micro analysis of your home in today’s market, please contact me!
(Data is comprised from top 10 most expensive zip codes in Minneapolis, St. Paul, Lake Minnetonka, and surrounding Twin Cities Metro areas, using homes priced above $500,000)
The 2010 Twin Cities Real Estate Report was recently released by the Minneapolis Association of Realtors and has some fantastic data on what has been happening over the past years in the surrounding 13 county area. While this is a general overview of all real estate activity for 2010 and not a specific breakdown of the luxury home market, it provides some important insight on areas that do cater to the upper bracket real estate market.
New Listings
New listings have been decreasing over the past five years, which is really no surprise to anyone. What is interesting is that 2009 and 2010 are relatively the same for homes put on the market. I like the fact the report breaks down the top/bottom five markets for new listings. For the luxury home market, Victoria is number four for most new homes listed, and has seen a 13% increase in home prices over the last year.
New Listing Data 2010
Closed Sales
For Closed Sales in 2010, the number one area for sold homes was Victoria, with Lake Minnetonka in fifth place. Victoria’s new home construction was probably a good reason for the top ranking for nearly 30% of its 2010 closed sales were due to new construction. Lake Minnetonka on the other hand saw almost 30% of its closed inventory as foreclosure or distressed properties. The desirable area coupled with lower home prices helped the Lake Minnetonka market have a better overall year than other Twin Cities areas.
Closed Sales Data 2010
Days on the Market
One of the most important pieces of date to relay to home owners is the number of days it might take to sell their home. Known to agents as DOM, the Days on the Market helps us understand exactly what a local real estate market is doing. As you can see, when the market tanked in 2008, DOM increased dramatically. Since then, homes have been slowly seeing that time frame decline – a good thing for the overall market. Areas of Minneapolis found themselves having the shortest days to sell, most likely due to the shear volume of foreclosures in those areas. The “North” area of Minneapolis alone had 60% of its sold volume in 2010 as distressed/foreclosed properties.
2010 Days on the Market
If you would like to learn how your local real estate market performed in 2010, please feel free to send me an email!
With winter quickly approaching in the Twin Cities, luxury home prices remain stagnant and overall continue to fall. Popular areas such as Edina and Lake Minnetonka are holding on, but as it happens ever year around this time, buyer activity decreases with the coming cold.
Twin Cities Price
Inventory for upper bracket homes across the Metro area remain high as home sellers keep properties on the market in hopes of finding that one buyer who will purchase their home. Typically luxury inventory hits rock bottom around Christmas and New Years, as sellers concentrate on other things as buyer interest declines. As spring approaches, sellers get back on the selling wagon when buyers perk up from a winter of slush. With such a vast difference in locations across town, it is obvious that a micro analysis would need to be done for each specific city to see how the luxury market fares individually.
Regional Inventory for Twin Cities
But probably the second most important statistic for home owners, behind price, is the number of days it takes for a home to sell in today’s real estate market. Known as Days on the Market (DOM), luxury homes are seeing some good news! The average amount of time a luxury home sits on the market, that being for homes priced above $500,000, is steadily declining in the Twin Cities. Currently sitting around 140 days, the contributing factorsmost likely result from a declining of the number of homes on the market (meaning less choices for buyers) and a decrease in overall prices.
Twin Cities Days on the Market Luxury Homes
If you are interested in a free micro market analysis of your home, please contact me !
Real 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.
