It will take major market changes to get upper-bracket real estate in South Minneapolis moving again.
Sales of upper-bracket homes in Southwest Minneapolis have come to a screeching halt. But the screeching is barely audible, if you’re listening to real estate agents or the local news.
Some blame the economy; some blame cautious home buyers; some blame the mortgage companies; and some blame real estate agents who aren’t accustomed to dealing with the current market conditions. There’s more than enough blame to go around.
But that doesn’t change the fact that homes $500,000-plus are not moving — no matter how far you drop the price, or how cleverly you decorate or how scrupulously you clean. And it will take structural changes in how upper-bracket houses are sold to get us moving again.
According to Edina Realty’s website (edinarealty.com), or any real estate company’s marketing site with a search function for MLS listings, only a dozen homes in the $500–$700 K range have sold in the past six months; in the past year, 50 of these homes sold; and in the past two years, 110 in this category sold. And now there are almost 40 $500–700,000 homes on the market, with more being added every day.
If you search Southwest Minneapolis “solds” under “any price,” you find that 237 homes have sold in the past six months; 646 in the past year, 906 in the past 18 months and 1,352 in the past two years. If you compare all sales to those in the $500–$700 K range, you obtain an average of more than 10 times the number of upper-bracket homes sold. This year, the disparity is particularly extreme.
Instead of looking at who’s responsible for this mess, we need to look for who can get us out of it. Strangely, there hasn’t been much leadership from the mortgage industry or from the real estate professionals, who have much to gain (their livelihoods, for example) if the deadlock is broken.
Instead, shell-shocked agents seem to be flocking downstream and focusing their attention on the $200,000–$350,000 market, which seems to be moving. In fact, some realtors are reporting multiple offers in this category.
Agents who list a home are charging 6–7 percent (half of which goes to the buying agent); on a $600,000 home, this represents $36,000–$42,000. The Internet has vastly reduced the time-consuming nature of a Realtor’s job. This would be a good time to reduce all real-estate fees, but particularly ones for upper-bracket homes. At the current rate, if a Realtor was being paid $100/hour, they could devote 360–420 hours to sell an upper-bracket home. Personally, I haven’t seen that level of devotion.
Most of the mortgage companies that were happy to repeatedly make thousands off of our upper-bracket homes in the boom times have closed due to tighter regulations. It’s surprising that the survivors aren’t lobbying to change the jumbo mortgage requirement of 20 percent down. Given how home equity levels and market investments have declined, there simply are not many buyers who can come up with the $100,000–$140,000 required to buy any of the $500,000–$700,000 homes in our desirable Southwest area.
And where is the media in all of this? Why haven’t they reported that it’s nearly impossible to sell a house worth more than $500,000? Most likely, it’s because news teams have been downsized to skeleton crews. So instead of the news we need, we get syndicated stories about how to renovate homes with money most of us don’t have access to.
First, quit holding open houses. It takes a lot of time to prepare your home for gawkers who want to see how the other half lives or get decorating ideas from folks with more resources. Your time and energy could be spent better finding real buyers.
Put your home on the market yourself. Without a real-estate commission, you can drop your price to a range that today’s finicky buyer may find compelling, and you can pre-qualify buyers, rather than opening your doors to droves of people who will never be able to qualify to buy your home.
Consider offering a contract for deed. If you do connect with the dream buyer who wants to move up into your home, hire a lawyer and draw up a contract.
And if all else fails, pull your house off the market and enjoy the summer. It’s only 94 days long. Pull your for-sale sign up and head to the beach. Things may get better or worse down the road, but now is clearly not the time to sell your upper-bracket home.
Lynn Ingrid Nelson, owner of communications consulting firm LIN PR, has had her home at 525 Prospect Ave. in the Tangletown area of Southwest Minneapolis on the market for 370 days.