When it comes to selling a house, price isn't always the issue.
While sales of existing homes in the Twin Cities metro area dropped a whopping 14 percent over the past 12 months, sales of homes priced at $1 million-plus jumped 4 percent, according to data from the Minneapolis Area Association of Realtors.
"People that own these expensive homes are not affected by the market very much," said Linda Blyth, director of Coldwell Banker Burnet's Previews-Distinctive Homes Division. "If they see something they want and they see value, they have the money to buy it."
In large part that's because upper-bracket buyers often pay cash and aren't concerned with what's happening with mortgage interest rates or the state of the mortgage industry or even the snowballing foreclosure crisis.
And in many cases wealthy buyers don't have to sell before they buy or they're getting a fat relocation package that includes moving expenses and a buyout of their previous house.
"When you're paying cash it doesn't matter what the interest rate is," said Cindy Froid, sales agent with Keller Williams in Minneapolis and who recently received multiple bids on two downtown Minneapolis condos, including one for more than $1 million.
Life isn't all peaches and cream in the upper-bracket market, though. Currently, there's a 23-month supply of listings, including one priced at $53.5 million -- the most expensive in Minnesota. That's the lowest absorption rate for all price categories, according to data from the Minneapolis Area Association of Realtors. Marketwide, there's now a 9.9-month supply of listings. Agents blame the upper-bracket backlog on aggressive sellers who aren't willing to adapt to a softer market, and speculative sellers and home builders who continued listing houses at a time when the market began to correct itself. They also say that consumer confidence has been blunted by concerns that prices have yet to hit bottom.
"But move-up buyers in this price range and relocation buyers look at the purchase differently," said Todd Shipman, sales agent with SKY Sotheby's International Realty in Edina. "It's the wealth effect of this not being the only investment they hold."
Though the reasons are slightly different, that's why the bottom category -- those houses that sold for less than $150,000 -- and the top of the market -- those priced at $1 million or more -- were the only categories to post an increase in sales during the previous 12 months. Buyers in both categories typically don't have to sell a house before they buy another. That leaves homeowners in the middle price ranges stuck.
"There are plenty of people who have the cash to make it happen," Shipman said. "These are people who have the income and security to make the change."
Wooing with wine
Mark Evenstad and his family, for example, were perfectly content with their 6,500-square-foot house in Woodland on Lake Minnetonka. But when a much-admired house down the street came on the market, they couldn't say no even before selling their current house.
Evenstad thought it would take six months to sell the two-story brick house, originally priced at $2.3 million. After nearly two years and a new price of $1.895 million, showings have been modest. And somewhat frustrating, too.
A prospective buyer looked at the house eight times to see it at all times of the day -- and then wanted to see what it would be like to wake up there. So Evenstad quickly refurnished parts of the house, which had been vacant, with bedroom furniture, linens and a pair of wine glasses and a bottle of pinot noir from the family vineyard to help seal the deal.
The overnighters passed on the house but took the wine with them uncorked.
"I've been trying to keep it out of my mind and not focus on it that much," Evenstad said. "But when we look at how healthy our local and national economy is, the paralysis in the market just isn't warranted."
Lots of competition
Sheri Fine, a sales agent with Edina Realty who has a listing for $1.1 million house in the Kenwood neighborhood in Minneapolis, is frustrated, too. She said she's had lots of showings but no offers on the house, which has a new kitchen, a new master bedroom suite and a recent $50,000 price reduction.
In that price range, there's lots of competition. Of the 468 sales at $1 million or more during the past 12 months, 401 of them were less than $2 million. And that's where the bulk of the inventory is, as well.
But there are some signs that sellers are beginning to take a breather. John Shaw, director of Edina Realty's exceptional homes division, said that so far for this year there were 921 new listings at $1 million and more during the past 10 months compared to 1,021 last year.
And sales in some parts of the market have been sluggish. Shipman said sales of newly built $1 million-plus houses in Edina, for example, have been slow since this summer. The same is true in some second- and third-tier suburbs, as well.
Not so in Minneapolis, Edina and around Lake Minnetonka, where most upper-bracket sales are concentrated. In Orono, a $4 million house sold during the past few weeks. And last year two lakeside estates sold for $12.25 million and $17.5 million. And in downtown Minneapolis two existing condominiums recently sold for more than $2 million.
While a luxury condominium would be out of reach for most buyers, many upper-bracket buyers view such a move as a kind of simplification.
"For many of these folks they're actually downsizing from their existing homes," Froid said. "People in this bracket tend to move around a lot because of their lifestyle and they just want a new adventure."
Jim Buchta 612-673-7376
Jim Buchta firstname.lastname@example.org