Yearning for a yard with more room to roam, Nick and Shannon Arnold decided to sell their Shakopee house they lovingly remodeled, never expecting they would close a deal fast.
Five days after the couple listed, they had a good offer in hand, which forced them to move out before they found a new home to buy.
Six months later, the Arnolds are still searching for that dream house with the big yard — stuck in a small townhouse rental, most of their belongings sitting in storage.
“It’s not how we wanted things to happen,” said Shannon Arnold, lamenting that she has to set aside her excitement about decorating her baby’s nursery. “As a mom, I’d like to get into a place so I could feel like our baby is a little more settled.”
With for-sale listings declining, homeowners are finding themselves in the kind of limbo that seemed unthinkable just a year ago: They’ve sold their house, often for the price they want, but can’t find another to buy.
As a result, many local agents say, some homeowners are thinking twice about selling what they have.
“We could sell their house in 30 days, but they don’t want to be homeless,” said Tammy Chevalier, an agent with Keller Williams.
While the competition for listings is triggering multiple offers and boosting prices, it’s creating headaches for agents. Tammy Chevalier spent much of Friday going door-to-door, trying to drum up listings in a neighborhood where a couple wants to buy. They are ready to sell, but won’t list the house until they have a strong prospect to pursue.
“Sellers are terrified,” Chevalier said.
Across the metro area, the number of homes for sale is now at a 10-year low, falling more than 30 percent compared with last year, according to the Minneapolis Area Association of Realtors.
At the current sales pace, the number of houses currently listed on the market would last only three months.
“We’ve even had sellers turn down offers close to the list price because they came in too quickly,” said Kate Beckman, a sales manager with Coldwell Banker Burnet. “They just weren’t prepared.”
Last fall, Jennfier Olson and her husband listed their East Bethel house when they found the “perfect” one, but quickly pulled their house off the market after getting outbid.
The Olsons don’t want to take any chances. Jennifer Olson says the family has specific needs and don’t want to be forced to settle because they were forced to buy quickly. They are shopping for a four-bedroom house on or near a golf course that’s within their children’s school district in northern Anoka County.
“Timing has always been precarious,” said agent Sarah Kinney. “Most people have to sell before they can buy a new house.”
Rentals squeezed, too
The rental market has proven tough for people who have sold their homes without knowing what they will buy next.
Rental vacancy rates, which have been hovering around 2 percent, are at record lows, allowing landlords to charge more for month-to-month leases. Many no longer bother with short-term leases and demand longer commitments.
The shortage of house listings and the tight rental market are the result of a broader slowdown in the construction industry. When the housing market crashed, home construction ground to a halt, and housing starts have been way below historical levels.
But as the economy gains momentum, home builders are having trouble keeping up with sales, which have increased at double-digit rates.
Olson and her husband have considered building, but developable lots are in short supply within the seven-county metro. The Olsons have scoured plat maps to identify buildable lots and have called owners to see whether they would sell.
“When you approach someone who isn’t selling, they want top dollar,” Olson said.
Agents say the situation isn’t likely to change anytime soon, or at least not until more homeowners are willing to sell. That won’t happen until prices rise enough so that more underwater homeowners are pulled out of negative equity.
Meanwhile, several months after the Arnolds sold their home, the search continues for a new one. While renting wasn’t what they had planned, Shannon Arnold said, a month-to-month lease and cash in hand from their house sale will give them an advantage when the right house comes along.
“That puts us in a situation where we can jump.”