When Mary and Mitchell Roach decided this spring to sell the 4,000-square-foot house they built 15 years ago in Savage, they were emboldened by stories of home buyers lining up and sellers getting more than asking price.
Four months and three price reductions after listing the house for $539,000, they’re still looking for a buyer and are baffled by the disconnection between the headlines and what’s happening on their quiet suburban street.
“It’s a whole different ballgame in the $500,000 price range,” Mary Roach said. “It’s been very frustrating.”
The Twin Cities housing market is booming, and the median sale price has regained everything lost in the 2008 downturn and more. But that has mainly happened because of improvements in houses that are priced around the median — which was $242,000 in June — and below it.
More expensive homes in the region, particularly those from $350,000 and higher, are harder to sell. They attract a smaller pool of buyers, stay on the market longer and gain value at a slower rate.
In June, the latest month for which data are available, there was a nearly 20 percent increase in sales of houses priced from $250,000 to $350,000, according to the Minneapolis Area Association of Realtors. For houses priced above $1 million, the jump was around 10 percent.
The situation is the result of changing demographics and shifting priorities. As millennials age, marry and settle down, many are trading their rental apartments for starter houses close to their jobs and shopping. At the same time, waves of baby boomers are eager to swap their sprawling suburban houses for ramblers and one-level condos closer to shops, restaurants and parks.
Shelly Holz of Keller Williams Premier last week sold a pristine, architect-designed house overlooking the St. Croix River Valley in Afton for nearly $80,000 less than its list price of $739,900. It took nearly two years. “In the upper-bracket market, it’s not so much about what the house is worth,” Holz said. “It’s about finding a price the matches the expectations of that buyer pool.”
It’s particularly challenging for suburban multilevel houses built in the 1990s with finishes that scream their moment. “Homes built with oak woodwork and brass fixtures are in their own minirecession in a market that’s not in recession,” Holz said. “If your house still has oak, you have to slash the price just to get people to consider it.”
Even though listings are on the rise in nearly every price range, demand for the least expensive houses has outstripped supply in some areas, leaving buyers with few options.
During June, there was a nearly 19 percent decline in listings of houses priced from $190,000 to $250,000, but a 6.3 percent increase in houses priced at more than $1 million, deepening the divide between buyers and sellers at opposite ends of the price spectrum.
At the current sales pace, there were enough houses priced from $190,000 to $350,000 on the market last month to last 2.1 to 2.6 months. In the $500,000 to $1 million range, the supply of listings was at least six months.
The scenario is particularly vexing for real estate agents who cater to upper-bracket sellers, who see the data and the headlines but feel like they’re missing out. And if an upper-bracket buyer doesn’t sense value, they’re apt to move on and build exactly what they want.
“We’re fighting a huge battle in the upper-bracket market,” said Meredith Howell of Coldwell Banker Burnet. “The market is very, very harsh, particularly when you’re competing against newer developments.”
Sara Huebener of Edina Realty, who has the listing for the Roaches’ house in Savage, said “most buyers who opt for new construction do so because they like the shiny new penny. They want the espresso hardwoods, white cabinetry, and black or white marble surfaces.”
Mitchell Roach said the buyer of his house will get all of the improvements the couple have made over the years, including landscaping and a $100,000 basement remodel.
He said the feedback they have received from shoppers has been mostly positive. Some aren’t fond of the bedroom configuration — it has three upstairs and one downstairs — or the size of the three-car garage. Some said the house was not priced appropriately even though a recent appraisal came back higher than the asking price.
“If you listen to the media and the people around you, you’d think your house would fly right off the market,” Mitchell Roach said. “When we listed it we thought we’d be lucky to be in here in a month. Now, it’s four months and 11 showings later.”