Chris Snowbeck on Price Reductions

Twin Cities Motivated Sellers

The Twin Cities ranked seventh among the 50 largest cities in the U.S. in terms of the share of reduced-price listings, with 34% of for-sale listings in the 13-county metro area [seeing] price reductions as of Sept. 1. The size of the average price reduction in the Twin Cities was 9 percent.

--Chris Snowbeck, "Twin Cities a Hotbed of Discounted Homes this Season"; Pioneer Press (9/12/09)

Snowbeck's article does a nice job summarizing the mindset of home sellers faced with discounting their asking price to get a deal. Locally, that anxiety definitely kicks up after Labor Day, as Sellers contemplate cooler weather, and the seasonal slow-down that comes with it.

That's particularly true for homes that have been on the market since Spring (or before!).

Snowbeck also quotes me, and cites the Minnetonka home I've been discussing the last week or so for its serial price reductions.

My take on price reductions is that, while they can show Seller motivation, they don't necessarily tell you if a home is well-priced ("Cheaper -- Not Necessarily Cheap"). That's because the initial asking price could have been inflated.

When it comes to establishing value, only three things matter: the comp's, the comp's, and the comp's.

Down Time/Catch-Up

Hot Search Term(s): "Realogy Bankruptcy";
"Firing Your Realtor"

Note to Readers: no, it's not your imagination -- I've been off-line for a few days. Family trip to Chicago; taxing foreclosure deal (that came to naught); and ramping up a new blog design (details to come).

Question: What do parents (combined age: 95) of 3 kids (combined age: 19) say after driving to and from Chicago for four days?

Answer: TGIM ("Thank God it's Monday).

Enough catch-up . . .

One of the fringe benefits of a being a frequent blogger -- the last few days notwithstanding -- is that, in conjunction with my site meter, I can tell what key terms people are surfing for.

(Just in case you're concerned about your privacy: I can't tell the visitor's identity, but only such things as the name of the visitor's service provider, the time and length of their visit . . and the search words that brought them to the blog.

So, just like radio stations can tell which songs are popular and which aren't, blogs can tell which posts are attracting attention, and which aren't.

Out of some almost 300(!) posts the last six months or so, the far-and-away most popular is Coldwell Banker Burnet Troubles.

Clearly, there are lots of people out there speculating about the company's future -- so much so that my post has become one of the half dozen or so most frequently read on the subject. (Full disclosure: in the blogosphere equivalent of "being famous for being famous," blog posts that attract attention then draw attention for drawing attention -- very circular.)

To recap, Realogy is the parent company company of Coldwell Banker Burnet, an Edina Realty competitor, and is loaded with debt even as the recession whacks revenue. Not quite as bad as the problems facing the now-bankrupt Chicago Tribune or Minneapolis Star Tribune . . . but close.

Tough Market . . Rocky Relationships?

Winning the title of most popular "up-and-coming" blog post? Something I wrote last month titled, "Firing Your Realtor."

In a challenging market -- and this certainly is one -- more Sellers are taking multiple price cuts; more listed homes are expiring, unsold; and more Buyers are looking at more property, and taking longer to make offers. All those things can stress relations between Buyers and their Realtors, and Sellers and their Realtors.

So, clearly, unhappy clients are seeking online advice about when -- and how -- to find the exit.

Last item: I didn't even know that the Star Tribune had something called a "Netlet" -- an online-only guest column -- until they ran one of mine.

And I didn't even see it until a week after it ran (and two weeks after I submitted it).

Both of which just underscore the paper's declining business fortunes.

The piece was called "Who are Obama's Air Traffic Controllers?" In it, I made (I think) the rather obvious and unassailable point that, sometimes it's important for top government leaders (President, Federal Reserve Chairman, etc.) to tell key constituencies "no" -- and be willing to take the political heat for it.

Ironically, I was the one who got the "heat" -- in the form of multiple "flames" (critical, if not abusive, email criticism).

For the record, I am not a Reagan apologist, a defiler of the environment, anti-labor or anti-union, against air traffic controllers, in favor of gargantuan deficits, etc., etc.

(Not So) Exceptional Properties*

Upper Bracket Woes

Although Edina has been a housing standout in the current downturn, it, too, has pockets of excess inventory, and homes that have suffered serial price cuts -- and still aren't selling.

Just one street in Edina's Country Club section, Sunnyslope, now has six homes on the market, at prices ranging from $729,000 to $5 million. The market time ranges from just over 3 months to almost three years(!) (lots of green lawns in the MLS shots -- never a good sign in the Twin Cities in January).

What's going on?

Sunnyslope Sellers

Unfortunately, not just one thing. The economy, of course. The fact that anyone buying one of these homes likely needs a jumbo loan, which now carries a huge premium to so-called conventional or conforming loans (under $417k). The fact that people with the means to buy upper bracket homes have likely had their assets whacked, and now, their jobs threatened.

Finally, you'd speculate that the "Sunnyslope inventory glut" is emboldening Buyers to make, shall we say, "aggressive" offers that Sellers have been rejecting.

What you can categorically rule out is some sort of long-term decline, or a neighborhood-specific issue: Country Club is -- and is likely to remain -- a premier Twin Cities address.

So what happens next?

You'd guess some combination of more price reductions, Sellers who take their homes off the market, and/or Buyers who raise their offers enough to entice one or more of the Sunnyslope Sellers.

Although Edina so far has been spared the pox of short sales and foreclosures affecting other parts of town, that, too, could change with a deepening recession.

*Edina Realty has a special marketing group for upper bracket home called "Exceptional Properties," which includes two of the six Sunnyslope homes.