Spring has wonderfully sprung in Minnesota, with warm weather, flowers blooming, and outdoor sports. Unfortunately, the real estate market hasn’t noticed.
In Minnesota, every real estate agent will tell you to get your property ready for spring, when buyers flood back into the market. That’s the approach we’ve used for the rental townhouse we’d like to sell. Our son moved out in March (on a very cold day!) and we were on the market in early April (before spring weather arrived).
Unfortunately, no flood of buyers has arrived. We’ve had open houses and showings – but not many of them. We trimmed the price after three weeks to ensure we were attractive, relative to comps. Our realtor (a family member who is a metro top-seller) said it’s the worst spring market they’ve seen in years.
High interest rates, weak consumer confidence, and Trump uncertainty seem to have rocked the spring market, nationally. Certainly the “Home Affordability Crisis” isn’t a new issue, but it does seem to be growing.
A recent Gallup Poll shows the concerns …
As you can see, perceptions of the housing market are as bad now as they have been in 25+ years. (We’ve had friends that recently sold properties quickly, but the trend does seem to be pretty broad).
Federal Reserve real estate data shows that existing home sales dropped (about -5%) in April from earlier this year. The median sale price is also down about -5.5%, from last year’s peak of $427K.
As they say, real estate is local and our agent shared data from our community that looks equally difficult. Even when you just narrow in on townhomes in our price range. Inventory isn’t particularly high, but buyers are thinner. We live in a great community that was just named top 20 places for families in the country by Fortune magazine.
As a result, if there isn’t any pick-up in activity, we’re going to reassess where we are at before Memorial Day Weekend. Price doesn’t seem to be a lever, but we could pull that again. Or, look at keeping it as a rental property for a couple more years.
Regardless, we’ve gotten to the point that I can see this property is going to end up on our “financial failures” list. I think we will lose money on the investment, although it was great having our son live so close for the last 3 years.
How has the housing market been in your area?
Image: (c) MrFireStation.com
MrFireStation 
Prior to the Palisades Fire, houses in the local market were in short supply to the point Realtors are making unsolicited calls and mailing flyers trying to get inventory to sell. I asked our postman how many houses got burned on his route, and he answered 19. There are other nearby neighborhoods that got hit a lot harder. This means even less inventory for an already short supply. Housing prices seem okay right now. My bet is that a lot of the burned out lots will change hands. Investors will over invest building out the burned out homes, and then the excess supply will drive down cost. I have seen this cycle before.
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You are certainly in a very UNIQUE housing market right now. You are going to have to deal with a lot of nearby construction over the next few years. How many houses do you think are on that postman’s route (to put 19 in perspective)?
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I am in a rural area where the norm is 400 drops per day because they are spread out. So the burned houses are at around 5% of his route.
Of the 19, I know and have known around six of the owners and ten are within easy walking distance from my house. Ironically, I have been through two wildfires; in 1993 and again this year. Only four of the houses that made it through 1993, burned this time.
The mail carriers in our area are very good. They know who their customers are. For some reason they always seem to get my Amazon delivery whenever I am ordering more weight plates, which weigh up to 45 pounds each.
Right now there is a lot of traffic involving dump trucks taking the remains of burned homes to the dump.
I still don’t see ready to move in houses dropping anything soon in my area, as long as there are not very financially savvy Hollywood and BLM types looking for places to spend their new found income. This is ironic, because the area was initially settled by a aerospace engineers who built their own homes (me included), an eccentric CEO for Gulf and Western, and a land developer.
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5% … that’s good to hear. I know from the photos that some areas were completely burned up. Wildfires are such a unique risk relative to anything we have here in the upper Midwest.
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Two other early pioneers in my neighborhood and the eleventh home that burned within easy walking distance.
Nike Missile Sites brought water, power and roads to the area.
https://wikimapia.org/4705881/Los-Angeles-Defense-Area-Site-LA-78-L
And there were aerospace engineers, including a swinger couple who started a wife swapping ranch. By the way, I forgot to include their house in my count, so we are now at eleven. Their ranch manager actually bull dozed in my driveway. He told me about some crazy stuff going on.
https://en.wikipedia.org/wiki/Sandstone_Retreat
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Wow – Sandstone Ranch – that’s quite a story. When I started an early retirement blog, I’d didn’t think “wife swapping swinger ranches” would come up, but whatever works! Maybe it’s a unique FIRE lifestyle- although it sounds like it was a $$$ drain! 😉
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Days on the market in Pasadena have risen. I don’t know where displaced people from the Eaton Fire went. A friend who lost his home is renting in Glendora 20 minutes away.
my building of 111 one and two bedroom condos always has a few units on the market. They are slower now as many sellers have patience and buyers at these interest rates (low considering 1980’s and 90’s) are reluctant to spend $800,000 to $1,100,000 for 800-1500 SF.
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Wonder if a lot of those who were burned out took the insurance settlement and moved out of state to buy a replacement property? The prices in CA are crazy. No way I would move here again if I was in my 20s again. Prices in 1986 were a gift.
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many are taking insurance money and selling the bare lot. I don’t blame them as many are over 75 and who wants to spend final years planning and building a house that you might never occupy.
there is a lot of pressure from preservationists to keep Altadena the same and not sell out.
This is like when Caltrans bought property for 105 freeway. The homeowner’s took the cash and moved to Moreno Valley and Compton changed from a black community to a Hispanic community.
Change happens
also everyone wants the county to abate lead from soil in burn area. All the lead likely came from cars in 60s and 70s
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Yikes … $1K per square foot. I can’t imagine. Our rental townhouse is about $180 per square foot. Quite a difference!
https://www.remaxresults.com/property/133-6692757-10754-falling-water-lane-d-woodbury-MN-55129
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Malibu along the coast had miles and miles of homes burn. They were built right up against each other. They burned down the line like dominos falling.
Inland, Alta Dena and the Palisades were really hard hit. The fires got into the flats where the houses are built close together. They also had older construction with big vents in attics to let air circulate. These vents are how the embers get into an attic. This has been one of the code changes since the Paradise Fire and the resulting forensic analysis. Once again the domino effect happened.
The houses in my neighborhood that burned didn’t cut their brush. Three of the houses were built to be fire proof, so they didn’t cut their brush. Their windows failed. The fire got inside and caught the contents on fire. There are steel support beams in one of the houses that twisted like a pretzel.
Sandstone Ranch sounded pretty crazy and I had no idea about it before the ranch manager who bull dozed in my driveway told me some crazy stories. They were pretty much shut down by the time I moved in by the AIDs epidemic. Thought the story would make for some interesting reading.
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🔥 Hot enough to “pretzel” steel beams. Yikes!
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