Area realtors bracing for ‘perfect storm’
The number of closed sales on homes in southeast Minnesota is down nearly 4 percent from last year, but don’t let that fool you into thinking the market is soft, real estate experts say.
“The reason being… lack of inventory,” said Jay Jewson, president of Southeast Minnesota Realtors. He added people are faced with the dilemma if they sell, where will they go.
Jennifer Walsh, a realtor with Keller Williams Premier Realty, knows first hand about the market not having enough houses. In Blooming Prairie, for example, there is a waiting list for people wanting to move into the community, but can’t because there aren’t any houses available. She knows of at least four families wanting to move into BP that don’t already live there and five others that want to upsize or downsize into different homes. Many have been on the waiting list for up to a year.
“It’s kind of sad because people want to move here, but there is no where for them to go,” Walsh said. “We’re stagnant (in BP),” she added.
In regards to the waiting list in Blooming Prairie, Walsh said, “These buyers are qualified and ready to buy.” She has never seen such a back log before.
Walsh said the “sweet spot” for houses in Blooming Prairie currently experiencing shortages are in the price range of $125,000 to $200,000.
Throughout southern Minnesota, the real shortage of inventory falls into the $125,000 to $350,000 category, according to Pat Ingvaldson of Bay Equity. “The shortage of houses has made the buying quite aggressive,” he said.
Ingvaldson said some houses are going so fast they don’t even hit the market.
What Walsh is seeing is that all the families on her waiting list have a strong desire to be in the Blooming Prairie School District. “We have young families that want to raise their families in Blooming Prairie,” she said. “That a great testament to our school district.”
She said there is a “super shortage” of country properties. “They are even harder to find,” Walsh noted.
She compares the Blooming Prairie housing market to a “shell game” being played out. “You move something up to move something over,” Walsh said when it comes to selling houses.
Walsh said it’s a “perfect storm” happening right now with a low inventory of houses and the spring market now moving full steam ahead. She urges anyone interested in selling to make the move right now.
“Now is the optimal time to sell because of the perfect storm we have going on,” Walsh said. “This is called a true seller’s market.”
Blooming Prairie isn’t the only market experiencing a crisis of low inventory, according to Jewson. He says it’s “very tight, very strong,” all across southeastern Minnesota. He is expecting a strong spring for the real estate market.
One of the keys to pulling through the crisis, Jewson said, is to work with a credible real estate agent. “Finding a good solid agent that has a real pulse on the market is going to make all the difference in this environment,” he said.
Added Walsh, “There is never a more critical time to have a realtor for representation, doing proper paperwork to protect the seller and to counsel and navigate through multiple offers.”
Jewson said some properties are getting up to a dozen offers. “It can be daunting to go through that,” he said. “A good agent will help you go through all the offers.”
Homes that are priced correctly are selling at full price or above, Jewson said. He pointed out one house in particular had been on the market for $180,000. The house ended up selling quickly for $7,000 above the asking price.
“Buyers need to be ready to make a strong offer,” Jewson says. He added they also need to be ready to make an offer immediately or risk the chance of losing the property.
Walsh said a house in Austin recently sold within four hours of being on the market. “We have to be a cougar in the bushes and prey on it when it happens,” she said.
Home buyers are shying away from houses that need extensive work, Jewson said. “They want to move in and have no work,” he noted. “Having the house ready to go is important to getting top dollar,” he added.
Both Jewson and Walsh advise buyers to get preapproved by a reputable local lender. “It’s imperative to get prequalified,” Walsh said. “Have that letter and sit in the bushes and wait. If you wait two or three days to get qualified, by then the house will be gone,” she said.
Ingvaldson warned that some realtors won’t even take potential buyers to showings unless they have been preapproved.
He also said buyers should be careful on what they spend. “If you're preapproved for $300,000, it does not mean you spend that,” Ingvaldson said. “You don't want to be house poor,” he added.
“It’s best to have knowledge and be educated on how to best create long-term wealth,” Ingvaldson said.
Walsh is hoping for the best in the coming months. “We’re all praying for the spring market to perform and have an influx of new listings,” Walsh said.
In 2017, there were 462 homes sold in Steele County compared to 548 in 2016. The average sale prices were $174,396 in 2017 and $160,485 in 2016.