Steve Havig knows first hand how hard it is to sell a house in the Twin Cities these days. “Right now, you have [new house] listings going up and pending sales going down, and that means you’re not selling houses,” says Havig, president of Lakes Area Realty, Inc., in Minneapolis.
At the end of July, roughly 31,500 single-family homes were on the market in the 13-county metro area, according to the Minneapolis Area Association of Realtors. New listings were 19 percent higher than they were the same time last year, and pending sales were down 23 percent. The association reports that the housing supply rate, which estimates the number of months it will take for the current supply of properties to sell, has increased significantly over the past year—at all levels of the market. For homes priced between $350,000 and $500,000, for example, the housing supply rate is just under 10 months. For homes with price tags exceeding $1 million, the rate is more than 18 months. The market balance between buyers and sellers is considered healthy when there’s a five-month supply of available homes.
“It’s a buyer’s market because of the amount of inventory that’s out there right now,” Havig says. “The houses that are selling right now are the ones that are move-in, move-in, move-in condition.”
Today’s definition of move-in quality extends far beyond applying fresh coats of paint, replacing windows, and mending fences and decks. Today’s high-end buyers, Havig explains, have specific expectations of prospective homes, most notably, spectacular kitchens, master suites with bathrooms, and bathrooms on the first floor.
“In a seller’s market, people were quite willing to overlook things just to get into a property in a certain location,” he says. “For example, if a house didn’t have a first-floor bath, you were more likely to say, ‘I love this house so much, we’ll put one in.’ Now, if a house doesn’t have a first-floor bath, you’ll keep looking until you find one in the area that does.”
That said, if you’re remodeling your home for resale—even if you don’t plan to move out of it for a few years—there’s little room for error. Your remodeling efforts must not only meet your lifestyle needs, both aesthetically and functionally, but they also must enhance your home’s value in the marketplace. Which means you must spend your remodeling dollars wisely. If you burn through all your equity or allow your budget to get too bloated, you’ll be hard-pressed to recoup all or most of your remodeling costs, and you’ll potentially undercut the overall profitability of your property.
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