Whenever I haven’t done something for a while, I usually find I’m a little rusty at it and it takes some practice to get back in the groove.
The same can be said of the Minneapolis and St Paul duplex market. After seven years of foreclosures, short sales, and buyers markets, both duplex buyers and sellers seem to be having a hard time remembering what a sellers market is like.
For example, many sellers who’ve been waiting to sell their duplex and change their lifestyle seem to believe pricing should pick up where it left off in 2005-2006 when prices were sky high.
Buyers, on the other hand, keep hoping it’s 2010-2011, when duplexes were selling at numbers that created double digit cash on cash returns.
But it’s 2014, and as a result, neither is exactly true.
For the week ending May 31, 2014, 24 duplex, triplex and fourplex sellers accepted offers on their properties. A whopping 87.5 percent of these owners were traditional sellers. On average, the final list price of these properties was $159,569.
Last year, there were 27 successful sellers during the same week. Just 51.9 percent of these people had equity in their properties. Curiously, on average, these properties sold for $212,104, which goes counter to conventional thinking about the impact of distressed properties on pricing.
The number of new listings for the last week of May, 2014, was up six percent over last year. Nine out of ten of these duplex sellers have equity in their properties. Last year, just 61.3 percent of the sellers did.
As we move deeper into a very late spring and early summer, we’ll hope we all get our traditional market groove back.