Orono, MN Median Home Prices Decline From $800,000 to $525,000

Orono, MN Median home prices have fallen from approximately $800,000 in 2005 to $525,000 so far in 2012.  Orono is home to many incredible homes and estates as you might imagine with a median home price of $800,000 at the peak.  It has not been easy to sell homes lately in Orono.

Recently I was reviewing many different listings and it was incredible to see that many homes sold for 50-60% of their initial list price and that often took anywhere from 1-2 years to sell.  Average market times to get a home under contract in Orono are about 275 right now.

(Click image to enlarge)

Orono Median Home Prices 2005-2012

 

 

 

 

 

 

 

 

 

 

Chart: NorthstarMLS and 10K Research

During 2008, I recall the collapse in home prices.  I could actually feel it on the street.  Buyers were backing away and sellers started to drop their prices.  Many did not move quickly enough with their price reductions and suffered even great losses because of their unwillingness to reduce quickly and significantly.  I was trying to sell someone’s home in Orono during the drop and it was incredibly difficult.  I was relieve of my duties as their Realtor and they hired a “superstar” Realtor who couldn’t get the job done and then they hired another big name Realtor who was also unable to get the job done…but price doesn’t matter, does it.

If you look closely at the chart above, the median home price for January 2012 is higher than January 2011.  Perhaps that slight adjustment is the start of a true bottoming in home prices.

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Comments

  1. Greg says:

    John – would you say that the properties are like for like ? Do you think that some of the higher priced homes are just not coming to market as those buyers may be holding on for market improvement.

    it would be very interesting to see an overlay of mandatory vs. discretionary sales – meaning people putting their homes for sale because of job transfer, loss of job (financial pressure) versus a voluntary move up or down in home. Is it the case where the $800K sellers a few years back were taking advantage of market conditions to move up / relocate where now they are sitting tight.

    Just curious what that background behavior might look like.

    Greg

    • John Murphy says:

      Hi Greg, thanks for your comments and questions on this. I think it’s a little bit of all of the above from what you mentioned. There have been some foreclosures and short sales in Orono but not a lot. Those would certainly fall in to the mandatory sellers.

      There is some relocation sales that happen in Orono as executives move in and out. Sometimes the relocation company is stuck with the house and has to sell it.

      One of the things I will post later – perhaps this weekend or early next week – is a snapshot of a 3 or 4 property listing histories so that people can see some examples of the decline in home prices. This is not exclusive just to Orono. There are several pricy properties in Medina and Lake Minnetonka where homes ended up selling for 50-60% of the original list price. I think that’s a combination of home sellers as well as their agents thinking that their home is worth more than it is.

      Lastly, the homes will sell. I believe they all will sell when they get to a point that they are interesting enough for certain buyers to make an offer. It’s painful to see the dribble down pricing strategy that takes nearly a year to achieve a sale. If the homes were priced more aggressively and adjusted more rapidly, I believe they would sell for more money.

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