Out of control

The crazy, mixed up real estate market

It’s not a buyer’s market right now.

“As a buyer, be prepared to pay way over the asking price,” says Grantsburg Real Estate man Lenny Chute, of Edina Realty.

“The last six months I’ve watched property raise in value,” he told Grantsburg Rotarians on Tuesday. And he didn’t mean a slight raise, but a way, high, out-of-proportion increase in the price of property.

“Last week I sold three homes I never even put on the market,” he said.

He called the real estate market, “Absolutely crazy,” and feels Covid-19 has had a lot to do with the upside-down market that began with residents of big cities such as Minneapolis and St. Paul.

“People in the “Twin Cities have fired up the market here,” said Chute. He described how many big city residents during Covid-19 have taken the opportunity to sell their homes and seek real estate in rural communities.

As a result, the residential and commercial markets have gone out of control and prices have gone through the roof.

“It’s a tough market right now (for buyers),” said Chute.

He said it’s not uncommon to see five to seven offers on each home or property.

As a result, many listings are not on the market more than 24 hours and, “the pressure is on everyone.”

He also warned, “If you have extra property, now is the time to get rid of it.” And he offered a bit of advice. “If it were my money, I wouldn’t spend it,” he said.

Chute added, “Local buyers are getting killed in the market.”

Property has risen so high people are paying, “Up to four times the value.” He said, while this is great for the seller, “It’s going to come back and bite us.”

After real estate values return to normal rates, people holding property they bought at a high price will have to “take a bath” if they want to re-sell the property.

“I think we are at the peak, but I’m a little gun shy. When is it going to go down? I thought it would have been by now and we still don’t know when it’s going to go down.”

He said the safest bet right now is, “Put the property on the market. I’d take the money and run,” said Chute.

As a buyer, you’ve got to be prepared to pay well over the asking price, maybe $100,000 or more over the value.

Crazy things are happening, such as lots worth $1,500 going for $15,000 to $20,000.

Chute also warned property owners not to rent property for now. “Sell it … sell high,” said Chute.

You can make money on selling property that’s been for rent, then when the market changes, purchase a new property at a lower price, with extra money in your pocket.

“A lot of people are moving into trailers, mobile homes and many elderly are selling their property and retiring,” said Chute.

Right now this over-inflated real estate market is out of control. “It’s reality now, but it can’t sustain,” said Chute.

“It’s gonna come back down and it will crash, it always does,” he told the Rotarians.