A teetering economy and a ramshackle housing market are forcing homeowners looking to sell to take extreme measures these days. It’s no secret that, thanks to unscrupulous lending practices and subprime and Alt-A mortgages, millions of homeowners got in way over their heads with the promises of refinancing and surefire growing equity dangled in front of them. Now, homeowners who are literally drowning in their suburban McMansions are willing to do anything to get out from underwater, including taking to Craigslist to offer cheap, Realtor-circumvented “trades” for more meager, average-sized homes.
It’s a sign of the times that an online space that was once created for vacation swaps is now a space for permanent home swaps. And it’s further proof of a shaky and forever changed Twin Cities housing market when homeowners are using it to downsize from a 7,000-square-foot “castle,” a 5,000-square-foot lake home, and a four-bedroom golf-course home and into homes at less than half of the sale price of their original home.
What other time in history could you find a $900,000 home with an eight-car garage selling for $749,000 in exchange for a humble three-bedroom home in Minneapolis or St. Paul? Or how about the giant lake home, with what the seller describes as available with “very creative terms,” being swapped for partial payment on a home that has equity? If those items weren’t telling enough about the housing market and general American over-consumption, perhaps the lake home’s “creative terms” are: Despite what we know now about a continued market downslide, the seller is still offering the home at a deferred-interest payment of $3,800 a month, one that will put any prospective homeowner into a swelling sea of debt. In other words, like the lenders during the housing heyday, some homeowners will do anything to sell right now.
It isn’t only suburban McMansionites looking to unload their no-equity homes for something more manageable. Homeowners in the Cities are using Craigslist instead of Realtors and banks to try to trade their newish homes for cheaper mortgages. A homeowner in Northeast Minneapolis, for example, is willing to trade a mortgage on a four-bedroom home for one that is less than $1,000 a month. And there’s another side to all of the downgrade fever: With credit drying up, lending standards getting stricter, and fees to Realtors, brokers, banks, etc. continuing to rise, buyers are also finding that “trading” and paying only attorney’s fees beats the high cost of home buying.