Teri is right about the point on value but I thought I'd expound on that a little more. Jack's quoting of current MLS stats is usually ok but this is a unique house that I don't think can be compared with general MLS stats. Looking at activity over $1M in Edina since September we see the following:
86 for sale
3 houses Pending Sale
14 sales in 5.5 months gives us approximately 33 months of inventory... a pretty high number. Of those that have sold, the average Cumulative Days on Market is 247 days and sold for 87.5% of original list price.
While Edina is a VERY STRONG market and very stable even in this market, the high end of homes have been hit heavily with the difficulties in getting reasonable mortgage terms on Jumbo loans. Down payment requirements have increased dramatically (20% to 25% down is not uncommon) and rates are a good 1.5% - 2.5% higher than for conventional conforming loans. While buyers in this price point almost always have strong asset bases, they either don't want to tie their money up in real estate or their money is stuck in investments that have fallen in value and they are skittish on selling them at a loss... hoping to recover their investment by waiting.
It is hard to put a value on exactly what impact the mortgage market has had on these higher-priced homes since it varies by buyer but my feeling is that a substantial amount of value has been lost due to these less attractive financing terms.
Additionally, there is some competition in this price point with builders with new construction and foreclosures of new and slightly used houses. For example I have a foreclosed new construction rambler in Minnetonka that was originally listed for $1.6M by the builder and is now priced at $900,000 with the bank/seller. Many, but not all, buyers looking at Edina would look at Minnetonka and vice-versa.
There is no quick answer, like Teri and Jack have mentioned. If you are looking to sell and I was listing the home what I would do is have 15-20 of my fellow agents come out to the house for a price opinion before listing the home for sale... simply because in this market the more perspectives and opinions you can get the better you can address the issues that get in the way of a successful sale.