Minnesota lake property: A buyer's market short of buyers
It's a buyer's market short of buyers for lakeside cabins and vacation homes in northern Minnesota. And the farther east and north you travel, the tougher the market.
A few years ago, many believed that every lake front property in the Land of 10,000 Lakes was going to sell fast, and prices climbed at double-digit rates.
Now, some shorelines in northern Minnesota are dotted with "for sale" and bank foreclosure signs. It's part of a growing trend: According to the National Association of Realtors, one of every 10 vacation homes nationally is in foreclosure, the highest rate in five years.
In many cases, homeowners trying keep up with payments on their first homes can't afford the extra payment for the second. April Stavig, broker for Lake Country Realty in Warroad, Minn., said she handles quite a few foreclosures on Lake of the Woods.
"Waterfront sales have slowed in the last couple years," Stavig said. "Buyers stopped showing in the last 18 months."
Donna Christianson, agent with Greenberg Realty in Grand Forks, said there aren't a lot of high-end buyers for property on Maple, Union and Cable lakes as well as Lake Sarah. She said she hasn't seen many foreclosure signs.
"I don't think prices are necessarily dropping," Christianson said. "They're holding more stable. It's cheaper on the smaller lakes. Sales activity is down but better than it was last year."
Christianson said more and more lake home owners in the northwestern region are making the properties their primary residences.
Greg Anselmo is a broker for Edge of the Wilderness Realty in Itasca County. He said counting lots, cabins and vacation homes, there are about 300 to 500 pieces of property available.
"We've got 1,000 lakes in this county, and we've got a shortage of buyers, that's for sure, and I don't know how to change that," Anselmo said.
With buyers seeing a lake home as more of a want than a need, Anselmo said Realtors are putting in a lot of time evaluating property.
"If it's 35 percent off the high point from 2006, that's probably where it should be," Anselmo said. "Buyers are pretty sharp and not going to overpay on the high side. If they see value in it, they're making offers."
He said buyers are wary and more Internet savvy.
"Usually when we get calls about a property, they've been on the Internet and know a lot about it," Anselmo said. "They know what they're looking for and have narrowed it down to five choices."
As for the sellers of lakefront property, some are willing to take a hit, some are willing to wait it out, and there are others not ready to take a loss. Anselmo likens the market to mutual funds and commodities.
"It's supply and demand," he said. "There's a supply of homes, but people that normally had the money just aren't in a position to demand a lake home."
In the Brainerd Lakes area, Realtors say banks are involved in about two of every five sales of waterfront property, which has helped push prices down, especially on the high end.
Mark Kuhnley, Edina Realty, recently told the St. Paul Pioneer Press a lake home in the Brainerd Lakes area listed at $1.7 million two years ago is on the market at $999,000. Another home at $1.8 million three years ago is now $1.3 million. Kuhnley said there are 80 properties at more than $1 million on the market.
Anselmo said the decrease in buyers could be attributed to the economy. A lifelong resident of the area between Bigfork and Marcell, Minn., he also owns a convenience store and motel. He said lake home owners are not driving north from the Twin Cities and metro areas as much as they used to.
"Where they used to come up six to eight times during the summer, last year it was twice, maybe three times," Anselmo said. "The kids are staying in the car, not coming in for ice cream, candy or pop."