Low prices helped bring out bargain hunters, too.
Sales of vacation and investment homes jumped to their highest level since 2005 last year as buyers took advantage of low prices.
The number of properties investors bought rose 65 percent to 1.2 million, according to the National Association of Realtors (NAR). The transactions accounted for 25 percent of home sales last year, compared with 17 percent in 2010.
"Investors have been swooping into the market," said Lawrence Yun, the association's chief economist. "Rising rental income easily beat cash sitting in banks."
Sales of second, or vacation, homes increased 7 percent to 502,000. Those transactions represented 11 percent of all sales, up slightly from 2010.
Yun attributed the spike in activity to the increasing number of buyers able to pay cash. All-cash deals represented half of investment home buyers and 42 percent of those who purchased vacation homes.
State and national associations don't break out sales of investment and second homes in Minnesota, but second home cabin values rose 8 percent from 2006 to 2010, according to the Minnesota Department of Revenue.
The economic crisis has been a boon for bargain shoppers and investors alike, who have been able to nab foreclosures and short sales at a fraction of their original price. In fact, NAR said half of all investment homes and 39 percent of all vacation homes bought last year were distressed sales.
Ryan Kempenich, a sales agent with Coldwell Banker Burnet, said the foreclosure crisis has created an unprecedented opportunity for people looking for a place to park extra cash. Last year, 47 percent of his sales were investors or second home buyers, up from 22 percent in 2010.
"If they weren't second homes, they were investors who are buying low, then renting them out until the market turns around to sell for a profit," he said.
Bill Hansen, a real estate broker who specializes in out-of-town lake homes, said demand has risen dramatically.
"Properties have dropped down to what buyers are willing to pay," he said. "And, gosh, there's a lot of demand."
Hansen, the broker/owner with Bill Hansen Realty, said buyers have come out of the woodwork, though many are driving a hard bargain. In the last week he's received multiple offers on four lake homes. Last year the $150,000 to $250,000 price range was hot; this year the $200,000 to $700,000 price range is gaining steam.
During a tour of northern Minnesota earlier this year, Chris Galler, CEO of the Minnesota Association of Realtors, said transactions have been slow in the middle and northeastern part of Minnesota, but things are picking up in Fergus Falls, Detroit Lakes and the Bemidji area. North Dakota buyers flush with cash from the oil industry are helping give the market a boost.
Barb Hansen, marketing director for Odyssey Development in Duluth, a company that represents sales at six resorts in northern Minnesota, is also seeing a shift in the vacation-home market because buyers are becoming more confident.
"Interest overall is up," she said. "And some of that interest is translating into sales.
Jim Buchta • 612-673-7376