Sue Hakes and her husband recently sold their "suburban" Grand Marais, Minn., house to buy a commercial building along Hwy. 61 and have been converting it into two side-by-side loft-style living spaces with concrete floors, an open floor plan and near all the perks of small-town living.

"We love living in the heart of our community," said Hakes. "And because we are directly across the street from Lake Superior, we basically live on the lake."

Urban living isn't popular only among those who live in big cities. In quaint resort communities statewide, a burgeoning number of vacation home buyers are choosing weekend getaways with sidewalks and porches out front rather than lakeshore and decks out back.

Many are doing it for the small-town sense of community they don't get in their suburban hometowns; others are doing it because they can't afford the high price of lakeshore property. While the trend is generally good news for the small-town homeowners who are seeing their property values rise, the phenomenon is also contributing to the overall rising cost of housing in these small towns.

By and large, however, most second-home buyers still lust for shoreline property, according to Cameron Henko and David Gooden of Lakeplace.com, a Web-based company for lakeshore property.

In fact, vacation home sales have been brisk even as the broader housing market struggles. While primary home sales fell 4.1 percent nationwide during 2006, sales of vacation homes rose 4.7 percent, according to the National Association of Realtors. A survey by the group found that most of those buyers -- 66 percent -- bought near an ocean, river or lake.

For one couple from St. Louis Park, walking distance was close enough, so that's why they bought a two-bedroom, 1¾-bath house in 2003 just steps from Lake Superior. More important, they wanted easy access to all of the cultural and civic amenities that Grand Marais offers, including the North House Folk School, two art galleries and a half-dozen restaurants. Avid kayakers, they use their cottage as a base camp to explore the area's many inland lakes.

"The price of lakeshore is driving that," said Pat Wiebusch of Re/Max Lakes Area Realty in Nisswa.

That's why the trend is being seen primarily in established small towns that are adjacent to high-demand recreational lakes where prices have skyrocketed. In the Brainerd Lakes area, for example, where the price of shoreline can rival that of Lake Superior, Wiebusch recently had two clients who opted for in-town getaways.

One client bought a house in Breezy Point for about $200,000 because he doesn't want to be limited to fishing just one lake, so he keeps his boat on a trailer and hauls it to whichever lake suits his fancy that day. And because he owns an in-town house, he's neither financially nor geographically limited. Wiebusch said that another client bought a house in Nisswa for about $450,000.

"It was the quaintness of the town," he said. "They wanted to be close to the small-town atmosphere."

In both cases, a comparable house on the lake would have cost at least twice as much, Wiebusch said.

Although the real estate market in Grand Marais and other resort communities isn't as strong as it was two years ago, lakeshore prices haven't experienced across-the-board declines that might create opportunities for budget-conscious buyers.

"Lake Superior vacant land is getting so expensive and the next best thing is to be on the hill and to have a beautiful view of it," said Hakes.

In Grand Marais, there's another option for price-conscious buyers. East Bay Suites is a condominium building on a prime piece of harbor front lakeshore that was once the site of the East Bay Hotel, built in 1909.

Some locals rued its passing and lamented a new metal and wood-clad addition to the building, but buyers have responded to the project favorably, largely because of the units' prices, which range from $110,000 to $449,000.

"It fits beautifully with that migration to the urban lifestyle," Hakes said.

Most of the 31 units have sold since the project opened in 2006, even though the town's zoning rules prohibit owners and guests at East Bay Suites from living in the units more than 30 consecutive days each year.

There are other restrictions on living in downtown Grand Marais, but there has been "strong support," Hakes said, to change zoning rules to allow now-prohibited residential units above street-level storefronts. That could increase the population density in the town and allow more people to experience both the lake and the town.

"We basically live on the lake," Hakes said. "But we enjoying watching and hearing the hubbub of activity on the harbor, including the commercial fishermen, sailing, boating, kayaking, sightseeing tourists and residents alike, enjoying the lake."

Jim Buchta • 612-673-7376