From still ponds in remote forests to the whitecaps of Lake Superior, lakeshore buyers in vacation home destinations throughout Minnesota are finding lots of options and prices that remain well below pre-recession peaks.
Shifting demographics and a radically different postrecession attitude toward investing in a vacation home have kept the lakeshore market far more balanced between buyers and sellers than in the Twin Cities, where scarce listings make it easier to sell than to buy.
Few homeowners are using the equity in their year-round home to fund the purchase of a second one, and many millennials are focused on paying off student loans and buying their first home. A lot of baby boomers are forgoing the dream of a place Up North, or are selling the one they own, to be closer to family activities near the metro.
“We’re seeing people chasing their grandkids,” said Jim Eisler, manager of Edina Realty’s Brainerd/Baxter, Crosslake and Hackensack offices. “There are a lot of things tugging on people’s time and money.”
Lake home sales across the state have posted incremental annual gains, but they’re far from peak, and prices are still soft in many parts of the state.
Dave Gooden, co-founder of Lakeplace.com, said that during the first quarter, his company’s Minnesota lakeshore sales were up nearly 40 percent compared with last year, but the average sales price was down 18 percent.
As in the Twin Cities, demand is most robust for properties priced at less than $250,000, he said, adding that the higher the price the longer it takes to sell and that the pace of the market varies dramatically from one region to the next.
In northwestern Wisconsin, for example, sales have been on par with last year, according to Dave McNulty, broker at the Lakeplace.com office in Shell Lake, Wis. On average, it took 201 days to sell those properties, a slight decline from last year. He said the average price of those sales in his market was $252,000, a modest 3.7 percent increase.
The Brainerd Lakes area continues to be the most popular in the state, and properties that are in good shape and priced right can sell quickly, according to Jim Slater of ReMax Lakeshore Plus. “The lakeshore market is absolutely recovering positively,” he said.
Slater said that this year, he’s seen a 10 percent annual increase in lake home closings outside the Twin Cities with a median price increase of just 3 percent.
Plenty of choices
Unlike the shortage of listings that’s dogged homebuyers in the Twin Cities, lakeshore buyers have plenty of choices. By mid-May, there were 2,557 lake homes on the market, ranging from an RV trailer and shed on North Long Lake in Brainerd for $39,900 to a $5.9 million log house with seven bedrooms and 10 bathrooms on Gull Lake in Nisswa.
Casey and Christa Miller, for example, said that when they started shopping for a northern Minnesota lake home around Labor Day last year, they found plenty of options, but only a few met their criteria. Their wish list included a year-round house with at least three bedrooms and two bathrooms on a lake with a sandy beach near Brainerd. Their goal was to spend less than $450,000.
They found one that fit, but they thought it was overpriced, and the seller was unwilling to negotiate. The Millers surmise that the seller was basing his decision on what he sees happening in the hot Twin Cities housing market.
“I don’t think he understands that the market up here is not the same as down there right now,” said Casey Miller. “Some people are trying to sell their homes up here like we live in the metro, and they aren’t having much luck with it. He has had the property up for sale for a long time now and he still hasn’t sold it.”
In no small part because vacation homes are an elective purchase, sales across the U.S. cooled slightly last year, according to an annual survey by the National Association of Realtors. An estimated 920,000 vacation homes were sold in 2015, an 18.5 percent decline from the previous year but the second-highest total in nearly a decade. During the same period, sales of owner-occupied homes increased 15.9 percent.
Would-be lakeshore buyers are instead focused on upsizing, downsizing and buying their first home. Lawrence Yun, NAR’s chief economist, attributed the sizable step back in sales of vacation homes last year to late-season turbulence in the financial markets.
“Baby boomers at or near retirement continue to propel the demand for second homes,” he said. “The expanding pool of buyers amid a dwindling number of bargain-priced properties led to tighter supply and fewer sales and caused the price of vacation homes to rise.”
After retiring, Laird and Linda Hanson decided to sell their getaway place on Hanging Kettle Lake near Aitkin so they could buy a lake home near the Twin Cities to be closer to their children and future grandchildren. Nearly two years later, the couple finally found a buyer.
During that entire time on the market, they only had half a dozen serious inquiries.
“In our price range, it’s a market where buyers can take their time, ask a lot of questions and wait until they are ready,” said Laird Hanson. “It is a matter of what a willing buyer and seller agree to.”
Hanson said the buyer pool included couples like them who wanted a getaway lake home, retired couples and families living and working in the area. The people who eventually made an offer are an Aitkin-area couple with two children who have outgrown their current home.
“As a seller, you need to be patient, keep the property in great shape and be prepared to negotiate,” Hanson said. “There’s not much competition; it’s more a matter of finding the right buyer.”