DULUTH – Spring usually means slim pickings for house hunters in Minnesota and that is especially true around Duluth. But this season's dip has reached record lows — the number of homes for sale in March was well below the average for this time of year and February saw the fewest properties on the market since at least 2005.
"This is just kind of our new normal for now," said Shaina Nickila, president of the Lake Superior Area Realtors [LSAR] board. "Seeing new listings in April and May is a normal trend in a normal year in a normal market, but do I see it making a huge switch in just a couple of months into a buyer's market? I don't see that."
There were 566 homes for sale in the area last month, according to LSAR data — half as many as there were in March 2020 but a 20% increase from February 2021. It was the first time since June that the inventory of homes for sale in the area increased, a seasonal trend that typically starts a month or two earlier.
Buyers continue to be driven by record-low interest rates but many would-be sellers are hesitant to list their homes without having a place to move to first — including rental opportunities, which are also in short supply.
"I have a lot of clients waiting until they can find an apartment or townhome," Nickila said. "We've still been seeing the same trends: multiple offers and high sales prices."
In Duluth the median home sale price this year reached $217,000 in March, up 14% from last year and a 2% increase from February.
In Superior, Wis., the median sale price has risen more than 25% in the past year to $144,500 after reaching nearly $130,000 in February.
Closed sales continued to increase faster than homes were being put on the market as buyers took what they could find. Building remained an expensive proposition last month given increased lumber and other material costs. The National Association of Home Builders reported this month lumber prices are nearly twice what they were last year, and the cost of steel-mill products has jumped 22% in the past three months.
"If we start seeing construction prices go back down maybe we'll level out on inventory," Nickila said.
Buyers looking for a break from competitive urban markets will find no solace farther north.
"We do have some bidding wars taking place, though at a smaller scale," said Laurio Brown, Range Association of Realtors board president. "It's been busy."
Virginia, Minn., has seen a jump in sales compared to last year even as the number of homes for sale has dropped by more than half.
Lake homes continue to be a big draw for those looking to relocate and work from home. One couple Brown worked with saw both of their Twin Cities-based jobs turn fully remote, so they decided: "Let's live on a lake in northern Minnesota," Brown recounted.
"The key factor there is they have to have the internet speeds to continue working from home," he said. "It can't be too remote of an area."
Brooks Johnson • 218-491-6496