Duluth sees record high home prices in 2024

DULUTH – Home pricing in Duluth rose to a record level last year, clocking in at $292,000 for the median sales figure, a 50% jump from 2019.

And those homes sat on the market for an average of just 19 days, about half the amount of time seen the previous year.

The higher prices illuminate the city’s enduring growing pains, with limited new housing even as its population growth finally inches up after decades of stagnancy.

Mayor Roger Reinert has made increasing the city’s numbers a major goal.

Duluth’s median sale price is much higher than that of surrounding St. Louis County. A 2024 Minnesota Realtors report shows $259,000 as the countywide median price. Along the North Shore of Lake Superior in Cook County, where second homes are more common, it was $440,000 for the year, and in Lake County, $225,000.

High construction costs and a lack of buildable land are two factors driving the spike in Duluth, but a dearth of single-family, condos and townhomes is the primary reason for the higher listing prices, a new city-commissioned study says.

“We just have a dramatically low amount of housing for sale,” said Tom Church, senior housing developer for the city of Duluth.

The study estimates Duluth’s population will grow to more than 90,000 in the next decade. The last U.S. census count had the city at 86,700 residents.

Duluth has consistently added housing, but the pace and scale have not kept up with demand, Church said, averaging only 230 permits annually.

Since 2020, builders constructed more than 1,500 units of housing here, with nearly half last year. The majority of those are apartment rentals, leaving the city with pent-up demand for townhomes and single-family homes.

Rental vacancies, too, reflect the struggle to find housing in Duluth. Last year’s vacancy rate hit 1.8%, down from 3.5% in 2022, the last time the city conducted a survey. The rate for affordable and subsidized rentals is even lower at 1.1%.

Some city councilors and those in the real estate industry worry a tenants rights November ballot measure pushed by local renters and the nonprofit TakeAction Minnesota will further erode the rental market. The group has complained about long waits from city inspectors and from landlords who ignore complaints.

Many buyers struggle with a $300,000 price point, which lately indicates a house with at least cosmetic needs, said Julie Brown of Edina Realty.

Not everyone wants to spend that much on a home that needs updating, she said, and “would rather finance something that’s definitely move-in ready.”

She’s also worked in the Twin Cities market, where new construction and newer homes in general are more prevalent than in Duluth, where more than 40% of the city’s housing was built before 1940.

Because of that, the existing stock will probably continue to grow in price, she said, especially as the population grows.

The city is looking for new ways to make it easier for developers and builders to construct affordable housing, beyond subsidies. More senior housing, such as condos and townhomes, should put some single-family homes on the market, Church said, and creating more balance in neighborhoods to include housing at a range of price points may help cater to seniors wanting to “age in place,” rather than a high-rise.