DULUTH – It's going to be a record-breaking summer for Duluth-area real estate if recent trends continue.
Already the median sale price reached a new high of $216,250 last month, according to Lake Superior Area Realtors (LSAR) data, and sellers are getting every penny they ask for — and often more.
"We're breaking a lot of records, and if only we had a crystal ball to see what the future holds," said Shaina Nickila, president of the LSAR board. "We have a lot of folks coming to the area, and they're between a rock and a hard place."
High demand, low inventory and low interest rates have been keeping the market hot for nearly a year, and real estate agents have been scrambling to keep up even as the typically busy summer season has yet to fully arrive.
"We've become a popular place," Nickila said. "It's just fast and furious at this moment."
On Wednesday afternoon, agent Jamie Sathers-Day was putting a sold sign on a home in Hermantown that hadn't even been officially listed.
"It's just a crazy market," she said, pointing to numerous cases of multiple offers pushing prices past asking, once a relative rarity in the region.
A four-bedroom, two-bathroom listing in western Duluth that went up Wednesday with an asking price of $249,900 will likely see the same flood of interest, Sathers-Day said.
"At this price range, there should be lots of activity," she said.
New listings have finally started picking up after remaining well below average for months, but the inventory of homes for sale remains about half what it was last spring. At the same time, closed sales so far in 2021 are up 15% over the first four months of 2020.
That has driven up prices more than 10% in the past year in a market that typically sees half that much annual growth in home prices.
The lack of homes on the market is a nationwide issue that the National Association of Realtors says should ease up later this year, bringing some relief for buyers.
"We'll see more inventory come to the market later this year as further COVID-19 vaccinations are administered and potential home sellers become more comfortable listing and showing their homes," the group's chief economist, Lawrence Yun, said in a recent news release. "The additional supply projected for the market should cool down the torrid pace of price appreciation later in the year."
In the meantime, as bidding wars drive up prices in Duluth — in city limits the median sale price is $220,000 so far this year — the same is happening throughout the region as buyers look at smaller cities and rural properties. An average day for an agent may now include showings in Esko and Hermantown in Minnesota and South Range, Wis., in addition to homes in Duluth and Superior.
The median sale price in Superior for was $144,250 in April, a 7% increase over last year.
"We're getting just as many multiple offers and over-ask offers in Superior; it pretty much has the same feel," Nickila said. "I think our saving grace will be when they can start building more homes again and construction costs go down. We're kind of hanging in the balance."
A shortage of building materials has driven up prices for new homes 20% nationwide over the past year, according to the National Association of Home Builders, and the group sees that continuing in the near future.
"Policymakers need to find ways to improve the supply chain by facilitating more domestic production or, in cases where that cannot be done, suspending tariffs to allow for more imports," association chairman Chuck Fowke said in a statement this week.
Nickila said even having more apartments open up in the region should help take pressure off the housing market as downsizing sellers have new options for moving — anything to help get more homes on the market.
"If we keep growing, what will it be like 20 years from now? Will my children be able to afford a home?" she said. "I don't want people to get priced out of Duluth."
Brooks Johnson • 218-491-6496