Faith Blackwell has longed for a cozy lakefront home to spend holiday weekends with family. But it was only last summer that she found one to fit her family's budget.

"It felt like prices reached the bottom," said Blackwell, who along with her husband purchased a cottage a couple hours from their home in Oak Grove, in Anoka County. "There was no point in waiting."

Minnesota's vacation home market has turned a critical corner, with sales on the rise in many parts of the state. Such transactions increased nearly 30 percent nationwide last year to the highest level since 2006. Even listings that have been sitting on the market for years are starting to be sold off.

"It's really quite exciting," said Dave Gooden, co-founder of, a leading online vacation home brokerage with offices across the state. "This spring we have had a lot more sales and a lot more interest from buyers."

Because recreational property is purely discretionary, the vacation home market in much of outstate Minnesota has recovered more slowly than in the Twin Cities metro. But even that's changing. Sales in Minnesota's Arrowhead region, which includes the North Shore of Lake Superior and hundreds of secluded inland lakes, were up 8 percent during the first quarter, the biggest gain ­statewide.

During the housing boom, lakeshore sales and prices soared as buyers from all income levels took out bank loans and tapped into their home equity to buy a second home. But with today's more-stringent credit standards and higher down payment requirements, the market is being driven mostly by buyers who have cash or can tap into an investment account to pay for a lake home.

None of this is stopping buyers from splurging on luxurious properties, however.

On the Whitefish Chain of Lakes near Brainerd, for example, lake homes priced at $400,000 and up have been selling faster than less-expensive listings, said Mark Wessels of Re/Max Lakes Area Realty in Crosslake.

For instance, a five-bedroom, chalet-style house on the Whitefish Chain recently sold for $755,000. The log-sided house has a wall of windows overlooking the cobalt waters of Lake Roosevelt, and soaring vaulted ceilings with a massive fireplace made from locally quarried stone.

"A lot of people have been sitting on the sidelines and all of a sudden have jumped into the market, so they're eager. I'm very busy," Wessels said. "Some of these people have wanted to do this for a while; homeowners are really regaining confidence."

Wessels said that while prices are still far below peak, they have increased nearly 10 percent on some properties.

Lavonne Christensen, an agent for the Odyssey Real Estate Group in Duluth, said she's had more than $5 million in sales during the first three months of the year, compared with $2.6 million last year. Most of those sales have been along the rugged, windswept shore of Lake Superior, where one of her listings is a 2,400-square-foot townhouse for $549,000. The property is in Silver Cliff, an exclusive gated community with a private beach and east-facing views.

But certainly, not all sales are pricey. Last year the median price of second-home sales across the country was $168,700, a 12.5 percent increase. And nearly 40 percent of all buyers paid cash, reports the National Association of Realtors.

In Minnesota, waterfront sales are strongest on the best-known lakes that are within two hours of the Twin Cities, along with other metro areas where job growth has been strong. In the North Central region of the state, for example, sales during March were up 2.1 percent compared with last year, according to the Minnesota Association of Realtors.

Along the state's western border, Detroit Lakes is doing well because it's capturing buyers from the Dakotas, where the Bakken oil boom is boosting incomes. And in the Alexandria area, which is less than two hours west of the Twin Cities, there's been deepening interest in undeveloped lots, a segment of the market that is usually the last to recover.

"For five to six years ago you couldn't move a lake lot to save your soul," said Missy Johnson, a agent in the Alexandria area.

She recently sold two lake lots, including one that was the biggest sale in the area in nearly a year. "That's a good sign because that means someone will be building houses on those lots," she said.

Jason Martin, a farmer from west-central Minnesota, recently bought a lot on Lake Mary. He has a camper there, but has no immediate plans to build. For now, his family stops by to swim and sit by a campfire. His real motivation was financial. He thinks prices have hit bottom, and he was able to refinance the mortgage on his house for 2.78 percent and pay cash for the lot.

"You have to take advantage of these low prices and low rates," he said. "It's by far a better place to park your money than in a bank."

Blackwell, the school secretary from Oak Grove, agrees that her family's decision to buy now had everything to do with a renewed sense of confidence in the market. And with interest rates near all-time lows, they were able buy their cottage within their $175,000 to $225,000 budget with a home-equity loan.

"I love having a cabin and looking forward to Memorial Day weekend and the 4th of July week. It's a special thing," she said. "And we're already seeing prices going up, so I'm so glad we bought when we did."

Jim Buchta • 612-673-7376