Northeastern Minnesota home sales have been on a tear this summer despite a relative scarcity of listings.
"There's definitely a disconnect between the number of people wanting to buy and sell," said Sarah Wisdorf, a Realtor for Gables & Ivy Real Estate in Duluth.
The number of homes listed for sale in July was down 19.8% from the same month last year, according to a report by Lake Superior Area Realtors Inc. Nevertheless, the number of Northeastern Minnesota home sales that closed was up 20.7% compared with July 2019.
The Northland's surge in sales fits well within a larger narrative. Nationally, sales of homes in July rose 8.7% compared to the same month last year, and in Minnesota, year-over-year sales were up 12.2%, according to the National Association of Realtors.
Megan and John Bennett can attest to just how hot the market is right now. The couple's home in Duluth's Morley Heights neighborhood sold within hours of their placing it on the market — twice, actually.
They listed the house for $249,900 in early July and had nine showings the first day.
"We had multiple offers real quick, and they were all at or above our asking price," Megan said.
The Bennetts took the most generous offer. But when that buyer got cold feet the following day, they calmly put the property right back on the market, as their real estate agent advised.
While the false start was disappointing, John Bennett considers it a reflection of just how much demand there is for homes in the Northland right now.
"Most people know that when you see a house that's priced correctly, it's going to go quick," he said. "And you don't have time to think about it. From the buyer's perspective, you've got to act now, and then you think later. It's frustrating from a seller's perspective, because little did we know that earnest money is not really earnest money. You can't necessarily collect that. People often have the ability to back out of an offer for whatever reason."
The setback proved fleeting. After relisting their home, the Bennetts received multiple offers at or above their asking price and again accepted one of them within a day.
Krista Klobuchar also describes a strong seller's market.
She and her husband, Jeremy, put their home in Duluth's Denfeld neighborhood on the market and sold it two days later for $155,000 — $5,100 more than the listing price.
They moved to a new home south of Superior, drawn to the area and its more rural setting with 14 acres of land. But they, too, paid a premium, besting the asking price by $10,000 after a bit of a bidding war with other would-be buyers of the property.
"We always wanted to move to the country," Klobuchar said, explaining that they would likely have relocated regardless of the pandemic.
Realtor Doug Kman of Coldwell Banker East-West Realty in Duluth said a number of people have been motivated by the COVID-19 outbreak to move to more rural areas of the Northland, which are often perceived as safer than urban settings. And with many people now working remotely, commute concerns have nearly evaporated for many homebuyers.
Good internet service remains a must for the majority of Kman's working clients, however, keeping them from looking too far afield.
As the Federal Reserve seeks to keep the economy afloat, mortgage rates have slipped below 3%, providing another boost to home sales.
"Rates are good, and that results in a lot more buying power," said Maranda DeSanto, CEO of Lake Superior Area Realtors Inc. She noted that a 1% drop in interest can translate into $167-per-month savings on a $200,000 mortgage.
DeSanto suggested the current value proposition is drawing increasing numbers of renters into the market.
"It's putting mortgage prices well within reach of or better-than-rent prices," she said.
DeSanto pointed out that nationally, first-time homebuyers accounted for about 34% of July home sales.
While now may seem an opportune time to list a property, Kman noted that economic uncertainties have resulted in hesitancy on the part of people who might otherwise be looking to move up to a more expensive home. This factor likely has constricted the inventory of houses on the market.
If anything, the pandemic seems only to have intensified the dream of homeownership.
"It gives you a sense of being able to control your tiny corner of the world when you own your own space," Wisdorf said.
While open floor plans remain popular, Kman, who serves as president of Lake Superior Area Realtors Inc., said many buyers are now also looking for space removed from the common areas of a home, where they can work without family interruption.
Duluth Realtor Shaina Nickila said the most intense competition for local homes seems to be in the $150,000-$300,000 range.
April and May are typically busy months for real estate agents, but not this year, as people hunkered down and heeded recommendations to self-isolate to the best of their abilities.
Wisdorf believes that the resulting pent-up demand is now being felt.
"It kind of shifted the spring market into the summer months," she said.
Northland Realtors report being busier than ever before, according to DeSanto, who described the situation as "a compacted market."
While Northland home sales typically taper by October, DeSanto wonders whether this year could be an exception.
"Not a lot of people like moving in the dead of winter," she said. "But it takes about six weeks or so to close, and the sales that are being agreed on now will close in mid-October. So, I'll be curious to see in the months ahead if this ends up pushing ahead into the winter a bit, too. I think there's potential for that."
