Purchases of High End Lakehomes Increasing in Minnesota
As home sales and prices rise in Minnesota, movement is beginning to be seen on the long-dormant vacation home market. But vacation homes still aren’t rebounding as fast as the rest of the market.
The average price of homes in Cass, St. Louis, Otter Tail and Aitkin counties has increased 3 to 5 percent since last spring, with the high-end vacation home seeing the most increase in demand, according to Trulia. In many popular lakeside destinations in northern Minnesota, sales of $351,000 to $500,000 homes have surged by more than 100 percent over the past year. Many of the homes are being purchased for significantly less than they were worth at the height of the housing boom.
And some of the buyers with all this discretionary spending are not originating from Minnesota. Some buyers are employees on North Dakota’s booming oil fields and farmers of the Red River Valley.
The volume of second-home buyers is much lower than before the housing crash and recession. This is partly due to tighter lending restrictions, as compared to primary homes. Further, second-home loans now require a 5- to 20-percent down payment, as underwriters remain cautious following the downturn.
Further, an oversupply of upscale houses built during the housing boom is available. There is a 10-month supply of outstate Minnesota lakeshore listings compared with three months in the much tighter Twin Cities real estate market.
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