Home News Are Duluthians getting priced out of the local housing market?

Are Duluthians getting priced out of the local housing market?

by admin
0 comment

Duluth — A few years ago, Amber Johnson was the ideal Duluth homebuyer candidate.

But after 10 offers were rejected earlier this year, including the valuation gap, St. Luke’s assistant stopped trying.

“The listing price felt like a proposition,” Johnson said. I didn’t have the ability to.”

Johnson is one of many in Duluth who are struggling to buy their first home or upgrade to a better home.Even if Mortgage interest rate jDespite reaching the highest level in 20 years, most homes continue to sell quickly within a certain range and above list price.

In a city with a limited supply of single-family homes, locals compete with investors, Twin Cities buyers who have discovered they can work from anywhere during the pandemic, and employees in growing industries such as healthcare. doing. They also escape the dangers of wildfires and water shortages, competing with West Coast residents who live by the world’s largest freshwater lake.Duluth often quoted as a climate paradise Shelter People come to escape the effects of global warming and seek its outdoor, rugged beauty and relative lack of devastating weather and natural disasters.

And many of these buyers come in cash.

Through September-August 2021, cash sales accounted for more than 20% of Duluth-area home purchases, compared to 14.7% in the summer before the pandemic began. According to the National Association of Realtors, Duluth ranked eighth in the nation for his first quarter 2022 annual growth in cash home sales.

Some sellers in this market will not accept a loaned offer, said Jenna Galegher, former president of Lake Superior Area Realtors (LSAR).

The association doesn’t track where the buyers come from, but Duluth has an abundance of “unseen” offers, many from cash buyers, she said.

However, not all of them are from outside the prefecture. LSAR president Karen Pagel Guerndt said some first-time buyers borrow money from elderly relatives to turn their home equity into cash.

“When they get the property, they refinance it and pay back mom and dad,” she said.

More expensive, no surprises

Homes in Duluth are also selling for a lot more. The average selling price of a Duluth home has jumped 45% over the past five years to $300,674. This is a similar rise to Twin Cities, which averaged his $365,000 price in September, up 47.8% from five years ago.

At the time, the Duluth home was selling for about $3,000 less than the list price. Currently, they are selling him at $9,000 more than the asking price, or about 3%.

The high end of the market was more intense last spring, according to Duluth real estate agent Brock Hansmeier. He recalls two of his homes on Island Lake in the $500,000 range, both of which he sold $111,000 above the asking price. The city’s low-end market is now where buyers compete most, ranging from $100,000 to he $300,000.

“People live paycheck to paycheck,” Hansmeier said. “If you have to pay the seller for closing costs, it’s almost impossible.”

Only 15 single-family homes under $200,000 were listed in Duluth this week.

This is the most demanding market, as higher interest rates force buyers to spend less. Many have been shut out in the past few years and are still looking to buy, but can’t afford to abandon inspection or pay thousands of dollars more than the listed price.

Local buyers who need to sell their homes are also struggling, said Messina and Associates real estate agent Deanna Bennett.

“You can’t be accidental,” she said. “You have to sell your house first, move in with your family, or rent something. That’s where the locals hurt the most.”

Taylor Björk received 23 offers for $169,900 at her Duluth Heights home last spring. It sold for another $35,000, and he was ecstatic to think that a family of four could buy a “forever home” for about $100,000.

“The timing was terrible,” he said. “It was really stressful to give up a solid security blanket without a backup — the kids roof.”

They arranged short-term rental options with the home’s new owners, lived with their families, and then found a suitable one at the end of the summer, ending up with $100,000 more than planned. i paid.

City leaders are working to increase housing stock on multiple fronts. housing trust fund And allocate millions of dollars of American Rescue Plan funds for affordable housing. Several apartments are planned or under construction throughout Duluth, but the city lacks space to build new single-family homes and condos.

According to Bennett, demand is highest for one-level living and specification housing for retirees.

“They think it’s a bargain.”

As winter approaches, real estate agents expect the market to remain competitive. They also expect more buyers from the West Coast and Colorado, and are choosing areas that are resilient to climate change.

Jeremy Christensen, a native of Wisconsin who lives in the California desert, is one hopeful climatic buyer who plans to build a home in Duluth next summer.

“Compared to California, the market is insanely cheap,” he says, wanting a much better home for that price. I have a friend who knows nothing about the Midwest who is looking for a climate-safe property along the Great Lakes.”

Casey Carbert, a real estate agent in Duluth, said he gets calls every week from people who live outside the area.

“They think it’s a bargain. We have multiple offers on Lake Superior properties,” Carbert said. “A million dollars to live on the lake? Big money if you’re from California is”

You may also like