— Real estate agents are hoping for a brighter sales year in 2024, buoyed by a report that shows that more homes are being listed for sale.
Statewide, December shows that new listings are up 12% and pending sales rose 8.7% from a year ago while interest rates are beginning to fall, according to Minnesota Realtors. West-central Minnesota did even better, with new listings up 68.3% and pending sales up 34.2%.
The numbers indicate a hopeful trend for the real estate market, the organization said. It described 2023 as “a down year overall,” with the lowest level of closed sales since 2010 and the number of listings declining every year since 2019.
“There was this doom and gloom for last year,” said Minnesota Realtors President Geri Theis. “Everyone was like, there’s nothing to purchase, and then the interest rates increased, and that was a hit to the market.”
Mortgage interest rates have fallen a full percentage point for 30-year fixed-rate loans since the beginning of December, according to Freddie Mac.
“We’re very optimistic about where we’re going in the housing market and there should be a lot more opportunity to buy,” Theis said.
That’s not to say that buyers might not be frustrated with being unable to find the home they’re looking for. Sheryl Bakewell of RE/MAX Results said buyers are still paying full price.
“You can’t mess around with a low offer,” she said. “If you really want the property, you really have to pay for it. … When something comes up that’s decent, it gets a lot of attention.”
She said she has been working with a couple of buyers who have been looking for the right property for more than two years. One of them is looking for a level lake lot on the chain of lakes with a sand beach, which are very difficult to find, she said.
People looking for starter homes may also be stymied by being unable to find anything in the price range they can qualify for.
Sharon Quernemoen, a real estate agent for Coldwell Banker, said that when home prices spiked sharply upward during the pandemic, buyers started looking outside Alexandria to smaller cities.
“A lot of people went to these smaller towns,” she said. “Kensington. Glenwood. Long Prairie. Parkers Prairie. Then those homes started selling like crazy.”
In Douglas County, the number of new listings was 11 in December 2022 and 18 in 2023, a 63.6% increase, according to the Minnesota Realtors report. Pending sales rose from 18 in December 2022 to 27 in December 2023, a 50% increase. The limited stock caused the median sales price to soar 20%, from $250,000 in December 2022 to $299,900 in December 2023.
Al Edenloff / Alexandria Echo Press
With a limited supply of existing homes for sale, you might think that bare lots would sell like hotcakes, with buyers deciding to build their own. Yet Zillow lists several subdivisions with vacant lots that have been waiting for a year or more for buyers.
But G.G. Thang of Kvale Real Estate, who is selling lots in two subdivisions, said some subdivisions have conditions that limit their appeal, she said. For instance, some lake lots restrict how large a house can be built. And some subdivisions have associations to care for property held in common, such as recreation centers, wells, and roads. Those conditions need the right buyer.
Also, buying a bare lot requires planning and patience. Whereas an existing home can close in 30 days, building a home can take a year or more. Many builders are booked, and Thang said she thinks the market also lost a number of builders and craftsmen who lost their shirt building spec homes during the early 2000s.
“A lot of those guys laid down their hammers and said this is enough,” she said.
Builders don’t want the risk of building spec homes, she said, and lenders are a little more apprehensive too, slowing down the whole process of building a home.
Sarah Klimek of Counselor Realty, who is selling lots on Lake Jessie and Lake Mary, said it can be slow to sell lots in a development. Buyers want to see what a neighborhood is going to look like before they build, she said.
She agreed that covenants and regulations can limit the appeal of a property. Local governments have increasingly been regulating development in order to protect lake water quality. One of the ways they do that is by limiting how much of a lot can be developed. So that might limit a home owner’s ability to add a garden shed or a dog kennel with a concrete base.
It’s a different world than when she started 25 years ago, she said.
There’s still plenty of demand for lake lots, and even lots with many restrictions are getting “gulped up,” she said.
“I had one that was listed for 11 years and it finally closed last year,” she said. “I was pretty excited. I woo-hoo’ed pretty loud.”
Reporter Karen Tolkkinen grew up in Plymouth, Minnesota, graduated from the University of Minnesota with a journalism degree in 1994. Driven by curiosity and a desire to learn about the United States, Karen Tolkkinen has covered local news from Idaho to New Hampshire to Alabama and landing at the Echo Press in Alexandria in 2017.