The average price of a house purchased in Aberdeen increased 9 percent in 2011, due in part to low supply and high demand.
The average sale price of a home in 2011 was $148,838, up from $136,621 in 2010, according to figures from the Aberdeen Multiple Listing Service.
The upward pressure on prices is related to a lack of inventory, said Scott Grebner managing broker at Gerharter Realtors.
This week, 171 homes were listed for sale in the Aberdeen area, 115 of which were in the city limits.
“A good number to have in the city limits would be 200,” Grebner said. “It has been a long time since we had that.”
As a comparison, Watertown, with about 5,000 fewer residents, has more homes on the market.
The Multiple Listing Service shows 292 homes for sale in the Watertown area and 200 within the city limits, said Jackie Schaefer, a real estate agent for Roby Realtors in Watertown. At one time this summer, the area had more than 400 listings, she said.
The average sale price for a home in Watertown is $143,500, or $5,338 less than in Aberdeen.
Demand for housing is strong in Aberdeen because of a growing economy, say economic development officials. Many businesses, including Molded Fiber Glass and Midstates Printing, have been adding jobs. Two new businesses — Northern Beef Packers and Sanford Hospital — are expected to open later this year, bringing hundreds of new jobs to the city.
While the construction of new houses and apartments increased in 2011, according to city building permit statistics, it might not be enough to handle the expected influx of workers.
“Are we going to have enough housing? That is the million dollar question,” Grebner said.
People have been working on the problem, he said. There have been 357 apartment units added since 2008, he said.
One thing that would help ease the shortage of single family dwellings would be the building of more speculative homes, those built by a developer without a buyer.
Grebner said that there are only about four firms in town that build spec homes. The homes are almost always sold before they are completed.
The increase in the average price of a home might be the result of more expensive houses being sold than an across-the-board increase on all homes, said Peggy Kalt, broker associate at Coldwell Banker Mehloff Associates and president of the Aberdeen Board of Realtors.
One of the characteristics of the Aberdeen market is that there are relatively few houses for sale under $90,000. The greatest number of listings are for homes in the $140,000 to $160,000 price range, she said.
Even though the average sale price jumped 9 percent, Aberdeen is fortunate to be in a very stable market, Kalt said. The number of houses sold does not vary a great deal from year to year, and prices, when viewed from a multiyear perspective, have increased gradually, she said. Aberdeen has not experienced a housing boom and bust like other parts of the country, she said.
Jody Zueger, director of the Aberdeen Housing Authority, which offers housing assistance, said the tight housing market has helped push rents higher.
“We are still having a hard time finding our people places to rent,” she said. “It is the same old story. HUD (Housing and Urban Development) gives us a fair market rental amount and we can go 10 percent above that. At that amount, our voucher holders still have trouble finding a place.”
Zueger said HUD will pay $580 a month for a two-bedroom apartment, but utilities must be included in that amount. Not that many two-bedroom apartments in Aberdeen qualify, she said.
As a result, the Aberdeen Housing Authority has 76 people with subsidized housing vouchers who have not been able to use them because they can’t find housing that qualifies. There are 400 people on the waiting list for vouchers, Zueger said.
The housing authority is building a 32-unit townhouse development on Illinois Avenue, which is expected to be open in May. The complex will look similar to the Lawson Street Townhouses, which are owned by the housing authority.
The organization is also seeking funding for a 41-unit apartment building on land near the K.O. Lee building at Jackson Street and First Avenue Southeast. It will be called Jackson Heights.
These subsidized housing units will help provide more affordable housing options in Aberdeen, Zueger said.
“Affordable housing is a big issue, and one entity can only do so much,” she said.
Homes Are Possible Inc. helps people build more affordable homes and recently bought land west of Central High School for the development of apartments.
Zueger praised HAPI’s efforts and said any additional housing created in Aberdeen is appreciated.