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Yolande Jenny’s experience selling her Duluth home last year is one of the success stories.
In the midst of a housing rebound last spring, she sold her house in just two days.
“I was amazed,” said the retired University of Minnesota Duluth professor. “I put it up in May. I expected to spend the entire summer there.”
After 37 years in the house, she decided to sell because she also has a cabin to keep up, and she wanted less yard work. She also feared her pocket neighborhood, tucked between UMD and Arrowhead Road, might shift to student rentals.
With three purchase offers coming in the first day of the house’s listing, the sale to a couple offering $10,000 over the asking price was a quick one. Jenny hadn’t even found a condominium to move to yet. But working with the same real estate agent, she found one the next day in the nearby Aspenwood housing community. Within a few weeks, she had moved in.
Chalk up two home sales for Duluth.
As confidence returned to buyers last spring, listings were up, sale prices were up, and foreclosures were heading downward in Duluth.
Even higher-end homes likes Jenny’s, in the $250,000 to $300,000 price range, were selling.
But the sales boom didn’t last.
City data show a total of 625 home sales in 2012, up only slightly from a low of 623 reached in 2011, keeping it a buyers’ market. That’s well below the 1,041 home sales in 2007, before the recession hit.
Len Sarvela, president of the Duluth Area Association of Realtors, suspects the slowdown in the last half of 2012 in Duluth was due to the market’s seasonal lulls coupled with economic uncertainty.
“People like to get into homes before schools start,” he said. “Then we get a whole set of buyers who want to buy before winter, before the holidays.”
But fiscal cliff fears made people cautious, she said.
“That sent people in the wait-and-see mood,” he said. “There were some people holding off.”
UMD economist Jim Skurla agreed.
“Lots of things were happening: the fiscal cliff, the election — and after the election, people didn’t know what would happen with Congress,” Skurla said, also noting the gross national product slowdown and stock market losses in the fourth quarter.
“All of a sudden, everything kind of paused,” he said.
Duluth MLS sales up
The 2012 sales picture was brighter in the broader Duluth multiple listing service area, which stretches from Carlton County to Cotton and up the North Shore to Grand Marais.
Those numbers used by the Duluth Area Association of Realtors show closed sales up 18.5 percent in 2012, when 1,919 sales were recorded, compared to 1,620 in 2011.“We’ve certainly seen a healthy market in rural areas,” Sarvela said. “Waterfront property has done fairly well in the last year.”
Those 2012 numbers also show new listings up and the average number of days homes are on the market dropping from 92 in 2011 to 85 in 2012.
Both city of Duluth numbers and DAAR numbers for the greater Duluth area show median sale prices up slightly more than 2 percent in 2012. The median sale price in Duluth was $143,000 (up from $140,000 in 2011), while it was $133,000 (up from $129,900) in the Duluth region.
Home sellers received nearly 92 percent of their original asking price in 2012. That’s up 3 percent over 2011, the same as the statewide increase, which also saw prices come in at 92 percent of the initial asking price.
All are good indicators for 2013.
“We are still seeing a positive market, a growing market,” Sarvela said. “It’s moving along in a positive way, especially when looking at median sales prices.”
Indeed, those median sale prices are key, Skurla said. When declining prices stabilize and start to rise as they are now, it’s an indicator to people that they shouldn’t wait any longer, he said.
“The reason they wait is because prices are dropping,” Skurla said. “It makes sense; maybe the price will go down more. But when prices rise, people might want to jump in.”
Shrinking inventory
A 9 percent drop in inventory in the Duluth region is also a good sign that the market is improving. It helps sellers, because a smaller selection boosts prices.
Sarvela attributed the shrinking inventory to the continuing low mortgage interest rates that encourage home-buying. That allows more owners to sell so they can move to bigger or smaller homes.
“There’s been a logjam the last four, five years,” Sarvela explained. “People don’t want two mortgages. If they can’t sell existing homes, they end up just staying or they rent it out.”
And that’s changing.
The most competitive market these days isn’t the lower-priced homes. It’s the homes in the $150,000 to $200,000 range, Sarvela said.
“People are able to move around,” he said. “They are able to sell their house to move into another one. The low interest rates also allow buyers to buy more of a house.”
The trends in the Duluth region are in line with what’s happening statewide, according to the Minnesota Association of Realtors Year End Housing Report.
Statewide, closed sales were up 8.4 percent in 2012, reversing the market’s four-year decline. Prices were up, inventory and days on the market were down, and fewer sales of foreclosed home and short sales were recorded.
All have prompted the association to declare that the housing market has turned a corner.
No easy sell
That doesn’t mean there aren’t home owners whose efforts to sell houses drag on for months, even years.
“I would love to tell you that, yes, we have sold our house in 2012, but unfortunately we have not sold our house for the past two-plus years,” Sue McLeod of Duluth said in an e-mail. “Our house started out at $399,000 and is now on the market for $299,990, and it has been on and off the market throughout that time frame but no success. Can you read my disappointment?”
The 3,000-square-foot home with a grand view of Lake Superior was built in 1998 in upper Woodland, surrounded by older homes. Adding stress to efforts by McLeod and her husband to sell are their plans to move to another house.
“We are 90 percent completed on a new house but need to sell this one first,” she wrote.
For Shelly Jo Wick-Zeman, selling her parents’ 1,200-square-foot home in Duluth’s upper Gary neighborhood took 15 months, possibly hampered by the many other homes for sale in the neighborhood.
“I blame it on the market,” Wick-Zeman said. “There’s a lot of homes for sale. It definitely is a buyers’ market, because so many different homes are for sale. I kept saying it’s going to sell. It’s going to take the right person or people, and eventually it did.”
She listed the 1949 rambler home in October 2011. It sold on Feb. 1 for $120,500, down from the original asking price of $129,900.
“We lowered the price two different times,” she said.
Wick-Zeman never sensed the uptick in the market in the first half of 2012.
“We only had two people look at it during that time,” she said. “I was surprised. My parents had a very nice home, on a corner lot. It was immaculate inside and out. They (buyers) didn’t have to do anything to it.”
Sarvela said houses can sit on the market a long time for any number of reasons.
The condition of the house might not reflect the price. The price could be well above other homes in the neighborhood. The inventory of available homes may be large, allowing buyers to be very choosy.
A foreclosed home in the neighborhood selling for $40,000 to $70,000 also could hurt a home’s chances of selling for its market value. With interest rates still near historical lows, those bargain-basement prices attract investors.
“People who see the positive aspects of this market want to invest in it,” Sarvela said. “They see it as healthy investment. They see that values can’t go down much more. They’re renting or remodeling them to live in. Or they’re buying and fixing them up and reselling them.”
But that should lessen if the economy continues to improve, and foreclosures continue to drop. After the number of foreclosures peaked in Duluth at 179 in 2011, they dropped to 135 in 2012. And Sarvela says he’s seeing fewer short sales as well.
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