Lakeshore real estate market up, down in town
It was a strong summer for the overall Otter Tail County housing market, and home sales are considerably up from where they were at this point a year ago. The situation varies markedly from one town to the next, however, and sales are down in a number of cities within the county, including Perham.
On the whole in Otter Tail County, home sales are up 16 percent so far this year, according to a letter sent out last week by Alan Olson of the Lake Region Association of Realtors. Sales of rural and country homes are up 17 percent.
The market for lake homes is even better, with home sales up 27 percent.
"I believe it," said Cathy Mueller, owner/broker at Boll Realty in Ottertail, which specializes in lakefront property. Mueller has experienced the uptick herself and at her company, and she said she's heard a lot of similar reports from other brokers: "Everybody I talked to has had a really, really good year."
Realtors who focus on Perham's in-town residential properties, however, say that overall uptick has not been reflected within city limits.
A breakdown of the home markets in 10 different communities in the area shows that closed sales in Perham are down almost 21 percent, with 53 homes sold as of Sept. 7 of this year compared to 67 at the same time last year.
Linda Stoll, of Coldwell Banker Preferred Partners in Perham, said Perham's lower-than-usual turnover rate has played a role in the city's home market: "The workforce is strong economically, so people just aren't moving from Perham."
In addition, she said, higher housing prices in Perham, compared to homes in outlying rural areas and smaller nearby communities, "limits the amount of affordable inventory" in town.
The median sales price of a home in Perham is currently $197,000, which is above the countywide median sale price of $194,630. By comparison, the median price in Fergus Falls is $131,000, and in New York Mills is $118,450. Those prices go up in communities known for their lake properties, which tend to be more costly. In Ottertail, for example, the median price of a home is $250,000.
Nick Dockter, of Real Estate Results in Perham, said homes in the $130,000-$180,000 range tend to be the most popular with in-town buyers. Though sales in town are down from last year, he said, it's still been a strong year — he said the current dip is more an indication of last year's stellar market than of anything negative about this year.
"In the town of Perham every year, on average, right around 55 houses are sold," he said. "Last year, for some reason, I want to say that number went up to about 83. I think it was the busiest year we've ever had. This year, 2018, seems to be more like 2016 was, where it's still very positive and very good. Last year was an outlier. I think it's gone back to the norm now; it's not necessarily slowing down."
As far as lake properties go, Mueller attributes the large increase in sales to a number of factors. For one thing, she said, area ag producers had a good year, and "farming affects our market a lot. We get a lot of farmers that buy. A lot out of Wahpeton, Fargo, and all over the state."
There's also been an ample supply of lake homes for sale, making it more likely that real estate shoppers will find a property they like enough to purchase. A number of lake homeowners are growing older and looking to downsize, Mueller said, and it's getting less common for lake properties to be passed down from one generation to the next as families get more spread out, so more of those homes are getting put on the market.
Supply has been an important factor not only with lake homes, but across the board in Otter Tail County. Olson's letter states that "there's been a good supply of homes for sale to choose from in the popular price range of $100,000 to $250,000."
Home loan interest rates have been another factor behind the market bump. Rates have slowly risen over the past year, but remain relatively low at under 5 percent.
More buyers "were making a jump this past year before they thought interest rates would go up more," said Gloria Hedstrom, a realtor at Boll Realty. "The interest rates have really helped our market by keeping low."
Homes are selling faster than last year, too. On average, homes in Otter Tail County are selling in 80 days — 20 percent faster than last year.
Mueller said some prospective buyers are currently waiting until after the Nov. 6 election to buy, so they'll have a better idea of how their taxes, family budgets and the interest rates might change. But overall, she said, things are looking positive for the housing market into the foreseeable future: "I think next year is going to be a good year, too."