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Where is the inventory?

Neil Johnson, Marketing, Northview Bank

It appears that we are soon entering a real seller’s market. The average listing time in the Twin Cities is currently only four days.

Mortgage rates are still incredibly low, with the Ten Year Treasury Note remaining significantly lower than it was at the beginning of the year. Mortgage rates follow the ten year and other fixed income products in terms of dips and rises. This happens because home loans are viewed as safe havens along with the other fixed income products. Treasury notes get a substantially lower return though because they are guaranteed by the government. With the low interest rate environment and low inventory competing offers are the norm, and homes are often selling for more than the original listing price.

This gets us to the vacation home market and its fluctuations. Vacation homes are typically slower to rise and are also behind the pricing descent of the metro markets. Because many people who buy vacation homes either use equity in their primary residence for a down payment or are more encouraged to buy based upon their total net worth and typically come from larger metropolitan areas (Twin Cities, Madison, Milwaukee, Chicago, etc.) we are certain to see more competition coming for hunting land, seasonal cabins, and lake homes. So, if you have been considering vacation property now is really a great time to buy. You are able to buy at what are still attractive prices due to the metro/outstate lag, with favorable interest rates, and most likely will watch the property appreciate.

A really great strategy is to buy a harder-to-finance seasonal cabin (Northview specializes in this product) and through some sweat equity turn it into a year round residence. This could mean insulating, adding heat tape to water lines, putting in a well, adding a year round heat source, or taking care of some deferred maintenance. Once those fixes are made we can help you secure a long term fixed rate mortgage. Now you have a double equity gain (through appreciation and improvements) along with a chance to build memories with your loved ones at the cabin.

At Northview Bank we can give you the flexibility of simply buying your vacation property and making changes at your own pace or walking you through the process of getting a construction loan and doing all the improvements right away. Whatever you decide make sure you have your financial ducks in a row so you are able to enjoy your time as you build your legacy and enjoy special times at your vacation property - whether it be hunting land or a lake cabin.