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Dramatic Recovery In Vacation Property Market

Neil Johnson, Marketing, Northview Bank

The Vacation Property Market Has Experienced a Dramatic Recovery.

After the real estate market crashed back in 2008 vacation properties were not unaffected. In fact, depending on the type of property the effects may have been even worse. There had been a substantial amount of development and as a result there was quite a bit of inventory. With home and cabin prices on lakes being suppressed lake lots weren’t moving at all. Developers went under as the price to buy a vacant lake lot and build were substantially more than vacation property consumers could buy foreclosed and discounted properties for. It took some years for the market to heal but it has rebounded nicely and today we are financing not only more seasonal cabins and lake homes but also lake lots.

As we speak to brokers throughout Minnesota and Wisconsin we are constantly hearing cries of, “We need more inventory.” Bemidji, Alexandria, Detroit Lakes, and Park Rapids have been particularly short and when properties are priced at market value they are often getting competing offers.

While in Ely this past week I spoke with Chris Eilrich from WIdwoods Land Company and he has diligently tracked the numbers for the last ten years. Ely was the last area to feel the downturn and as a result has also been the latest to feel the recovery. That being said inventories have tightened dramatically due to both an increase in unit sales and also because less properties are up for sale. In looking over the data with Chris there appears to be at least a forty percent reduction in inventory and if properties are priced right they are moving. Lake lots are still soft in the Ely market and the North Shore has been slow in that respect as well.

Because we serve both Minnesota and Wisconsin we can get a bit of a pulse on the entire region and all over both states things are looking up. Lake lots are finally starting to sell, people are building, and inventories are shrinking. For those of us who work in this space it is welcome news.