DL housing market holding its own
By NATHAN BOWE
Detroit Lakes Newspapers
Realtors say the housing market is in pretty good shape in the Detroit Lakes area -- especially compared to the Twin Cities area -- and at least one is seeing boom times.
"We've been having a record year," said Jack Chivers, owner of Jack Chivers Realty in Detroit Lakes. "In the last 12 months, we have sold 11 lake properties over $1 million and two over $2 million."
Chivers said his company focuses on lake property, but is selling property in all categories -- farm, city residential, hunting land.
The one area that is suffering a bit is rural residential.
"Some areas could be a problem," he said. "People who built McMansions on marginal, secondary lakes, it's going to be problematic when it's time to sell ... nothing changes in real estate -- it's all about location."
The area is tied to the Fargo-Moorhead housing market, which is also one of the few bright spots in the nation, he said. The oil economy in North Dakota is doing great right now, as is the farm economy all over, he said.
The housing market in this area tends to be more stable than other places, Chivers added. "I've been doing this since 1966 -- we don't see the huge upward thrusts, but we don't see the busts, either ... there's not a lot of speculation here, people buy lakeshore because they want to enjoy it. They don't buy it to flip it like in Florida and California."
Though the market has been a little hesitant the past week or so because of the financial mess on Wall Street, obtaining a mortgage has not been a problem locally, Chivers said. "You just have to be qualified to get one."
David Schiller, owner of Counselor Realty in Detroit Lakes and the new president of the Lakes Country Association of Realtors, acknowledged that Chivers has had a great year.
"Jack's had a tremendous year selling high-end stuff," he said. Business has slowed a bit for most other realtors however, he said.
"We have a huge glut of rural lots," he said. "Lake lots are stagnant, hunting land is still good -- there's strong demand. The biggest thing inhibiting people is lack of consumer confidence ... people are spooked about their investments, they're not sure what to do."
Looking over the numbers, he noted that the number of listings on the market has increased by more than 100 from October 2006 to last month. There are now 580 homes for sale, a 22-month inventory.
Ideally, the unsold inventory would be six months worth or less, he said.
The housing boom is over and property is selling much closer to assessed value than it did the past few years, Schiller added. Sellers need to lower their expectations, and their prices, if they want their property to move, he said.
"The buyers know what they're doing, they've done more research than the sellers ever dreamed of ... If your (price) is out of whack, you're just going to sit there," Schiller continued.
Sellers need to remember that even if they sell for less, they will also be buying for less in this market, he said.
"City homes were going for 15-20 percent above assessed value," said Schiller. "There was considerable irrational exuberance over the prices -- the pricing now has gotten way closer to assessed values -- our county assessor is pretty accurate. More so than some of the private assessors."
All in all, Schiller said, the market in this area is holding its own. "Because of the strong North Dakota economy, we're doing really well, comparatively. In the Twin Cities, a third of what's selling is foreclosures. We aren't anywhere near that," he said.
In part because of higher gas prices, rural residential homes are not as popular this year, especially homes that are a dozen miles or more from Detroit Lakes.
Although the average sale price is up to $177,000 from $175,000 last year in the Detroit Lakes market, sellers dropped their asking price a little more -- getting an average of 94 percent of their listed price this year, down from 95 percent last year.
New listings are down 7 percent, to 182 homes this year, and the number sold is down 10 percent, to 51 homes.
City residential in Detroit Lakes has seen a 17 percent hike in the number of houses on the market this year -- up to 381 from 325 last year.
There has also been a 16 percent hike in numbers sold, from 106 last year to 124 houses this year.
The average price was down 4 percent to $127,000, and sellers are dropping their prices a bit more -- to 96 percent of list price this year from 97 percent last year.
In Detroit Lakes, the number of city lots on the market dropped 46 percent, to 91 this year from 169 last year. New listings dropped 70 percent, to 28 this year from 95 last year.
The average price for city lots dropped 56 percent, to $11,000 this year from $25,000 last year.
And sellers have been willing to take a lot less this year -- city lots have been going for 57 percent of list price. They averaged 90 percent of list price last year.
Lakeshore residential in the Detroit Lakes area has been a bright spot this year, with the average sale price up 20 percent, to $413,000. The number sold rose 7 percent, to 91 properties this year.
Total active listings in the category rose 20 percent, to 437 this year, and on average, sellers were willing to accept 94 percent of list price, down from 95 percent last year.
Lakeshore lots didn't fare quite so well. In the Detroit Lakes area, sold volume is down 27 percent, from $5.5 million last year to $4 million this year. Total listed lots is up 2 percent, to 416, and the number sold dropped 21 percent, from 32 last year to 25 this year.
Average percent of list price was 89 percent this year, up from 88 percent last year. Average sale price dropped 7 percent, to $158,000 per lot this year from $170,000 last year.
In the housing market in general, Schiller said, "Irrational sellers are the biggest problem. Houses need to go on sale. (homeowners) need to price them competitively, or they aren't going to sell."