Duluth-area home inventory drops in half, but buyers keep looking

DULUTH – With an offer pending on their house after a weekend of showings, a Duluth couple answered a knock on their door Sunday to find one last buyer asking if they could please take a look around and make their own offer.

For countless buyers in the area, there aren't many other options left — though Realtors ask that folks don't knock on doors and instead call the number on the for-sale sign.

February may have been the toughest month yet to find a house in the Duluth area after inventory hit a record low. There were half as many listings last month compared to February 2020, yet closed sales still rose 6% year over year, according to Lake Superior Area Realtors data.

"You're seeing multiple-offer scenarios from $100,000 homes to $500,000 homes in some places," said Shaina Nickila, president of the Lake Superior Area Realtors board. "Believe us when we say, sellers, that now is the best time to sell your house."

In Duluth city limits, the median sale price jumped 22% year over year to $174,000 in February. Around the region, Ely saw one of the biggest median sale price increases — a 35% rise to $166,500 — as interest in rural and lake properties continues to climb due to the pandemic and an increase in working from home.

Driven by low interest rates, the need for better work-from-home setups and new job opportunities in the region, buyers continued trying to break into the market and have even started forgoing home inspections to improve their chances.

"I know the desperation of some of these buyers, but I'm not sure I would recommend that," Nickila said.

Some would-be sellers are holding off, Nickila said, because in some cases they don't know where they would go if their house sold fast.

"I know quite a few sellers are putting their house on the market and moving in with mom and dad" so that they don't have to make an offer contingent on selling their own home, Nickila said. "Where can you go if you don't find something? Have a backup plan."

On the Wisconsin side of the local housing market, inventory was down about a third from last year and, like the Minnesota side, hit a record low, but closed sales jumped 32% over February 2020.

The median sale price in Superior jumped 40% year over year, to nearly $130,000 last month.

Nickila said March has so far brought more listings in the area, but not nearly enough to satisfy demand.

"We definitely need more development happening, and more homes for all economic situations," she said.

The National Association of Home Builders said in a report Monday that "single-family builders especially have had an increasingly hard time meeting this demand, as material prices — especially lumber — have continued to rise at unprecedented rates."

In the Duluth metro area — St. Louis, Carlton and Douglas (Wis.) counties — there were just 99 single-family homes permitted in 2020, according to census data, after 551 such permits were issued in 2019.

Minnesota Realtors CEO Chris Galler said in a statement that "although we're anticipating another record-breaking sales season, it is likely that supply will run short of the overwhelming demand."

Brooks Johnson • 218-491-6496