Why now might be the best time to shop for a Minnesota lake home

If you’ve been wanting a place on the lake, now might be the time to buy.

Lakeshore sales typically peak in the summer, with falling temps, kids going back to school and docks beached for the winter encouraging shoppers to take a break. That, combined with four years of record-breaking sales, higher mortgage rates and more stringent return-to-work policies, means there’s less competition in the fall/winter window for those who want to take their dream of a summer getaway off ice.

During the first half of the year, there were 5,410 active listings and 922 sales of single-family lake homes outside the Twin Cities metro, according to lakeplace.com, a Minnesota brokerage that specializes in lakeshore properties. That’s a 3% decline in closings and a 26% increase in listings.

Dave Gooden, the broker and co-founder at lakeplace.com, said while there’s a much better balance between supply and demand, buyers will still pay far more than they did four years ago, especially those looking for an inexpensive cabin. Demand is especially strong for lake properties priced from $300,000 to $500,000, which he said is the new entry-level price-point.

“That’s the sweet spot,” Gooden said.

In the same way higher mortgage rates have put a damper on sales and listings of houses in the Twin Cities, higher borrower costs have already caused a slowdown in lake home sales, said Paul Eisenschenk, a broker/agent in the Alexandria area. In addition to higher rates eroding buying power, he said election-year jitters are making many would-be buyers less willing to make such a discretionary purchase. That shift, which started last year, comes after a pandemic-fueled buying spree the proliferation of remote work partly drove, he said.

While there’s no way to know definitively whether a buyer plans to use a property as a primary home, a national analysis by Redfin of Home Mortgage Disclosure Act (HMDA) data showed that mortgage originations for second homes fell twice as fast as mortgage demand for primary homes last year, dropping to nearly an eight-year low. Many of the people who did take out mortgages for second homes in 2023 were high earners and/or Gen Xers.

For mortgage companies in the Twin Cities metro, according to the analysis, second-home originations sagged 38% compared with the previous year.

Gooden said the Redfin report was an accurate reflection of what’s happening in outstate Minnesota, where many buyers with historically low rates have decided not to list their lake homes, stifling sales.

“It’s pretty spot on,” said Gooden. “The good news is, we’re seeing a bit more inventory this year. It’s not balanced. We’re still in a sellers’ market, but it feels like we’re moving in the right direction.”

The best time to shop for a lake home, according to the latest year-to-date data from lakeplace.com, depends on your perspective.

If you want the lowest prices, that’s the dead of winter. During January, the median list price was $450,000, the lowest so far this year.

But if you want the most options, listings tend to peak in spring and fall, leaving winter buyers with about half the number of houses. In October, for example, there were 1,125 active listings compared with a low of 636 during January.

Sales also peak in late summer, if you’re into competition. This year, closings peaked at 395 during August, a reflection of deals likely signed two to three months earlier. The low point for sales was in February when there were only 65 closings.

At the end of October, there were nearly 260 pending sales with a median list price of $495,000. The most expensive pending sale is a $6.9 million lake home that’s been on the market for nearly 600 days. It’s 68 acres of parklike wooded beauty and 975 feet of pristine shoreline on the south side of Pelican Lake, southwest of Detroit Lakes.

The best days for shopping are ahead: In January through March, buyers generally have twice as much time to consider their options. In February of this year, properties were on the market for a median of 64 days compared with a low of 17 days in June.

In addition to lakeplace.com, there are many websites local brokerages operate, including Edina Realty. Those sites have advanced filters that let you search for lakefront, waterfront, riverfront or just land properties. Third-party listings sites such as Zillow, for example, let you filter for waterfront properties and listings with a view of water. On realtor.com, the “more” tab lets you select from a variety of search options, including waterfront and lake view.

Facebook Marketplace, Craigslist and other social media sites often include lake home listings, especially those for sale by owner.

If you don’t have your heart set on a specific area, you can check out the Department of Natural Resources’ Lake Finder websites in both Minnesota and Wisconsin to find your preferred spot.

If you’ve identified your dream location, it’s a good idea to visit the nearest town to it and meet with local brokers. They might not feed their listings to the bigger national brokers and third-party listing sites. Local newspapers, bulletin boards and coffee shops can also be a goldmine for discovering under-the-radar listings.