REGIONAL— The coronavirus and the increasing challenges of urban life have prompted record interest in lake homes and remote properties in northeastern Minnesota.
That’s according to a survey of real estate professionals in the region ,compiled recently by the Department of Iron Range Resources and Rehabilitation.
The survey, conducted by IRRR consultant Jim Glowacki, queried brokers or agents at 20 randomly-selected real estate firms in the region. Every firm reported greater “out-of-region” interest, with the majority coming from the Twin Cities, followed by Rochester, Colorado, Illinois, Wisconsin, and Iowa.
Roughly three-quarters of those interested buyers cited the current pandemic, and the social unrest that hit many urban areas in the wake of the killing of George Floyd earlier this year, as the primary reasons for wanting to relocate, either seasonally or year-round.
In some cases, owners of property in Canada, where access has been restricted in the wake of the pandemic, have opted to look at northern Minnesota properties instead.
Realtors also cited the region’s growing reputation for outdoor recreation, noting that many buyers wanted readier access to the Boundary Waters. Many cited clean air and water, and the growing number of recreational trails, as amenities that prompted them to strongly consider the region.
While the demand for homes in the region is higher than at any time in recent memory, the supply is not keeping pace, according to the survey. “One hundred percent of the realtors said they were in short supply of housing. Comments ranged from very low to a historic low,” Glowacki noted in his report of his conversations.
In-town homes in the $125,000-$225,000 price range are the most in demand, while lake homes are most popular in the $250,00-$400,000 range. On larger lakes, homes in the $400,000-plus range are currently in short supply. “Two of the realtors in the survey said that there is strong demand for lake condos or townhomes in the $500,000 range for the retiree market,” according to the survey.
Demographics
The types of buyers do vary considerably depending on location, noted the survey. “More recently, younger buyers from the Twin Cities are driving a large percentage of sales in the Ely market,” states the report. “Most buyers have a strong connection to the BWCA and to the wilderness. A lot of younger people are buying remote properties to “get off the grid.”
The survey found that buyers in the Lake Vermilion area and points north are similar to buyers around Ely, with “a strong orientation toward the lakes, wilderness, and hunting and fishing.”
On the Mesabi Range, workers in the taconite mining and support industries, continue to drive most of the sales. Many are first-time home buyers or are retirees looking to downsize.
Retirees or early retirees, married couples, ages 30-40 with children, and professionals, ages 30-50, looking to work remotely, were the groups most frequently searching for homes in the region overall. Younger, local buyers, ages 25-40, are also in the market for lower-priced properties.
Disincentives
While outdoor amenities are a huge driver of interest in the region, the lack of broadband capacity continues to discourage some would-be buyers from taking the plunge. When asked about the biggest drawbacks, 17 of the 20 realtors surveyed put poor internet service at or near the top of the list— and they urged the IRRR to continue its investments in community infrastructure, particularly improving broadband capacity. The lack of broadband capacity was a particular factor discouraging sales in the Lake Vermilion and Ely areas, where service is often limited to no more than basic DSL. “Ely certainly has all of the right amenities to attract people to work remotely, except the internet and cell phone service is a big limitation to attract more people,” noted Glowacki in his report.
Tower-based real estate broker and appraiser Steve Abrahamson agrees that broadband has become a much more important issue, particularly with buyers hoping to permanently relocate to the area. “It’s definitely a common question,” he said. “I would say that more and more people would like to work from home, so that’s become a bigger issue.”
Other concerns are also playing into the decisions of potential new residents. “A lot of potential buyers in the Ely area are very concerned about copper mining,” notes the report. Glowacki states that one local realtor was advised by legal counsel to add “Future Copper Mining” in the disclosure section of the company’s purchase agreements.
That view is consistent with other surveys in the area. A 2014 University of Minnesota survey of existing residents in Ely area townships identified copper-nickel mining as the single biggest factor that would cause them to leave the area. The potential loss of new real estate investment in the Ely area was one of the reasons that a 2017 analysis by two Harvard economists concluded that copper-nickel mining in the Ely area would lead to a net loss of local income within 5-10 years of the opening of a mine.
The IRRR also found that the region’s reputation for long, cold winters is a disincentive for some prospective new residents, as is a perceived lack of good shopping opportunities and limited medical services.
All of the real estate professionals who took part in the survey were supportive of a campaign to encourage more remote workers to consider relocating to northeastern Minnesota.