Record home sales, rising prices a highlight of sales study
A 2017 home sales study shows some area communities are selling more homes than ever and selling at record-high prices.
The study performed by Terry Davis of Davis Appraisal in Wadena gave a summary of area communities including those in Otter Tail, Wadena and Todd counties. The research came from county public records and all arms-length real estate transactions in the eastern half of Otter Tail County, and cities of Staples, Long Prairie, Perham, Ottertail and Wadena.
"It's certainly a seller's market," Davis said.
Davis believes we will see less volume in sales in 2018. He thinks that because the supply is low and the interest rate has risen slightly, sales will likely decrease and sale prices could continue to rise. While real estate went through some rough times when the economy tanked around 2008, things have made a dramatic turnaround.
"I think in 2018 we're going to have a good year," Davis said. "I don't know that it will be quite as good as 2017, but I think there are a lot of buyers out there."
Here is a breakdown by area.
Of all the towns in the study, Perham showed the least impact from the recession. In fact, home median sales prices steadily rose almost every year over the last 10 years. Home sales did see a drop in 2007 to 40 but never dropped that low again. The biggest change was a huge increase in sales from 55 in 2016 to 83 homes in 2017, a 51-percent increase in good sales. Meanwhile, real estate owned homes are nearly non-existent in Perham ranging from zero (2009) to 7 (2013) in the last 14 years. There was just three in 2017.
Right in line with the record sales, is a record in the median sale price. That price increased from $135,000 in 2016 to $169,000 in 2017, a 22-percent increase.
Davis said Perham didn't expect to sell so many homes, but homes sell so fast there that the number of sales turned out much higher.
"The days on market are almost zero, they have a lot of buyers and no sellers," Davis said.
The speed of sales and higher prices are nice to see, Perham Economic Development director Chuck Johnson said, but it's not so good for employers looking to get people to move to Perham to work there or if you are the employee that has to look at homes outside of Perham and commute.
"If they have to go so far, then Perham loses the positive impact," Johnson said.
The number of sales have increased from as low as 36 in 2009 to 73 in 2017, a 102 percent increase. The highest number Davis recorded for sales was in the first year of the study 2005, with 97 homes selling. In that same time real estate owned homes have seen rather low sales from five in 2016 to 12 in 2017. In the past 10 years, median sale prices have gone from a low of $66,750 in 2008 to a new high in 2017 at $99,900. Meanwhile real estate owned properties have seen large increases, going from a low of about $25,000 in 2014 to a high of $58,800 in 2017.
Staples has seen rather inconsistent sales, but there has been a gradual increase in sales and median sale prices. The community saw a low of 23 homes sold in 2012, increasing to 55 in 2017. The highest number was seen in 2006 with 79 homes sold.
Meanwhile, Staples has the lowest median sale prices in 2017 at $80,000, which is a 33 percent increase from the lows in 2009 and 2013. Real estate owned properties were limited to five with a median sales price of $21,500 in 2017.
Long Prairie showed similar fluctuations to Staples but had slightly higher sale prices or $88,900 with 51 sales in 2017. While median prices fluctuate from year to year, the number of sales has been very steady for the past four years after bottoming out from 2008-2012 at around 32 sales per year.
Rural residential East Otter Tail County
There were 135 sales in this area in 2017. That's up from 120 in 2016 but down from a record number of 163 in 2015. Since 2012, median sale prices have increased every year in this region from $116,500 to $154,500 in 2017, an increase of 32 percent.
Otter Tail Lake
One area Davis found interesting was Otter Tail Lake, which showed 35 sales in 2017. The lake has seen a lot of fluctuation in the number of sales each year, but the median sale prices are continuing to drop. Prices were at a peak in 2008 at $403,000. In 2017, that price is down to $265,000. That's not to say that homes are selling for much less than they once were, but that the homes that are selling are not the more costly properties.
Davis suggested this could be due to several larger resorts selling off portions of the resort into smaller properties.
"On the other hand, the upper market of homes are not doing real well," Davis said. "You get over half a million dollars and that market is pretty tough."
Cropland/bareland of over 35 acres
Another area of the report that Davis highlighted was the bareland price, which continues to rise in the state. Over the last 15 years, this price has slowly increased from about $1,000 per acre in 2004 to $1,750 in 2017 in this region. This could include farms and recreational properties.
He commented that this number is far closer to normal than some prices seen in the southern parts of the state. But if crop prices do not start going up, this acre cost is going to have to decrease. Or if acreage costs continue to rise, crop prices need to follow suit.