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Mike and Francine Martin
Buying by the (Frontage) Foot
The view of the ledge rock, facing west away from the Grand Marais Harbor, at Mike and Francine Martin’s newly purchased dream property in Minnesota.
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Apostle Islands Realty
Buying by the (Frontage) Foot
A lakefront property like this one near Bayfield, with ample frontage and city utilities, commands top dollar.
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Mike and Francine Martin
Buying by the (Frontage) Foot
The view of the ledge rock, facing west away from the Grand Marais Harbor, at Mike and Francine Martin’s newly purchased dream property in Minnesota.
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Mike and Francine Martin
Buying by the (Frontage) Foot
Mike and Francine on the shoreline of their lot, looking east toward the harbor.
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Team 100 Realty
Buying by the (Frontage) Foot
An Ontario lot for sale, located near the U.S.-Canada border. Price often depends on the quality and length of the shoreline.
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Bruce and Dar Gehring
Buying by the (Frontage) Foot
Bruce Gehring at a campfire on his property, fall 2011.
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Coldwell Banker North Shore
Buying by the (Frontage) Foot
At press time, this 1.24-acre undeveloped lot, just west of downtown Grand Marais, Minnesota, was listed for $319,900, thanks to 200 feet of shoreline.
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Mike and Francine Martin
Buying by the (Frontage) Foot
The view of the Martins’ woodsy property.
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Bruce and Dar Gehring
Buying by the (Frontage) Foot
The shoreline of Bruce and Dar Gehring’s property in Croftville, Minnesota.
Has a Pricing Tide Shift Made This a Buyer’s Market?
Buying land on Lake Superior fulfilled a dream that went back 25 years for Mike and Francine Martin of Marshall, Minnesota. That’s how long they have been vacationing by the Big Lake and, on each visit, they went to look at property.
“We stood on this land and said, ‘It’s home,’” remembers Francine. “The shoreline has a small alcove with a pebble beach. There is flat ledge rock where we can stand and look out and see the harbor of Grand Marais.”
It was a gut feeling, and they followed it through to a purchase.
But first came the waiting. Too pricey when they first saw it in the summer of 2011, the cost did drop and they were able to close on the land in early 2012.
“We feel we got a good deal,” says Francine.
It is where they wanted to have a home; Minnesota’s North Shore reminds Francine of the years they spent in Alaska.
The Martins’ story reflects the overall nature of the real estate market around Lake Superior, and how it has changed.
In the fall of 2008, when Lake Superior Magazine last visited the regional real estate scene, lakefront property values were holding, despite the bursting of the housing bubble. Our survey of real estate agents in communities around Lake Superior in early 2013 reveals that market activity did eventually drop significantly and prices have fallen over time. Buyer confidence has been low and far fewer properties were sold.
“It’s the silver lining,” notes Virginia Palmer, owner of Coldwell Banker North Shore in Grand Marais. “The Big Lake is affordable again. Building lots had gone up to over $600,000, and now that has come down to a mid-range.”
Virginia believes the market is far more realistic now. “People are thinking things through more analytically, weighing the pros and cons of their purchases. Today you can get a very attractive waterfront lot on the North Shore for $1,500 per foot, and a lesser property can be as low as $800 to $1,200 per foot.”
Price Range
MICHIGAN – On the Keweenaw Peninsula, prices range from $800 to $1,000 (it was $500 to $1,200 in 2008); in the three-county area by Marquette, shoreline runs $500 to $1,500, with prime properties as high as $2,400 per frontage foot, slightly lower than the $1,000 to $2,500 range for 2008.
MINNESOTA – Frontage ranges from $800 per foot to $1,700 from Schroeder to Grand Marais and prime parcels reach $2,000; average prices around Two Harbors are $1,200 per frontage foot. In 2008, the full North Shore range was $1,400 to $4,000 per frontage foot.
WISCONSIN – On the Bayfield Peninsula, from $500 to $1,400 per frontage foot (in 2008 at $1,500 to $2,200); Madeline Island averages just less than $1,000 per frontage foot ($1,200 to $2,500 in 2008).
ONTARIO – Around Thunder Bay, prices average $1,000 and reach $2,000 to the west near the border (in 2008 at $500 to $2,600); farther east near Rossport $500 per foot; near Sault Ste. Marie from $500 to $1,200 per frontage foot. In 2008, the eastern half ranged $1,000 to $2600.
Ontario Shores
Although the economy has been more stable in the United States and Canada, the Ontario market has been hurt by the loss of U.S. customers – especially by the weakened value of the U.S. dollar.
“The dollar being at par with the Canadian dollar has hurt perceptions,” says Malcolm Clark, a broker at Avista Realty Group Ltd. in Thunder Bay.
He says his U.S. business has dropped to nothing, while in the Sault Ste. Marie area, Carl Thomas, a broker at Royal LePage Northern Advantage, adds that the change in the U.S. dollar also affected potential European buyers.
“Germans and Europeans want the pristine land available in Ontario,” says Carl, adding that they have not been buying of late.
Sam Butkovich, a broker at Re/Max Sault Ste. Marie Realty Inc., notes Ontario land is not normally quoted by frontage foot. A typical lot is about one acre with 100 feet of shoreline and is valued according to location and type of shore, he says.
A 1- to 1.5-acre lot with a good sand beach can be found for $80,000 to $120,000 (Can.) within 50 miles of the Sault, but if you’re willing to work with a rugged shoreline, that can drop to the $30,000 to $50,000 range.
One thing that remains true is the limited supply of Lake Superior frontage on which to build, and it is becoming increasingly complicated to develop lakeshore.
“In Ontario we have problems developing more lakeshore properties these days,” says Wil Salo, broker for Team100 Realty Inc. in Thunder Bay. “Government and other restrictions make it more costly and take a lot longer.”
Carl cites another challenge to finding good waterfront land. “Due to the recent low water levels in Lake Superior, properties with a bay often have docks out of the water. Up until about five years ago, you could just add on to the docks. Today that is no longer feasible.”
Contrary to the trend of fewer options, a huge tract of land around Terrace Bay has come on the market.
With the closure and subsequent purchase of Terrace Bay Pulp, the non-mill land owned by the company is being sold to pay creditors. Ernst & Young, as “monitor” of Terrace Bay Pulp, is handling the sale of 10 parcels of land totaling more than 4,500 acres and including more than 15 miles along Lake Superior and a number of sizeable offshore islands.
Parcels range in size from 36 to 1,300 acres with potential use as residential, resort, wilderness estate and commercial development.
Ray Drost, senior vice president of Ernst & Young Inc., says that interest in the land has come from a wide variety of potential buyers, including developers, individual buyers looking for smaller lots and special interest purchasers.
Wisconsin Shores
The number of feet along the waterfront does not tell the whole story of a property’s value, according to Kathleen Russell, owner of Apostle Islands Realty in Bayfield, Wisconsin. A residential lot on Lake Superior in the Bayfield area requires a minimum of 150 feet of frontage. Beyond that size, additional frontage may not add much in terms of per-foot value.
Kathleen lists six factors that can affect a buyer’s interest in land and hence the price:
- Shoreline features. Easy access to the water, sand beach and flat rocks are most desirable.
- Depth of the lot. Deeper lots provide a better visual and sound buffer from the road.
- Noise and traffic. Being on a quiet road commands a higher price than a busy highway.
- View. The more variety in the landscape and lake view, the greater the appeal and market value.
- Proximity to services. The availability of shops, marinas and other services enhances a lot’s value.
- Soil type. Sandy loam soil with good drainage is best for installing septic systems, roads and gardens.
Land prices have not fallen uniformly around the Lake. On the Wisconsin shores, for example, prices have dropped more on the western side – southern Douglas County up to around Port Wing, Herbster and Cornucopia – than on the eastern side near Bayfield and to Ashland.
A 150-foot lakeshore lot on the west side of Roman Point with a high cliff, driveway and available power is going for $500 per frontage foot. In contrast, the area from Bayfield south to Port Superior Marina has the highest value. In that area, a waterfront lot in a development with a paved road, sewer, natural gas, fiber optic cabling and easy access to hiking trails and local restaurants goes for $1,400 per frontage foot.
Michigan Shores
Sales activity on vacant lots in the Marquette area has been very low. Three inexpensive parcels sold in 2012, but prior to that, no building lots had sold in the county since 2007.
“Inventory is low for vacant land,” said Carol Brady, associate broker at Select Realty in Marquette. There are 14 active listings for the whole county, from a half acre lot with 300 feet of waterfront frontage and a rocky beach at $59,900, to 15 acres with 1,000 feet of frontage and a sand beach for nearly $2.5 million. Most of the openings are in Big Bay and have been on the market quite a while, Carol says.
Despite this lull in activity, real estate sellers see positive signs that market activity is improving – as long as the national economy is perceived to be improving, says Karen Lahti, associate broker at Re/Max Douglass Real Estate in Houghton. “People relate their personal situation to the economic forecast.” She started to see improvement in inquiries throughout the Keweenaw Peninsula last summer and into the fall.
Minnesota Shores
Lavonne Christensen, broker at Odyssey Real Estate Group in Two Harbors, Minnesota, agrees the signs are looking up. She saw sales dip to their lowest in 2011 and come back significantly in 2012.
“Sales are up, but not prices. There is still too much inventory,” she notes.
Kim Wolff, broker of Timber Wolff Realty in Lutsen, Minnesota, points out that “buyers are still willing to pay a premium for those special Lake Superior vacant land parcels.”
She has a current listing for a 150-foot lot in Lutsen priced at $295,000, or $2,000 per foot. It features level-lake access, a driveway to a building site and is bordered by a creek on one side.
“People are still buying land, but the reason has changed,” says Kathleen Russell of Apostle Island Realty. Earlier many people “bought land as an investment and held it for three to seven years. Now they are buying land because they want to live here. Often it is empty nesters or those who want to retire here.”
With property values down and low interest rates, it can be an attractive proposition.
Buyers’ Market
Bob and Joan Rheineck of Lake Mills, Wisconsin, took just such advantage of the good market for buyers. They had become enamored with the environment around the northland, and a short stay in their RV right on the water near Two Harbors – combined with the proximity to their son who works in the Twin Ports – persuaded them that this is where they wanted to have their retirement home.
They found a six-acre lot that suited all their criteria – shoreline, privacy, far from the road and wooded. In addition, there is already a cut for a driveway, and an opening for a building site with a great view of the Lake.
The original asking price was “quite out of line,” Bob felt. He determined a price comfortable for him and after a month of negotiating got the price close to that offer. “The current economy helped,” says Bob. “It is a good time to buy, not to sell.”
The economic downturn shifted the market from vacant lots toward existing homes. Building new can be more expensive. “Most vacant land in the three-county area around Marquette is undeveloped,” says Carol Brady. “You need to put in roads, power, well and septic even before adding building costs.”
That makes existing homes a much better value these days. In 2012, the average price for residential waterfront outside Marquette was $360,000.
“Buying power is better now,” says Virginia Palmer. “More people are looking at improved lots because they can get them for the same cost.”
Kim Wolff adds that the low interest rates on conventional mortgages are also a contributing factor. “People are attracted to low long-term fixed rates rather than wondering what rates will be at the end of their building project.”
Bruce and Dar Gehring benefitted from that trend. After vacationing for a month every year for 12 years in the same cabin near Grand Marais, Minnesota, they knew they wanted to retire there. With high building costs, they felt an existing home would be more affordable.
Originally they thought they would buy a home in the woods. They were thrilled to find they could afford a house right on the shore. But it took time and patience.
The Gehrings began watching properties for sale in 2009.
“The values did not come down for quite a while,” says Bruce. During that time, they became educated about the market by watching county records and by monitoring sale prices. When they found the home of their dreams, their original offer last May was turned down.
“We knew our limit and what we were willing to pay, and we were willing to walk away,” Bruce explains. In September, the sellers agreed to their original offer.
“This was not a career move, it was a home move,” says Dar. “We found a place we didn’t want to leave when we were on vacation.”
And now they don’t have to.
Molly Hoeg is a freelance writer who made her way back to Duluth to be near the Big Lake.