In Minnesota city, COVID-19 creates a booming real estate market
WADENA, Minn. — The housing market in and around Wadena, Minn., has been what some would call booming.
“It’s the strongest I’ve seen in 30 years,” Garth Albers of Albers Realty in Wadena said. He’s seen homes receive several offers and even sell the same day they’re placed on the market.
“It’s a very strong market,” according to Joe Hinkle at Hinkle Realty in Wadena.
Others, such as Kyle Davis, appraiser at Davis Appraisals in Wadena, calls the current housing market “bonkers.” He knows from experience just how wild the market is right now as he sold one of his properties the same day it hit the market.
Davis shares an analogy that he thinks reflects the market well. Imagine a garden hose where water is freely flowing from the nozzle. Suddenly a kink in the hose arises. While there remains a trickle of water, there is a building pressure.
Davis said that kink is COVID-19 and while a trickle of houses are coming up for sale, it’s not much — not enough for the current demand. They are being snatched up regularly, once “for sale” signs are staked outside.
“There is all this pressure building up of people wanting to buy,” Davis said.
“We in our office are insanely busy due to COVID, because the government’s response to COVID is to lower interest rates,” Davis said. This helps to avoid foreclosures and has encouraged spending across the country. People who were on the fence about buying a home now are all in and ready to jump on a property that meets their needs and is within their means.
In the current market, Hinkle tells clients they should be ready to buy because the single-family home inventory is low and has brought many homes to sell very quickly. Both real estate agents say this low inventory is significant. Albers can recall having more than 100 listings in his early years and now perhaps a 10th of that amount is available for his inventory.
Davis credits some of that low supply to sellers' apprehension to list. Maybe they have concerns of the unknowns this virus has been known for. Maybe they don’t want other people in their home. Or perhaps the area just needs more housing. A current housing study for the county hopes to provide some answers.
And while homes are moving fast now, Davis said as some of the fear of COVID-19 subsides, possibly with the introduction of a vaccine, “I think it’s going to go even more bonkers.”
He means the market will likely open up with more people looking to sell, and they in turn will be looking to buy. The fire hose will be free to flow once more.
With home values at their highest, interest rates at their lowest and the supply is next to nothing Davis made this bold statement about anyone on the fence of selling.
"If I could tell Wadena, 'if you are thinking of selling, I am telling you, now is the time to sell,'" Davis said.
Home sales mean lots of business for all those involved from the bank to the home supply store helping to make the home show ready. Davis describes the work for the appraisal staff as “up to our eyeballs” in work. They are not just working on appraising for sales but low interest rates are also bringing many people to refinance their home loans, which takes another appraisal.
Even the rental housing situation is seeing increases. Davis has a few rental units in the area and his recent listings brought responses like never before. Even 20-30 calls on one unit.
“That to me is crazy,” Davis said. “I’ve been doing this for 10 years and I’ve never had that response from rentals.”
Davis looks at this low inventory and sees it’s high time to introduce some new housing options in the area. The tough part is the cost of new construction makes that a difficult task. As Davis explains, it doesn’t matter what it costs to build a home, it’s what someone is willing to pay for it that determines the value.
Things have changed a bit in this industry thanks to COVID-19. Masks are worn during tours and appraisals and wants and desires of those involved are taken into consideration.
Hinkle explained how the real estate business shutdown for a period when the stay-at-home order was in effect. He noted at least one seller took their home off the market just out of precaution as they were concerned about allowing extra people to file through their home. As restrictions started loosening, the market began a rebound and is now very strong.
“People wanted to get out and look at property,” Hinkle said.