Million-dollar lake house sales surge, even as rest of Minnesota market stalls

Higher mortgage rates and economic unease haven’t yet stifled the cost of one of Minnesota’s most coveted and expensive luxuries: lakeshore.

Even as home sales slow, the price of lake houses in the state is rising at more than twice the pace of inland options, according to data from Minnesota Realtors.

With the median price of those waterfront properties fetching a $200,000 premium, it’s a luxury affordable to only upper-bracket buyers in many parts of the state. That class of buyers is, for now, widely immune to the forces pushing many others out of the market.

“That group is fairly insulated from the world,” said Jim Eisler, managing broker at the Edina Realty office in Nisswa. “They have lots of equity in the market, and when [mortgage rates] went up, their passbook savings went up.”

Eisler added that in many parts of the state, lakeshore has been the steadiest segment of the market. In part, that’s because so many lakeshore buyers are immune to the economic uncertainty affecting many first-time and move-up buyers who usually make up the most active market categories.

In April, the median price of property with private access to water, including single-family houses, condominiums and townhouses, rose to an all-time high of $550,000, a nearly 8% gain from a year ago, according to Minnesota Realtors.

While lakeshore sales have ebbed slightly since peaking four years ago in the days of pandemic-low mortgage rates and a shocked market, buyers are still paying a bounty for a piece of shoreline on one of Minnesota’s 10,000-plus lakes.

Demand for waterfront is consistent with another trend: Sales of $1 million-plus homes increased nearly 18% last month. Those priced at less than $350,000, by contrast, declined.

Buyers have been especially aggressive on Twin Cities metro-area lakes, which are closer to high-paying jobs than lake homes in the more rural areas most popular with second-home buyers seeking vacation spots.

The epicenter of that demand is Lake Minnetonka, where Cathy Green is busy readying the modest house she and her siblings grew up in for sale. Since her elderly parents moved out several years ago, she’s grown weary of fielding countless unsolicited offers to buy the century-old house on 40 feet of Cook’s Bay in Mound.

“This year has been worse,” Green said. “They call me, and some even know my name.”

The callers regularly make sight-unseen offers on the house, she added. The dozens of overtures every year also come in the form of letters and checks for hundreds of thousands of dollars, which she’s collecting on the refrigerator door.

“One girl calls constantly, saying, ‘Are you sure you don’t want to sell it?’” Green said. “Then she calls me the next month, and then I get a check in the mail.”

The price of lakeshore in the metro and beyond is rising partly because so many houses — like the one Green’s parents bought when she was in third grade — end up razed and replaced with ones that cost double or triple.

“That says a lot about the desirability of lakefront property, that so many are willing to purchase lakefront property, demolish the structure and rebuild it just to be on the water,” said David Arbit, director of research for Minnesota Realtors.

Green’s parents bought the house more than 50 years ago for a fraction of what it will sell for now, and since they left, their daughter has been using it as a “cabin.”

“Times have changed a lot. Everything is more expensive. A gallon of milk used to be 50 cents. Now it’s $4,” she said. “You can’t feel bad; it’s just the way of the times, my own house included.”

She’s listing the house for $895,000. That makes it the least-expensive home to buy on the highly coveted lake, said listing agent David Gooden, co-founder and broker at Dane Arthur, formerly Lakeplace.com.

There is one other house on a nearby channel, not a main bay, on the market for $800,000, but most sell for well above $1 million.

“It’s the best deal on Lake Minnetonka,” he said.

Earlier this month, a much grander house on the opposite side of the lake hit the market for a whopping $55 million, the most expensive house listing in the state.

With limited supply and a growing number of baby boomers looking for the ultimate place to gather friends and family, lakeshore prices across the state have more than doubled in just 10 years.

Lake homes are the new darling of the residential real estate scene, even at a time when the broader market is slowing, Gooden said.

“It’s not the good old days,” he said. “But it’s fine.”

More sales data from Dane Arthur showed that during the first five months of the year, there were 759 sales of single-family, waterfront houses outside the 12-county metro area. More than a third of them sold for $300,000 to $500,000 within 30 to 60 days of hitting the market. Nearly 70 of them sold for more than $1 million.

That includes a sprawling hunting property with more than 1,000 acres and lots of waterfront in southeastern Minnesota, which sold in May for nearly $11 million.

Such deals come at a time when higher mortgage rates and record prices are having a noticeable impact on homebuyers who are far from entertaining what many consider an elective purchase. Those buyers are just trying to find one home to shelter their families.

Last month, the median price of all sales in the metro rose only 2.6% to $395,000, according to new data from the St. Paul Area Association of Realtors. That gain comes as home sales are slowing. Statewide, signed purchase agreements for all property types, including those not on lakeshore, increased only 1.7% statewide and 0.5% in the metro during May.

Sellers have been fetching much higher price gains in parts of the state where lakeshore dominates, agents said. In the Park Rapids area, for example, buyers are snapping up priced-right lake homes within just a day or two of hitting the market.

“The market has really gotten hot,” said Kristine Walsh, a Dane Arthur sales agent who specializes in lakeside properties in that area. “People aren’t spending money in a crazy way like they did in 2021. But they aren’t afraid.”

She added that as of April 1, she’s sold as much lakeshore this year as she did during all of 2024. She said if a property hasn’t had a lot of showings or sold within a couple weeks of hitting the market, it’s probably overpriced.

“There are some exceptions where people are getting way over market value,” she said. “But if things are priced appropriately, they go with relative ease. If they’re priced under, they will be gone be in a day.”

Eisler, with Edina Realty, said in that part of the state, lakeshore has been the most consistent part of the market because those buyers are able to pay cash and circumvent high mortgage rates.

Ted Hess and his wife, Beth, recently bought a lot on Leech Lake and plan to build a house where they can enjoy retirement with their three kids.

They took money out of their retirement accounts to fund the purchase, like many lake-home buyers. They plan to build in a few years after selling other real estate that will no longer serve them.

Hess said he’s confident in his decision because he’s watched the value of lakeshore continue to rise, in contrast to what he’s seen happen to the prices of other kinds of property.

Similar lots in the community, which has its own private boat harbor, have tripled in value in just six years. He’s not so confident that a piece of hunting land he also plans to eventually sell will do the same.

“We don’t want to risk that money on a rural piece of property that will not keep pace with inflation or the stock market,” he said. “Real estate that touches water or is adjacent seems to hold its value. ... We view it as a relatively safe investment.”