Demand remains extremely strong for the high-end homes of Leelanau County that command the attention of the rich and famous, but some faint cracks are showing in other areas of the market.
Time will tell whether those cracks grow and have the capability to trip up a market that’s been red hot for years. But they didn’t cause alarm in 2023, when 377 homes sold for a total volume of $273.3 million.
The sales volume represents an increase of $5.2 million from 2022, but remained a bit off the high marks of $285.5 million in 2020 and $310.5 million in 2021.
The median average for home sales in the county likewise increased at a modest rate, from $522,000 to $550,000 or 5.6%.
“It is a much more predictable year-over-year growth pattern, and more in line with the historical average for what we usually see,” said Jonathon Oltersdorf, a Realtor with family owned Oltersdorf Realty in Suttons Bay. “Two thousand twenty-one and 2022 were outliers.”
The number of home sales remained minuscule by historical standards, with 377 transactions for existing homes recorded. Three hundred fifty-eight homes sold in 2022. The record was set in 2020 during the first COVID year at 564 units. Even in 2012 as the Great Recession held on 382 homes sold in the county.
While demand may remain high by historical standards, it has moderated slightly for all but the highest priced homes that come with lake frontage, Oltersdorf added.
Leelanau County has always been considered a pleasant place to live by both county residents and newcomers. That influx of out-of-county home buyers has been on the rise, Oltersdorf said, and hit a new level when 56% of buyers of homes in 2023 did not reside in Leelanau or Grand Traverse zip codes. The ratio was only 37% non-local home buyers 10 years ago, Oltersdorf said.
“It’s been a constant trend for 10 years, to have more and more out-of-town buyers versus local buyers. Our area, every year, is discovered by more people from throughout the country, and we’re still considered an affordable market compared to western state, to southern states. It’s a desirable place for second homes,” he added.
Inventory has not kept up with interest, but it is improving. Currently 46 homes are listed for sale in the county, representing about two months of housing stock. A six-month supply of homes listed for sale has been the historical average, but the number stood at one month of supply heading into 2023.
High interest rates are starting to have an impact in the low — and moderate-priced markets — in two ways. Of course, they result in much higher monthly mortgage bills. But they also prevent families that locked in historic low rates from selling.
“There is some mortgage lock happening. Anyone who purchased in the last five years and got a mortgage did so at such a historically low rate that if they did move their payments could double … A lot of people who want to move can’t because of the change in their monthly payment,” Oltersdorf said.
And then there are the halves. Roughly half of the home sales conducted in the county in 2023 were without the help of mortgages.
“The upper end has not slowed at all. Waterfront, luxury properties still have a huge amount of demand. The middle market, that $500,000 to $600,000 range, has definitely been impacted by mortgage rates. The affordability has gotten out of hand for the average resident,” Oltersdorf said.
No place more succinctly personifies the mortgage rate impact than the first new subdivision in Cedar since … well, maybe ever.
It’s Cedar Cove Estates, the brainchild of Corey Flaska, a self-made contractor who’s been pounding nails since he was 10. From his own observations and through the advice of market watchers, Flaska sought to pound a bulls-eye in the housing market with a 30-unit development on 5.5 acres in a moderate- priced range between $349,000 for a duplex unit and $400,000 for a single family house.
He’s finished five houses and only sold two, one to a Suttons Bay family and another to a family from downstate.
“We built this subdivision to be in this price range. Now we’re not seeing a lot of interest and we’re not showing new houses. Where are the $400,000 buyers, because they are not coming to my subdivision,” Flaska asked.
It may be a matter of timing, he hopes, with sales and showings delayed a bit over winter mostly due to high interest rates that pundits say will soon come down. Interest for 30-year mortgages creeped above 8% earlier this year, but has fallen to 6.6%.
Flaska did his homework only to have market conditions change. He’s hoping they soon revert to easier times to buy — and sell— a house.
“We’ve been analyzing where my price is. But my pricing is so competitive that doesn’t make sense. You can only go so low,” he said.
Flaska, owner of Leelanau Construction Company, even built some homes with all upstairs bedrooms in hopes of attracting younger buyers.
“I made some sacrifices to design so they wouldn’t be all bought by older people. I really wanted Cedar to get younger. I don’t know if that is backfiring on me now,” Flaska said.
In the five-county region, both the number of home sales and the revenue those sales produced declined over the past year, according to figures compiled by Aspire North Realtors, the multi-listing agency that includes Leelanau County. Home sales fell for the fourth straight year to 2,538 units since peaking at 3,455 in 2020. The revenue from those sales of existing homes also continued to slide, from $1.40 billion in 2021 to $1.29 billion in 2022 to $1.28 last year.
