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DULUTH – In the past year the average home price in the Duluth area has risen nearly $30,000, or 15%, as a shortage of listings and surplus of buyers continue to remake a market that rarely saw more than a 4% yearly price increase in the past decade.

"We are living through historic times; it is just a roller coaster of emotion," said Shaina Nickila, president of the board of Lake Superior Area Realtors (LSAR).

The Duluth area has seen prices grow slightly faster than the state as a whole so far this year, a premise that would have been unheard of before the pandemic and low interest rates — along with more flexible workplaces that allow employees to work remotely — upturned a once slow-moving housing market.

While the busiest part of the season is over, the regional market is still seeing intense competition and low interest rates driving up prices while the number of homes on the market remains well below average.

In August, most homes in the region sold in less than a month and went for $225,000 on average, according to LSAR data. That's a 5% increase from July but a decline from a record $249,000 median sale price in June.

And while the inventory of homes for sale was 20% below August 2020 levels, last month saw the highest number of closed sales in 2021 so far.

"We've all had a pretty good year, but some of our agents wouldn't mind some time off coming up," Nickila said.

September is typically slower for real estate around Duluth, but sellers will likely still see multiple offers at or above asking price so long as there aren't enough homes for sale to satisfy buyer demand.

"Despite the ideal environment for selling a home, a lot of potential sellers are sitting on the fence. They're worried about their ability to find an affordable property after they sell," Chris Galler, CEO of Minnesota Realtors, said in a statement. "With school starting again, many sellers will wait until spring before they think about putting their homes on the market. It's a cycle that's likely to repeat until market forces increase inventory or rising interest rates put the brakes on purchasing power."

Nickila said there is not much that will shake up the local market in the coming months even as the Federal Reserve has signaled it intends to raise interest rates next year after keeping them at historic lows for 18 months.

"I think we're going to stay busy," Nickila said. "If you still have that right location, that right price, you'll still have 20 showings in two days."

Brooks Johnson • 218-491-6496