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Twin Ports housing market slow but steady in sales, price

The average home price in the five counties that make up the Duluth real estate market has fallen by 3 percent over the first nine months of this year, compared with the same period last year.

The average home price in the five counties that make up the Duluth real estate market has fallen by 3 percent over the first nine months of this year, compared with the same period last year.

In northern Wisconsin, the average price dropped 8 percent.

While that's nothing to gloat about, things here aren't that bad compared to how the subprime mortgage market and economic downturn are hitting other cities across the country, area Realtors say.

The Twin Cities, for example, has seen its average home price drop 12 percent during the same period.

"I think we're very, very lucky to be in a semi-protected area here," said Peggy Kman, president of the Superior Area Association of Realtors. "We don't have these big spikes in pricing. We don't have the big downturns either."

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Another positive sign for sellers in the Duluth market is that the number of homes for sale slid from 1,689 at the end of September last year to 1,664 this year, which is nearly the same number as two years ago.

"It indicates part of the excess supply is being absorbed," said George Karvel, a professor of real estate at the University of St. Thomas.

Though fewer homes remain unsold on the market, fewer homes have been sold, too. The number of homes sold has fallen by 16 percent in the Twin Ports region, showing that it remains a buyer's market, Realtors say.

The average home in the Duluth area sat on the market 71 days this year, compared with 64 days last year.

"It's a great time to buy real estate," said Kman, a Realtor for Van Hollen Realty in Iron River. She views the drop in buyers and slide in home prices as an overdue market correction.

Some Realtors believe the market downturn is partly fueled by fear the country's economic troubles are only going to deepen.

"People are a little afraid, especially buyers," said Pat Johnson, president of the Duluth Area Association of Realtors. They're worried about homes continuing to lose value, she added.

Realtors also say the shrinking number of homes purchased this year is partly linked to tightened loan restrictions.

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"Most people are going to have to have a down payment," Kman said. "They're really going back to the way it used to be," she said.

On the flip side, Johnson also pointed out that 30-year fixed mortgages are still in the fairly low 6 percent range.

Despite the Wall Street tumult, many local community banks say they continue offering traditional home loans.

"We are lending money like nobody's business," said Noah Wilcox, president and CEO of Grand Rapids State Bank.

He said while the real estate market remains soft in his area, his bank has plenty of money to lend, and has continued to function normally, despite the tremors on Wall Street.

Kman said she's seeing early signs that home prices will rebound in the spring.

Johnson predicts next year home prices will remain stable, or even increase a little, but a lot of it depends on who's elected and the resulting fallout.

"All things considered, if you look at the overall national picture, we're doing well," Johnson said. "Very, very well."

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PATRICK GARMOE can be reached at (218) 723-5229 or pgarmoe@duluthnews.com .

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