LakePlace.com in the News

Lure of the Local Lake
Twin Citians get a vacation feel from year-round living on metro-area lakes.
TWIN CITIES BUSINESS MONTHLY - February 2005
By Marcia Jedd 

Sun glints from the lake below the master suite and beckons. A stroll down the landscaped terrace ends at the dock where your boat is ready for a summer night's cruise. A weekend at the cabin? No, just everyday life for Twin Cities residents who own property on metro-area lakes. 

"There's a noticeable trend within the Twin Cities toward year-round living on lakes rather than having a home here and going to the cabin up north," says David Gooden and Cameron Henkel, co-founders of LakePlace.com, an independent website that lists year-round lake homes and rustic cabins for sale and rent throughout Minnesota. From popular Lake Minnetonka and the Minneapolis chain of lakes to hidden gems such as Christmas Lake, Lake Minnewashta, and Lotus Lake, metro-area lake property is a hotbed of year-round real estate activity, remodeling, and construction. Gooden doesn't anticipate that the rush to local lakes will abate anytime soon. Although the year-end slowdown for non-lakeshore properties occurred as usual last year, Gooden didn't see a similar drop for lakeshore properties. "We see White Bear Lake, Forest Lake, and Prior Lake as up-and-coming in the metro area," he says, noting that remodeling and construction are going toward the upper end of development. "Cabins are pretty much nonexistent on most of these metro-area lakes," Gooden adds.

In older lakeside neighborhoods in Minneapolis, buyers will find stately homes with "good bones" or structural integrity, says Steve Havig, president and owner of Lakes Area Realty, which specializes in neighborhoods around Minneapolis lakes. "Each city lake seems to have its own personality. By driving and walking around each, you get a feeling of what each lake has to offer," he says. "People want Lake of the Isles, Calhoun, Cedar, or Harriet for the views and style of...sophisticated, elegant homes."

Transplants to the Twin Cities notice the exceptional quality of city living, Havig notes, epitomized by homes in the Kenwood neighborhood on Lake of the Isles and the Linden Hills neighborhood on Lake Harriet. "Show executives relocating here the inner city and they are astonished at the quality of lake living," he says. The granddaddy of metro-area lake living lies to the west of Minneapolis on Lake Minnetonka, a vacation hot spot during the late 1800's. As a major recreational lake and the 10th largest in Minnesota, Lake Minnetonka spans 14,500 acres with 125 miles of mostly developed shoreline.

Brad Nielsen, planning director for the City of Shorewood, suggests that there is a mixture of homes along Lake Minnetonka as well as many other suburban and outlying lakes. The lakeshore was developed first as a seasonal vacation spot. "Over time, many of these homes were converted into year-round homes," he says.

The Call of the Lake
Tom and Tina Verburgt were pleased to find a home on Lake Minnetonka that had great potential. In 2001, the lure of the lake lifestyle sparked the Verburgts to sell their spacious Eden Prairie home in favor of a modest Colonial home on the upper lake in Shorewood. The bonus was finding a home with neighborhood children around the ages of their own children.

The Verburgts also chose Lake Minnetonka because of Tina's fond memories of visiting her parents, who once lived on the lake. "We like this lake because it has so much lakeshore, interesting bays, and a number of restaurants. We also like the proximity to biking trails and the town of Excelsior," she says.

Shortly after the Verburgts moved to Shorewood, the set out to remodel the kitchen, the first of several design facelifts to their 1974 home. Last fall, they commenced an ambitious remodeling project that will be completed this spring. "The project started with a desire for a larger guest room and garage and snowballed from there," Tina says. New construction includes the addition of a three-car garage with a master bedroom above it, complete with office, bathroom, and deck over-looking the lake. "Our current master bedroom will become a guest room, and we'll add a two-story great room to the back of the house," she says. The project also includes a circular driveway and major landscaping. The refurbished and expanded home will be more than 60 percent larger than the 2,780 square-foot home they purchased. "The finished home will look less traditional and have a cottage feel to it," she says.

The Verburgts are typical of lakeshore homebuyers who encounter land values far greater than the value of some of the smaller homes there. Property situated on lakes, particularly if the lake has clean water and is in a desirable location, commands high prices, says Carl Zinn, a Coldwell Banker Burnett agent who specializes in west metro-area homes including Lake Minnetonka.

Trading Up
"A lot of people give up a house to live on the lake, moving to houses with fewer features," Zinn says. "You get less house, but lakeshore has the highest value of all amenities because of the recreational aspect." A large wooded lot situated on a hill, especially one that's close to work, school, and shopping, also increases property value. For these reasons, Zinn says, lake homes in the lower Lake Minnetonka communities of Deephaven, Greenwood, Excelsior, Wayzata, and Woodland boast some of the highest price tags in the metro area.

Indeed, Lake Minnetonka is perhaps the best known for appreciating home values. Here, many luxury homes are valued in the multimillion-dollar range. Zinn says the average lakeshore home on the desirable lower-lake nets around $2 million, with homes on the upper lake netting an average of around $1.5 million. Although these homes don't appreciate as quickly as they did during 1995 to 2000, Zinn estimates current appreciation on lakeshore property at around 7 percent to 8 percent annually.

Keith Waters, president of Waters & Associates in Eden Prairie, builds homes on Lake Minnetonka priced in the $1 million to $2 million range, excluding land costs. "Lots are more expensive, so you will see higher-end family homes," Waters says.

The ever-increasing prices of other metro-area lake homes reflect the popularity of lake living. For instance, on White Bear Lake, the most expensive homes 10 years ago cost approximately $400,000, says Mark Ashby, and Edina Realty agent who specializes in the northern St. Paul suburbs including White Bear Lake. Recently, he's seen these lakeshore homes creep toward $2 million. "It's not uncommon for someone to pay $1 million for a home on a 100-foot lot on White Bear Lake and tear it down and build a bigger one," he says. He estimates the appreciation rates for homes on the lake at around 10 percent to 12 percent annually. "Ten years ago, you might have seen 2 percent to 3 percent appreciation," he says.

Kathy Madore, an Edina Realty agent who sells in a number of lake and river communities in the St. Paul suburbs, also sees a robust market for lake homes. She has recently seen homes on White Bear Lake fetch between $1.2 million and $1.6 million. Havig of Lakes Area Realty says that homes in the coveted Minneapolis lakes area have averaged about 10 percent appreciation annually during the last several years.

"Lake homes appreciate faster than the overall real estate market, because the greater percentage of value lies in the land, not in the home," Zinn says. For a $3 million home on Lake Minnetonka, for instance, "Typically, the lot is two-thirds of the value. On the other hand, with a $3 million house in Medina, the building will be two-thirds of the value," he explains.

Most buyers of lakeshore homes consider their purchase as an investment, Zinn adds. "It's a lifestyle, and investment, and a place to live. Homeowners draw from all of their budgets, such as vacation budgets for fishing, boating, or investment budgets, because the land is so expensive you couldn't justify [spending] it otherwise."

Disproportionately high land values in comparison to home values are why many purchasers of lake homes may elect to tear down a perfectly good home and build a new one. "Land outstrips the value of the buildings in many cases," Nielsen says. "We're seeing homes being torn down that you never would imagine being removed.

According to a Star Tribune report from Bob Strachota, president of Shenehon Company, a Minneapolis-based real estate appraisal company, the Twin Cities boasts some of the highest land costs as a percentage of overall property value in the nation. In most U.S. metro areas, land might only constitute some 10 percent to 20 percent of overall property value, but in the Twin Cities, the lot may account for 50 percent or more of a property's value.

Real estate agents and planners such as Nielsen note that clean water also affects property value. The water quality in Christmas Lake, near Excelsior, consistently receives high cleanliness ratings from the Minnesota Department of Natural Resources. Water quality combined with other attributes such as lake depth makes properties in this lake community highly desirable. Water quality levels found in Lake Minnetonka, which is actually a collection of 16 inter-connecting lakes with nearly two dozen bays, vary by specific area, with the lower lake tending to score higher ratings than the upper lake.

On the other side of the Twin Cities, White Bear Lake is another lake with excellent water quality, which makes it appealing to families for recreation. "At 2,000 acres, White Bear Lake is popular because it's one of the largest lakes in the St. Paul area," Ashby says. Its clean shores and deep water are two attributes that make it desirable.

Other popular St. Paul-area lakes include Bald Eagle Lake in White Bear township; Lake Jarvis in Maplewood; the tri-lakes of Demontreville, Jane, and Olson in Lake Elmo; Pine Tree Lake in Dellwood; and Pleasant and Gilfillan lakes in North Oaks.

Quality of life and a gathering place for friends and family are attractions for real estate agent Kathy Madore and her family, now in their second White Bear Lake home since moving to the lake in 1981. "It's serene, tranquil, and you can watch the storms come across. The kids love the lake," she says.

The allure of the river also attracts home buyers. The Minnesota side of the St. Croix River Valley is home to a number of communities that feature river views, including Lakeland and Lakeland Shores. Boating and lovely scenery are among the attractions that entice people to gravitate to purchasing riverfront property.

For Mike Rygh, president of Custom One Home Builders in Cottage Grove and his wife, Jan, it will be the third time they choose river living when they move into their new home along the St. Croix River this spring. The home replaces on that Rygh built in Lakeland in 2001 after having lived along the Mississippi River for more than 12 years.

The location of a site along the St. Croix, near the charming town of Bayport, was incentive enough for the home builder and designer. "We enjoy the tranquility of being on the river, the feeling of it, and the wildlife. We love watching eagles," Rygh says. "It's a nice lot, which goes right down to the river, but we had to raise the lot to get it out of the flood plain. We like the small-town atmosphere of the river [community], boating, and watching the seasons," Rygh says. "The home will be big and open, with a lot of large beams and an English cottage look," he says. He adds that his house will be featured on the Twin Cities Luxury Home tour this summer. Although the Ryghs vacation in northern Minnesota, they enjoy the year-round vacation feeling of living on the river.

Real estate professionals say some lake homebuyers forego far-flung cabins and vacation homes. "There's an element today of people who are tired of driving four hours to go to the cabin. They'll keep their Edina homes and have a home or cabin on Lake Minnetonka or elsewhere," Zinn says. Or, he suggests, they opt for one home on a local lake.

It's the benefit of being at the lake without the stress," says Chanhassen resident Tom Turcotte. Six years ago, Turcotte and his wife, Darleen, sold their home on five acres of Chanhassen farm-land and moved to nearby Lotus Lake, where they purchased a smaller home with a wide lot size (145 feet) on prime lakeshore frontage. "We're pontoon people, not speedboat people. Lotus Lake is a smaller lake where you can take your time and putt around," Turcotte says, "It's also good for fishing, which Darleen likes to do."

As for who chooses to live in a metro lake community, it's all over the board. Nielsen of the City of Shorewood says, "As a result of the expense of property in general, we tend to see homeowners in their 50s or 60s, but some of them are younger."

According to Tina Verburgt, her family's neighborhood in Shorewood is a little more eclectic than their former Eden Prairie neighborhood. "The houses vary, and there's a wider range of ages. Several people around us are snowbirds, which is different than in Eden Prairie," she says.

Madore notes, "Couples in their 30s with kids, or dual-income couples without children are selling their lake places up north. They'll keep the house in town or enlarge the one on the local lake." She adds that empty-nesters of all ages opt for lake living.

As the popularity of lake living increases, Madore says, "You want to get as large a house as you can if you are buying on the lake; you enjoy a lifestyle that not everybody can afford."

Greater demand for lakeshore property increases the price of land. To accommodate the demand, nontraditional lake homes will appear. "There's a growing trend for condominiums on lake properties," says Gooden. The trend is already appearing in condominium developments on Lake Minnetonka, along the river in Stillwater, and apartments-turned condos on White Bear Lake, Lake Harriet, and other metro lakes.

People dream of living on the lake," Ashby observes. "But the old adage that they just don't make any more lakeshore holds true."