Cause and Effect

Shortage of inventory drives values upward

If you ever needed a real-life example of basic economics, you need to look no further than the real estate market on Lake Martin. Our market has become a real-time example of the principles of supply and demand.

In 2017, property values began a slow, but steady, increase. That increase stayed relatively steady until 2020, and then property values began a rapid increase. Initially, property value increases were due to an improved 2017 economy that allowed more people to consider a second home on the lake. This followed a multi-year period of relatively stable values following the 2009 financial crisis which had adversely affected real estate values. We knew a property value recovery was due if the excessive inventory of available lake homes could be reduced.

By the end of 2019, we felt that inventory levels were at a healthier level and property values would resume their upward climb and perhaps accelerate. Then, COVID happened, and we thought that all bets were off for property value increases in 2020. What happened next was a BIG surprise. Everyone found that Lake Martin is pretty attractive, especially when you need a place to practice safe social distancing.

Dwindling inventories at the end of 2019 were pared by mid-summer of 2020 (see chart below where each period is for 12 months ending on April 30). Builders, developers, and existing property owners are unable to supply the demand that still exists leaving only 50 available residential properties by the end of April 2022.

The 2021 sales volume hit an all-time high (see sales volume chart below) and created what we call the COVID bump. This volume began to taper off in mid-2021, not because of lack of buyers, but due to the lack of inventory. Even with the reduced volume, the most recent 12-month period is the second-highest-ranking period for Lake Martin residential property sales.

Lower inventory has proven to be a financial windfall to property owners on Lake Martin. As you can see in the chart below, the diminishing inventory and steady demand have resulted in dramatically increased values for lake property. Low supply with high demand really does result in higher prices. Who knew? Economists know what they are talking about after all!

We think that property values are likely to rise further at best or hold firm at worst, since there is no readily apparent solution to the supply problem. In fact, properties that come on the market continue to sell at a very fast pace and, in most cases, at asking prices or slightly above.

If you want to stay abreast of the market and find out about the latest property offerings, please reach out to one of our Sales Executives at 256.215.7011. They will be happy to tell you about the latest and greatest in the Lake Martin market.