Fewer Available Homes Drive Lot Sales

If you have not been to the lake since last summer, we want you to know that your eyes are not playing tricks on you! Yes, there are more houses on the shores of Lake Martin than you may be used to seeing. Double yes, there seems to be a lot more construction activity this summer as well. If you can’t find a painter, we know where they are!

What has caused this substantial flurry of activity? For starters, Lake Martin is a popular destination. The past several years of lake property sales have been brisk to say the least. 2017 was either the second best or best year on record according to local MLS data. Property value increases were in the double-digits for several years, making investments in the lake over that last six years look pretty impressive (32.51% increase from 2014 to 2019).

Since builders have not been able to keep up inventory of ready-to-use homes and the inventory of these new, move-in-ready homes is much lower compared to 2015 (see chart below), prospective owners simply have fewer homes to choose from. Smaller inventory, changes in décor and increased prices have caused people to consider options—like building new.

A look at the numbers

For the last 12-month period ending May 31 of this year, sales of residential real estate declined by 27 units to 302 sales (an 8.2% decrease). That business did not go away. The appeal of the lake is just too strong. Over the same period, waterfront lot sales increased by 18 units to 72 total sales (a 33.3% increase).

Total dollar volume of residential property decreased 11.3% to $176,145,582 over the past 12 months, while the sale of waterfront lots increased 109% to $24,180,016. The combined volumes in a year-over-year comparison are $210,083,362 for all waterfront sales in 2018 and $200,325,598 for all waterfront lot sales in 2019.

When you consider the value of construction at a conservative $500,000 on average and the total value of homes likely to be built, the total potential value for the last 12 months business is an additional $9,000,000. So, year over year, the numbers are about even.

What to look for

We do not see a great increase in speculative construction. Most builders we talk to say they have more than enough custom work to stay busy. As available inventory is likely to stay stable or shrink, and if the economy stays stable, more people will consider building from scratch to get a place on Lake Martin.

Developing homesites is a long-lead-time process, and nobody’s making any more waterfront land. In anticipation of this demand, we are in the planning stages for developing additional waterfront lots. To stay abreast of the latest projects,  call one of our Sales Executives at 256.215.7011 or e-mail them today.