Market Report: Waterfront Sales Plateau

Year-over-year results level with 2017

After the very frenetic sales increase beginning in the fall of 2016, we were due to level off at some point. That time has come. Our year-over-year report of waterfront gross sales volume for the 12-month period ending September 2018 shows .04% decrease in single family. Overall residential sales dropped 3.9% due to a 25% decrease in condo sales.

While the sales volume has plateaued, it has done so at a historically high level. 2017 was arguably the best year on record for residential waterfront property sales. This impressive sales volume was matched despite a decrease in the number of units sold. This result was again driven by the lower number of condo sales—21.5% lower than last year. Due to the large lag in condos, overall residential unit sales decreased 2.3% year over year.

The average price of waterfront property was higher, undergirding the overall sales volume result. The average price logged a 9.5% increase to $584,346 for all residential types and $684,002 for single-family detached. Condos fell behind in average price as well logging a decrease of 4.1% in the year-over-year average price.

Inventory still in short supply

Several factors have influenced the slightly lower number of units sold. Higher prices and higher interest rates have certainly slowed the number of sales, but lower inventory and the quality of inventory have made property selection difficult for potential buyers. This resulted in fewer people finding their dream lake home. This was a trend we noted last fall, and inventory is 4% lower than last year’s scant supply.

Realtors® report that potential purchasers have fewer properties to consider. Showing lists tend to be fairly short, especially compared to the fall of 2016. Quality designed, built and decorated properties tend to sell extremely fast according to agents. This smaller count of quality inventory—coupled with higher prices—caused the condo market to slide in total volume and unit sales.

What to look for

The trends on the lake are following the national trends in that inventory shortages, interest rates and tax law changes are affecting the market. We expected a leveling off in residential sales, and we expect to see a continued decrease given the lower inventory levels for finished residential properties. Lower supply will likely tamp down demand and price increases.

Less finished inventory is leading to increased activity in the sale of waterfront building sites. Recent releases of lots, like those in The Willows of Willow Point, have been well received. We predict that year-over-year sales of homesites will rise significantly over the next several months. Newly built homes, although fewer in number, are selling at a fairly rapid pace, benefitting from new trends in design and décor.

Given the high level of sales in 2017, numbers leveling off at or near that level is a pretty good result, but reduced inventory will certainly provide a test for maintaining that level. For more detailed statistics or market trends, call one of our Sales Executives at 256.215.7011.