Residential market reaches plateau

Inventory shortages slow sales growth

2015 was the second-best year ever for waterfront home sales for Lake Martin. Through the end of August, it appears that 2016 will likely be the third-best year ever for waterfront home sales on Lake Martin, unless the fall sales season beats expectations. While that might be disappointing to some—take heart —the decrease is by the narrowest of margins!

For the past 12-month period ending in August of 2016, the overall residential market is off just 0.9% (nine-tenths of one percent) from last year’s sales level. That is actually a pleasant surprise given the reduced inventory levels that prospective buyers can choose from.

Earlier this year, we predicted in this report that sales activity was likely to decrease this year due to reductions in available lake home inventory. Prospective buyers found fewer properties to consider and described many properties as “picked over.” In fact, many new, attractive, properly priced properties sold at a much faster rate this year—two weeks faster on average than last year.[1]

Current inventory levels for single family residential waterfront property are 17 percent lower than this time last year. Since many buyers start their property search by reviewing available homes on-line, lower inventory will attract fewer inquiries and sales. Given the large decrease in available inventory, we are not surprised by the decrease in sales, but we are surprised that the decrease is so small.

Property Values Continue Increase

 While sales volume decreased, overall property values continued to climb. All property types on Lake Martin (homes, condos, and lots) have increased in the last year. The condo market realized the greatest level of increase with a 10.8% increase in median price. Overall, residential median prices increased by 5% over the same 12-month period ending in August of 2015.

The growth in market value has led to stability in pricing with the current average residential list-price-to-sales-price ratio increasing to 94.4%.[2] Experience has shown that a stable market exists when this ratio is between 94% and 96%.

Market Predictions

The market has plateaued at a healthy sales level with stable vital signs. Given the reduction in available inventory, sales prices are likely to rise creating greater equity for all lake owners. Average values are returning to near-peak levels, and, given current trends, 2017 appears to offer new peak property values on Lake Martin.

[1] Sales for single family detached homes on Lake Martin sold on average in 168 days in 2016.  180 days is considered normal for Lake Martin due to the seasonal nature of this market.

[2] The list-price-to-sales-price ratio is the percentage of asking price that is received with a successful sale.  A list-price-to-sales-price ratio for a $100,000 asking price would result, on average, in a $94,400 sale.  The list-price-to-sales-price ratio for the year ending August 2015 was 93.5%.