Articles & News
Ten Years Later
Market comparison reveals vast improvement
We are asked all the time, “How is the market doing?” There are a number of ways we can respond to that question. This time last year, we would have said, “The market is great! Lake properties are selling like hotcakes!” That would have been a true statement, since the number of residential sales reported to the local MLS for the 12 months ending October of 2020 was at an all-time high of 458 properties sold.
That torrid sales pace for the number of units sold has decreased by 12.9% to 399 for the most recent 12-month period, but the gross dollar volume for that same period increased 3.1%. So, this year, the answer would be, “The market is great! Property values are on the increase!”
A better way to answer the “how is the market?” question would be to compare the market over time. Now that the summer sales season is in the books, we have some time to judge the market’s performance. For this study, we looked back ten years ago to compare key metrics and to gauge a rough feel for the return on a lake property investment.
Key metrics for October 2011 versus October 2021
|# of property sales||15|
|# of sales for 12 months||215|
|Average sales price||$314,900|
|Median sales price||$232,500|
|Average days on market||198|
|Total property for sale||352|
|Months supply of property||19.65|
|# of property sales||31|
|# of sales for 12 months||399|
|Average sales price||$1,090,527|
|Median sales price||$915,300|
|Average days on market||101|
|Total property for sale||59|
|Months supply of property||1.77|
So, from a property owner’s perspective, lake property has proven to be a great investment compared to other investment classes over the last ten years—especially when you consider that looking at your Bitcoin collection is not as enjoyable as seeing a sunrise from your lake porch!
From a potential property buyer’s perspective, we recognize that there is a limited supply of property available. We also recognize that you have likely missed out on some appreciation. In fact, we heard people saying just one year ago, “We are going to wait a while so we can get a better buy.” The average price for properties sold in October of 2020 was $795,000! So much for waiting for prices to moderate.
Our crystal ball prediction
We are frequently asked, “What do you think the market will do?” As a disclaimer to our ability to see into the future, we did not foresee a double-digit increase in property values over the last year. Given that disclaimer, we can look at current statistics and economic conditions and share what we think will occur in the immediate future.
In short, the value of property on the lake will be subject to inventory levels. Inventory is at an all-time low. Builders are very busy building custom homes and dealing with supply chain issues preventing a large influx of speculative homes on the market. With most sales over the last two years with ultra-low, fixed-rate mortgages, we do not expect a rush for the exits with dramatic rate increases like we experienced in 2009.
Available lot inventory is at an all-time low for the lake as well. Permit approval and road building require long lead times, so additional inventory of lake homesites will be delayed until late spring of 2022. Even with a recent uptick in property values, people are reluctant to take a profit and leave the lake in numbers needed to meet demand. When a property does come on the market, that property is quickly sold. Over the last 12 months, 409 waterfront properties were placed in the local MLS. 399 properties were sold over that period of time.
Given the constraints on inventory and a Federal Reserve that appears to be reluctant to rapidly increase interest rates, we believe that property values will continue to climb. We also expect, because of the low inventory numbers, that the number of sales for the lake over the next year will decrease.
Newly listed property tends to sell very quickly. If you would like to hear about the newest property availability, please give one of our Sales Executives a call at 256.215.7011 today. They will be happy to let you know about the latest and greatest.