Market Report: Welcome to the “New Normal”

Sales continue at a brisk pace

This time last year, we were experiencing a rapid increase in the gross sales volume for waterfront property on Lake Martin.  The sales volume had increased to a level that began to rival 2006, which was the peak year for real estate sales on Lake Martin.  By the end of 2015, we had experienced the second best year ever for real estate sales on Lake Martin.

The question was – and is – will the trend continue?  Is this sustainable?

The answer is YES and YES!

The 12 month period ending in June of 2015 witnessed a 27.1% increase in property sales volume over the same period in 2014.  The number of sales also increased by 13.5% to 320 residential units sold.  Those numbers were welcome news to the lake market for sure.  But those were comps versus a 2014 market which was good, but not great.  This year the bar is higher.

The difference between 2015 and 2006 was not significant, so in order for the real estate market to post another year of gains it might just have to be the best year ever.  It is too early to tell if 2016 will surpass 2015. So far, by judging the same 12 month period ending this June versus the same period last year, we experienced an increase of 11.4% in dollar volume and a 5.9% increase in the number of sales!

New Normal

Okay, so it is not a 27% increase, but it is still a healthy increase!  We would point out that it is the healthiest type of market as well.  Since this volume is not driven by easy credit and rabid speculation that we witnessed in 2006, purchases may be made with confidence.  Buying in order to use the property, rather than to flip, is what we would describe as a normal motivation to buy.

Other indicators of a normal market are steady price appreciation (5.2% higher than last year), lower inventory levels (5% lower than last year), higher list price to sales price ratios (currently around 94%), and the speed at which lake properties are selling (27 days faster than last year).

We would be pretty happy if things kept perking along at these levels for the foreseeable future.  We hope you agree.

Market Predictions

Growth has continued, but the rate of growth has slowed.  Given the lower inventories, it is likely to level off this fall.  Newly built properties are not coming on the market quickly enough to provide enough property for current demand.  The prospect of a long distance construction project is not for everyone, so look for unit sales count to drop slightly and average sales prices to grow.  Eventually, newly developed lots and new homes will begin to provide the needed inventory by next summer.