Lake Martin Voice Realty
Proof Of End Of Sellers’ Market On Lake Martin
What is the real estate market like on Lake Martin right now? I own waterfront property, should I sell? I want to buy Lake Martin waterfront property, but is it still a crazy market?
These are questions I hear constantly. Both potential buyers and sellers of Lake Martin real estate want to know if changing conditions will benefit them. To be sure, the water is way down, and so are the numbers of real estate transactions. I will cover cause and effect in a later post. But for now, let’s just focus on one question:
Is Lake Martin still a sellers’ market?
If you talk to 10 people, you get 10 different answers, ranging from Pollyanna agents who still think it’s a sellers’ market to Chicken Little bubble barkers who act like property owners are literally throwing money into Lake Martin each time the water drops an inch. What’s the truth? When I approach the question, I treat it like every other issue about Lake Martin real estate:
1. Break it down by market segments. What are you talking about, here? Waterfront or non-waterfront? Condos? Lots? Leased lot homes or deeded homes? Homes above a million? What? (Below I will only talk about waterfront property.)
2. Look at the numbers. As I have said before, you have to be careful when interpreting statistics in our market. It is relatively small in transaction number (when comparing to large cities like Atlanta). But, to make a market opinion, you must look at market statistics, so I try to consider a year of data at a time. The goal is to take emotion – and agenda – out of the equation. Just the facts, ma’am.
3. Apply Common Sense. Just as you don’t want to be ruled by emotion or anecdotal 
evidence, you also don’t want to let the misapplication of statistics throw you off course. There is no magic statistic or rule of thumb to proclaim a market a buyers’ or sellers’ market. You have to use your common sense to test the statistics versus your everyday observations.
MY TAKE ON THE DIFFERENT TYPES OF LAKE MARTIN WATERFRONT PROPERTY:
1. LOTS – Right now on Lake Martin there are 113 waterfront lots for sale. 13 have sold in the past 12 months. That means we have about 113 months of inventory, or it would take almost 10 years to sell at this pace. On its face, that figure suggests an extreme buyer’s market. I do think this is a buyer’s market, but, like condos, I think that if sellers were more realistic on price, most of these would get snapped up pretty quickly. Everyone wants a lot. But, I think many sellers have incorrectly priced assuming the market rose by 35% over 2006. My call – Buyers’ Market.
2. CONDOS - There are 112 waterfront condos for sale and only 34 have sold in the past twelve months. That’s 38 months’ worth of inventory – i.e. at this current buying rate, it would take over three years to sell all of the condos currently for sale. That doesn’t count any that are under construction or might come on the market in the future. The recent condo auction at Harbor Pointe taught us – there are buyers out there, but they are at lower prices. This segment was by far the easiest to judge. My call – Buyers’ Market.
3. DEEDED LOT HOMES UNDER $1 Million - In rural Alabama, it’s hard to call a $400,000 home a “starter home” with a straight face. But that is about the price point of the lower end of the deeded lot single family home on Lake Martin right now. In the deeded lot homes priced under $1 million, in the last 12 months, 120 have sold, or 10 a month. 249 are for sale now. So we have about 25 months’ inventory. But looking at this inventory, if a few sellers got realistic and dropped their prices, I think they would sell pretty well. If homes in this segment are priced right, and are “good ones,” they sell in 45 days. But because there are many that are overpriced and have been sitting on the market, I really can’t say that it is still a sellers’ market. My call – Balanced.
4. DEEDED LOT HOMES OVER $1 Million - This segment is harder to compare with prior years, because the rate of increase on investment has meant that many homes are now worth $1 million whereas in prior years they would be at $750k. To be fair, you really would need to compare homes over $1 mill today with homes over $750k in 2005. Right now, there are 66 for sale. 17 have closed in the past year, or about 1.5 a month. So we have about 44 months, or almost 4 years’ worth of inventory. Most of these are new construction spec houses being sold by builders. They are getting aggressive – dropping prices and adding incentives. My call – Buyers’ Market
5. LEASED LOT HOMES – 15 have sold in the past year, and right now there are 15 for sale. So there are 12 months’ inventory. I had one listed, we priced it aggressively, and it sold in 81 days, which is about the average time in a balanced market. Looking at the inventory, I think some are better values than others, so if they adjusted prices they might sell more rapidly. My call – Balanced.
Are you considering buying Lake Martin waterfront property right now? Why don’t you let me help you find what you need? I can help you sort through the above 5 segments FOR FREE. Sellers pay the real estate commission. I can help you with any Lake Martin waterfront property, regardless of who has it listed. An average real estate agent won’t help you much. A good realtor will save you money and time.
Great content for a post! The consumers in your area are lucky to have a great agent keeping them so informed.
I loved the structure of your post, if you don’t mind I think I will duplicate it for my area data.
Thanks! This post ended up being a little longer than I had hoped, but I couldn’t think of a way to break it up without losing context. If you like the format, be my guest!
Great analysis. I had already noticed a trend towards lower prices on the high end homes, but wasn’t aware that so few lots were selling.
John, excellent analysis and well written! I have two
questions, 1) is there a rule of thumb for waterfront lot
pricing ie. dollars per waterfront foot?, and, 2) does the
fact that Russell accounts for so many of the waterfront
lots and the fact that they don’t need to sell in a timely
manner, (if it doesn’t sell this year, there’s always next
year) have an effect on the “time on the market” for lots?
I’ll look forward to your response.
Ron, thanks.
1. Great question. I have not come up with a perfect formula to yield a rule of thumb for price per waterfront foot. Because intangible factors such as view and privacy count for so much dollar value on the lake, it is (I think) a fruitless excercise. I can point to many examples of where a 300 foot lot in a swamp in the back of a cove sold for half of the price of a 150 lot on a point with deep water. I wrote a post on this subject back in February entitled “5 Mistakes Buyers Make on Lake Martin.” Look on the right column of this page and under Archives click on February. Scroll down to read.
2. Currently Russell Lands does not publish its sales data in the MLS or anywhere else. If it did, we certainly would have a more complete picture of the market. So when they open a new development, like the Ridge, and sell lots to builders or civilians, we can’t see that price. Of course, when the civilian or builder turns around and sells through the mls, then realtors can access that info. You are correct that it also distorts the statistic “time on the market,” but only if you are looking at the market as a whole. Since it is not in the mls, it is not “on the market” of the mls. I can’t really speculate as to why they choose not to publish their sales data. I guess they figure that they are a private company and the sales data is their private business. But you’re right – if they at least gave other realtors that information, we would have a much more complete picture of the Lake Martin real estate market.
Excellent questions, Ron.
Does anyone else have any thoughts on his questions? I would be interested in the responses.
Thanks.
[...] In 1776 Smith established himself as one of the most influential economic philosophers when he penned Wealth Of Nations. He described the natural economic forces that have existed since the caveman wanted to trade his neighbor one rock for two bones. OK, so maybe he’s not responsible for the slowdown, but he was the man who so eloquently described what is - Supply and Demand. [...]
John… great blog. We have been looking at property on Lake Martin for about 2 years now… have considered seriously a few, but haven’t found what we are looking for yet. Tell me, do you think that the influx of condos on Lake Martin is good or bad? We are debating if we may want to start with a condo on the lake for a few years (5-10) and then move up in property from there. What are you seeing in the new developments (ie Stoneview Summit in Stillwaters)? Thanks for the great info!
Thanks Jennifer.
Condos good or bad? Matter of opinion I guess. Some people complain that they might lead to overcrowding the lake. Maybe so, but I really don’t think that you will have too many more over the next 10 years at least. You have to have a pretty good stretch of waterfront to do a condo project, and there just aren’t that many left. Lake Martin has well over 700 miles of shoreline, and when you consider that there are only about 7 or 8 open spots with 1,000 feet or more, that just isn’t that many. The rest of the open land is owned by Alabama Power or Russell Lands, who historically have not developed condos (but they may in the future, who knows).
The fact is that some peope like the low maintenance aspect of condos. Also with Lake Martin becoming a national draw, the farther away people live, the less they want the upkeep of a home, and like amenities like a pool, etc.
Investment wise, according to some non-scientific research, I found that condos have experienced similar gains in value to other types of waterfront property like lots and homes.
That being said, some people just want a home over a condo for the privacy factor. I can see both sides of the coin.
Yes there are many new developments like Stoneview Summit and many others. As I said above, right now is a great time to be a buyer in the condo market. Give me a call and I would be glad to explain the differences and pros / cons to each condo development.
Thanks,
John
John–Great articles on your blog: easy to access,based on research, clearly you know the lake. Those of us who use and love the internet appreciate your cutting edge approach.Thanks for providing something unique in the Lake Martin area—one of a kind!!
[...] 2. Why can’t he “say why?” I have already written in earlier posts about the number of Lake Martin waterfront sales declining in 2007, and that I think it is mostly related to over pricing by sellers. Does he disagree, or has he not figured that out? [...]
[...] the numbers here; now is a great time to be a buyer in The Ridge. Need [...]