This Man’s To Blame For Slow Lake Martin Market

The Lake Martin real estate market has slowed way down – it’s no longer a sellers’ market.  Who is responsible?

lake martin real estate property supply demandOne man – Adam Smith.

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.

That’s right – the Lake Martin real estate market has slowed down because of simple supply and demand.  Not because of the drought.  Not because of the Army Corps of Engineers, not Alabama Power, not Russell Lands.  Mr. Smith’s omnipresent Invisible Hand has suppressed the number of waterfront closings.  In the 12 months before August 1, 2005, there were 386 waterfront closings.  In the 12 months before August 1, 2006, there were 346.  In the last 12 months, that number is down to 226.  Looking back, the summer of ‘05 was the peak.  Face it.  There are fewer waterfront closings this summer.  But why?  In a free market, the more accurate question to ask is always ..

 

What has affected supply and demand?

 

 SUPPLY:

Easy explanation here.  Waterfront property has been on an unprecedented run since 1999.  Prices have skyrocketed.  Whether we’re talking waterfront property or widgets, more people are willing to sell at higher prices.  While supply will always be fixed (Lake Martin ain’t gettin no bigger), the quantity supplied this summer is higher than in 2005.  At the peak of the sellers’ market in 2005, there were only 126 waterfront properties for sale.  Right now we have 603. Per se, that might not contribute to a slowdown, but when taken in conjunction with…..


DEMAND:

As inseparable as yin and yang, you must consider both supply and demand in any free market evaluation.  lake martin real estate waterfront So where are all the Lake Martin buyers?  Anyone could tell you that they must be scared away by the increase in prices since 1999, but is it a true downward demand shift?  Are fewer buyers interested in Lake martin waterfront property now?  Or is it simply a decrease in quantity demanded

Has the drought, low lake levels, and high prices removed buyers from the market?  Is that why there is a surplus?  I think not.  Anecdotally, I am talking to more buyers now than I was in 2005.  Buyers that I talk to are not phased by the low lake level.  They understand that it is a 50 year anomaly.  Sure, I think that the drought has affected it some, by removing potential buyers out of the pipeline before they ever talk to realtors.  But I don’t think it has affected demand that much.  So I don’t think we’re experiencing a demand shift.

I think the Lake Martin buyers are still out there.  There are still plenty of folks who want waterfront real estate, but they want it at lower prices.  Case in point: the condo auction at Harbor Pointe.  20 waterfront condos were sold in three hours, when in the previous 12 months, only 34 had sold on all of Lake Martin.  Why?  Price.  The exact same condos that were listed on the mls at $420,000 sold at the auction for about $250,000.  This jives with my anecdotal evidence – from talking with buyers.  Plenty of people want to own Lake Martin real estate, but not at a crazy price.  This extends across all market segments – lots, condos, deeded lot homes, and leased lot homes. 

 

SO WHAT?

 

lake martin real estate lisiting agentSo what does this mean?  It means that buyers can exert their influence more strongly, by seeking out better values with research.  Don’t expect prices to return to the 1990s.  But buyers can find decent buys if they know how to research and if they let a good realtor help themClick here if you need help.

Lake Martin waterfront sellers need to get realistic.  Don’t price things based on what you wish you could get – check the numbers on sold comparables.  Hire a good realtor (read: me) that will aggressively market your property – and it will still sell, trust me

 

Related Posts:
Proof Of End Of Selllers’ Market On Lake Martin

Lake Martin Drought of 1941 Was Worse than 2007

Lake martin drought 1941

 

Lake Martin has been a victim of the 2007 drought that has affected Alabama and much of the southeast.  The lake level is down to 480 already, which is the normal winter level.

Apparently in 1941 it was worse.  50 feet down is about as bad as it gets.  I think back then they used to bring the level down in the winter by 30 feet anyway, so maybe the 1941 drought’s true effect was 20 or so feet.  Since this picture was taken in November, I am sure there is some effect of the winter level.

Still, 50 feet down is pretty bad.  I was shocked to see this in an email that was circulating around.  Maybe someone will debunk this as an urban legend, but at the very least we can be glad that we don’t have to make up 50 feet this spring.

Thanks to Eric of Lakedog Appraisals for sending me the photo!

 

Proof Of End Of Sellers’ Market On Lake Martin

lake martin property sellers 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 lake martin real estate Horse senseevidence, 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.

lake martin homes ridge4. 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.

Gov Riley Declares War On Lake Martin Water Level

Lake Martin real estate water levelGovernor Bob Riley has declared war with the Army Corps of Engineers over the Lake Martin Water level.

Apparently he is sick of seeing this drought affect Lake Martin’s water level drastically, while reservoirs that are upstream (read: in Georgia) haven’t felt the hurt like we have.  The Army Corps of Engineers regulate the flow on most if not all of these dams.  Riley contends that they need to release more water in Georgia to help Alabama.

Robert Price Prince, the general manager for Central Elmore (County) Water Authority joins Riley in his concerns.  The company’s water intake valve is at 474 feet on the Martin dam.  Any lake level below that spells trouble.

In response, the Corps has responded to say that they will increase water flow into the Tallapoosa / Coosa system and also reduce the required flow going out.  Hopefully this will abate the drop in the Lake Martin water level.

I guess that just goes to show you what a country boy can accomplish when he gets mad.  Lake Martin water level effect on real estateGuv can put the top back on that can of Clay County Whup A**.  I applaud the Governor’s passion and action.

I looked and looked for an online video of the Guv’s call to arms.  I saw it on the news the other night, and it was a classic Alabama rant.  There he was, up in the grill of the cameraman, tie loosened and sleeves rolled up, spitting and fuming.  Well, it worked!  Good for him.

Every time I see the Guv at a public event, he has the tie loose and the sleeves rolled up.  It makes me wonder, if he ever did get in an actual fight, would he tighten up the tie and roll his sleeves down?  Just wondering.  Kudos to Riley.

 

Related Posts:

Help Keep Lake Martin Water Level Up
Fourth Of July Fireworks Are On, But Don’t Try At Home

How To Get One-Up On Lake Martin Wannabes

Lake martin clean upHave you had Lake Martin waterfront property all of your life, but you’re tired of the Johnny-come-latelys who can’t find Chimney Rock without a GPS?  Or maybe you’re new to Lake Martin, and have heard enough hot air from old timers that think they should have shut the gates of the lake back in 1958?

Here’s a way to way to shut both of them up. 

Ask:

When’s the last time you volunteered your time for the Lake?

After they quit mumbling a response, get over on them by bragging about how you participated in the 2007 Lake Martin Clean Up.lake martin real estate trash

Each year, Renew Our Rivers (a joint effort between Alabama Power and the Middle Tallapoosa Clean Water Partnership) hosts a clean up day.  It’s a chance for regular folks to pitch in and help beautify Lake Martin.

When?

This year it is Saturday July 14 from 8 AM to Noon. (No, you don’t have to work the whole time.  30 minutes will do.)

Where?

Four locations: 1. Kowaliga Bridge Boat Ramp, 2. DARE Park, 3. Union Boat Ramp, and 4.Alex City Boat Ramp

Any swag?

You get a t shirt, gloves, and a bag.

Contact?

Tammy Jones (256) 234-5271 ext. 3

Results Of Waterfront Condo Auction – Harbor Pointe – Lake Martin

Lake Martin waterfront condo buyers flock to the condo auction at Harbor Pointe in Stillwaters.

Roebuck Auctions held an auction at Harbor Pointe Marina in Stillwaters last Saturday, July 7, 2007.  The bidding started at 11:07 AM, selling 20 units in the Harbor Pointe Condo development.  Chris Boden, representative of Roebuck Auctions, stated he thought the auction went very well.  He estimated that there were about 500 people in attendance and about half were registered bidders.  Boden confirmed that all 20 condos were sold and are under contract to close in thirty days.

Boden went on to say that the boat slips were not auctioned that morning.  They were pulled from the auction due to a “legal snafu” that the sellers were currently working out.  He said that 24 slips are still available, and they would be offered for sale first to the auction high bidders, then to existing Harbor Pointe owners.  Boden also said that some boats were sold, but since he worked on the real estate side, he didn’t really know the details on how that all turned out.

Lake Martin Voice roving correspondent Kirk Wascom had this report:

“I went to the Harbor Pointe Auction at Harbor Pointe Marina this past Saturday.  There was obviously a lot of interest given there were 300 other folks in attendance as well. 


The first condo sold for $385,000 and the last one went for $235,000, not including the 10% fee to be added.  They auctioned the condos on a buyer’s choice.  The first condo sold allowed the buyer to choose his/her choice of the 20 available waterfront condos.  The first one sold and chosen by the buyer would have been the one I would have chosen.


Although I attended the auction more out of curiosity and genuine interest, I did take my checkbook and a letter of guarantee from bank.  During my registration they asked me for my letter of bank guarantee.  However, a buddy of mine who also attended the auction was not asked to present one.  We registered at different times.  I guess it’s like buying alcohol; sometimes you’re carded and other times you’re not. 


In my opinion, I think those who were the high bidders and who got their choice of a condo got a good deal at a fair value.  It was all a win-win position for both sides.  Due to the number of buyers at the auction there was no way anybody was going to get a condo for some low bid price of $75,000 – $100,000.”

 

Thanks Kirk, for that report, and for the inspiration for this series of posts.

Does anyone else out there have a subject they would like to see covered by the Lake Martin Voice?  Speak up!  And watch out, you may be drafted into action like Kirk…..

 

 

Related Posts:

More Info – Harbor Pointe Condo Auction – Lake Martin
Lake Martin Voice Auction Post Linked By The Wall Street Journal
6 Questions To Ask At A Lake Martin Auction

You Are A Lake Martin HOBO

Lake Martin HoboWhether you know it or not, you are a Lake Martin HOBO!

Some Lake Martin area folks have organized the Lake Martin Home Owners and Boat Owners Association – and called it the Lake Martin HOBOs.  You don’t really have to be a waterfront home owner or a license toting boat owner to be a member.  So even if you are merely a fan of Lake Martin, you can join today

Coley Real Estate and the Lake Martin Voice are proud sponsors of the Lake Martin HOBOs.

Why a Lake Martin HOBO?

The Mission Statement reads:

“The organization’s mission is to work together with home owners, boat owners, local businesses, local, state and federal agencies and others to foster long term partnerships to preserve, protect and enhance the overall quality of life of all living things in and around Lake Martin – The Crown Jewel of the South, including, but not limited to, water levels and quality, shoreline preservation, fishing, wildlife, recreational activities and the safety of all boaters.”

Worthy goals all.  I think Lake Martin needs an association like this that will responsive to the people in the area, and that will balance quality of life issues with the realities of Lake Martin’s future development.

Please support the Lake Martin HOBOs!

More Info – Harbor Pointe Condo Auction – Lake Martin

Harbor pointe auction brochure - smallDue to many of you asking, here is more information on the auction for the 20 waterfront condos at Harbor Pointe, Stillwaters Development, Lake Martin, Alabama.

The sellers of the Harbor Pointe condos will do the absolute auctions first. The high bidder on the first one will get a free boat slip. The high bidder will then select which and how many condos that he/she wants at that price. So if the high bidder selects only one, then they do another absolute auction for the remaining 4, and so on, until there are no more. Then the sellers will get together to decide if they want to do any more as absolute. But you know that at least there will be 5.

They not decided when exactly that they will auction the boatslips.

Please note the auction will start at 11:07 AM. You pay a 10% buyer’s fee. You will be required to put down 10% of the price that day as a deposit. You will not be able to have any sort of contingencies whatsoever on the purchase, so if you will want a home inspection, for example, you have to pay for it yourself and have them inspect during the preview / inspection days.

2 of the units are building A. 3 are in building D. The rest – 15 – are in building E. Only 3 of the units are 2 bedroom. All of the rest are 3 bedroom. 1 of the D units is 2 bedroom. The other 2 are in the E building.

Here is the info that I found at the official site of Roebuck Auctions:

Location:

Harbor Pointe Marina
397 Marina Point Road
Dadeville, AL 36853

Date:
Saturday, July 7th, 2007 at 11:07AM CST

Preview/Inspection Dates:
Saturday, June 30th, 2007
10:00 – 4:00 PM
Sunday, July 1st, 2007
12:00 – 4:00 PM

PROPERTY FEATURES:

20 Luxurious condominiums on Alabama’s popular Lake Martin
At least 5 condos will be sold Absolute
The first unit that sells also comes with a free boat slip!
Beautiful 2 and 3 bedroom units
Very high-end interior finishes including:

stainless steel appliances
tile
granite/marble counter tops
More!
Harbor Pointe consists of (5) four-story buildings with common elements:
pool
pool facilities
pavilion
sandy beach
New and existing condo owners will also have the opportunity to buy a boat slip
25 slips will be offered at auction
all boat slips are adjacent to the condos
Unit D203 is set-up as a model unit.
Check-in here at the open houses
Auction will be held at the Harbor Pointe Marina showroom adjacent to the condos

SELLING FROM:
Harbor Pointe Marina Showroom

Real Estate Terms:

The high bidders will be required to place a bid deposit equal of 10% of the amount bid. Deposits will be accepted in the form of cash, checks with bank letter of guarantee, or certified funds.

Buyer’s Premium:

A buyer’s premium of ten percent (10%) will be added to the high bids to determine the total prices to be paid.

Closing:

The entire purchase price must be paid by Cashier’s or Certified Check, or wired funds at closing. No purchase shall be contingent on financing or any other contingencies.The closing shall take place not later than thirty (30) days after the auction.

Related Posts:

Results From Harbor Pointe Condo Auction
Lake Martin Voice Auction Post Linked By WSJ
6 Questions To Ask At A Lake Martin Auction

Lake Martin Voice Post On Auction Linked By Wall St Journal

Lake Martin Voice – your blog for Lake Martin real estate and area information – was honored recently by the Wall Street Journal online. 

On June 30, 2007, the print edition of the WSJ published an article on page B1 entitled “Home Going Once, Going…” about real estate auctions.  On the online version, at the end of the article, my post “6 Questions To Ask At An Auction On Lake Martin” was linked under the heading “Blog Posts On This Topic.”  It was one of only two such blog posts mentioned.  

You can try and click here for the link to the article on WSJ.  It should be active for a couple of days so that non-subscribers can read it.  I printed a PDF copy but it doesn’t show the link, so I print screened it (below).

Lake martin voice link in wsj
As an un-apologetic lover of capitalism, I hold the Wall Street Journal in the highest esteem. 
 
Thanks to all of you loyal readers and linkers that helped get this and other Lake Martin Voice posts noticed.  I try to be helpful by covering topics that interest you – so let me know how I can do a better job!
 
To the Journal authors, thanks again, Jonathan and Ruth!

6 Questions To Ask At An Auction On Lake Martin

Lake Martin Auction property home25 waterfront condos are being auctioned at Harbor Pointe in Stillwaters on July 7th.  Five of those will be absolute.  This auction follows on the heels of one earlier this spring.  Is this a sign of the times on Lake Martin?  Does this signal an end to the seller’s market? Are auctions a way to get a good deal on Lake Martin property?

Like any real estate transaction, every auction is uniqueThe person that does the homework will either come out of it with a fair price or avoid paying too much.

What questions should buyers ask before attending an auction at Lake Martin?

1.  Is this an absolute auction?  Always clarify this, but usually an absolute auction means that they must sell on that day, regardless of price.  Even if someone bids $1 for a Lake Martin condo, they must sell.  If it is not absolute, then ask what the reserve price is.  I’m sure they won’t tell you that, but no harm in asking.
2.  How many / which parcels are absolute? The Harbor Pointe auction will have 5 out of 25 absolute.  But,  if you see an ad for a different auction that says “40 condos for sale, absolute auction” maybe only 2 will be absolute. You want to be clear as to which are absolute and you want to make sure that you’re under the tent when they’re selling the absolute ones.
3.  Have these properties been for sale before?  The auction company may or may not know the answer, or they may or may not be obliged to tell you.  Here’s where your Lake martin real estate property auctionresearch comes in the picture.  How well do you know the Lake Martin market?  Or Stillwaters? Or Harbor Pointe? If the lake properties have been for sale recently, the listing prices can give you an idea of the seller’s expectations.
4.  What do you have to do to be a qualified bidder?  Usually you can give them a check for like $5,000 or something or a letter from the bank, usually it is better to set this up ahead of time, the week before the auction.
5.  What are the fees to the buyer?  Usually the buyer pays a fee above and on top of the bid amount  – this could be 5% to 10% – to cover the cost of the auction and the auctioneer fees.  This is sometimes a big part of their pitch to sellers.  They say, why pay realtor fees of 6% when you can make the buyer pay 10%?  Sellers think they are saving money but it all comes down to what is net to them anyway, and buyers figure that in when they bid and reduce their top number by, say, 10%.  Whatever.
6.  Will you send me the rules of the auction ahead of time? I ask for those.  I read everything.  Every auction is a bit different.  Maybe I will spot something that I didn’t think to ask about originally.
Sometimes I have Lake Martin buyers ask me about things like this, where I am neither the listing agent nor involved in any way. If they are interested, I can call the auction company for the buyer and register them as a potential bidder.  The auction company usually pays an extremely small “referral fee” to realtors like me when they register a buyer that is a high bidder.  This doesn’t cost the buyer a penny more because the buyer’s fee will be the same whether I call them or the buyer calls them directly.  But if I do call, I can ask them all of the above questions and give my analysis.
Lake Martin home auctionIn the case of the Harbor Pointe auction, I would run a buyer a report of all of the sales in Harbor Pointe in the last 2 years, and give a bidder an idea of what the exact market price should be on a condo there.  This gives you a pretty precise point to bid up to without getting hurt too bad.  Again, it won’t cost a dime more, and could arm you with a lot of information for the auction.  If my registered buyer is not a high bidder, they don’t owe me a penny.
I will definitely be watching the auction at Harbor Pointe to see what happens. (Thanks, Kirk, for the idea for this post!)

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