The winners of the 2007 Nobel Prize in Economics, are advising buyers to act now on Lake Martin.
OK, OK, maybe Leonid Hurwicz, Eric Maskin, and Roger Myerson haven’t come right out and literally said that, but a quick review of their work should tell you that they would advise it. Their work laid the foundation for mechanism design theory, which attempts to explain how sellers and buyers allocate resources in the real world.
Our old friend Adam Smith describes the theoretical world of free market capitalism, where buyers and sellers have perfect information. If a seller has 100 widgets, he sells exactly 100 for his lowest price and has no one asking for more. Exactly 100 buyers show up and buy them at their highest price, and no one walks away empty handed.
In the real world, however, information is not perfect. Sellers don’t know buyers’ top number. Buyers don’t know how bad a seller needs the money. Let’s say a butcher has 20 people show up for his 15 steaks, and 5 people go home mad because of the shortage. The butcher should have raised his price to the point that he had 15 and only 15 buyers. Classic shortage strategy. Or, what if it’s the opposite? Say the butcher has so many unsold steaks that he may be forced to throw out meat. That’s called a surplus. So the butcher should lower his price and sell the steaks rather than trashing them. If steak loving buyers realized that he was dropping prices, they should get off their duffs and get down to the grocery. Simple, right? Easily applied to Lake Martin real estate, right?
There is a surplus of Lake Martin waterfront property right now. At current buying rates, it will take 25 months to sell it all. That, my friends, is a surplus.
If you’re trying to sell your Lake Martin real estate, you should get realistic about prices. I am beginning to see this happen. There are very few sellers still out there that think that it’s still a booming sellers’ market. But have they learned the lesson enough to look in the mirror and lower prices on their own waterfront homes or lots? They all say “I know the market has cooled off, but…”
Lake Martin buyers need to come to the table. All through 2006, the only thing I heard from reticent buyers was “call me when this crazy market slows down, I’ll buy then.” Well, I’m calling. It’s slow. Sellers are hurting. Are you going to wait until it takes off again to buy? Don’t say I didn’t warn you.
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