What do you know about Lake Martin waterfront lot pricing? In the city, it can be feasible to value a lot using multiple pricing methods, but at Lake Martin, it’s a whole different ball game. I’ve been telling buyers this for years based on anecdotal evidence, but now I have studied the Lake Martin MLS sales numbers and can back up my claim that the Comparable Sales method is the Lake Martin way to go.
Clichés are so… well ….. cliché. Part of the reason I started my real estate blog way back in 2007 was to examine, and publicize, what is really going on with Lake Martin real estate. I don’t claim to be the only voice for Lake Martin real estate, but I do hope to be a clear voice of the truth, looking past clichés, assumptions, agent puffery, and hocus pocus. Pretty is as pretty does around here. One of the biggest clichés or assumptions I constantly address with my buyers and sellers is how to accurately value a Lake Martin lot. Hence the need for this in-depth study.
In the first post I introduced three possible methods for valuing a lot: Comparable Sales, Price Per Waterfront Foot, and Price Per Foot/Acre. Hopefully I’ve already persuaded you that the Price Per Waterfront Foot method does not work as a primary method in the Lake Martin market. If not, click here to read Part I. Now I move to the Price Per Foot or Acre method . . .
Most consumers do not start their price valuation method with the size of a lot, but I do hear it as a way to justify one lot over another. Curious, I used the same tests of the scatter plot and correlation coefficient to test the relationship of the size of lots to eventual sales price. The result was pretty telling:
Once again, the scatter plot reveals how unrelated the two variables are. If they were dependent, we would expect to see results tightly formulated in a line pattern. Instead, it is loose. Similarly, the correlation coefficient is telling. For square footage or acreage to sales price, it is -0.02. That’s right, it is almost zero. That tells us that the overall area of a lot is even less of a primary driver in sales price as is waterfront footage. In fact, to return to another cliché, we can say that the size of a lot on Lake Martin has about as much to do with its sales price as the price of tea in China.
Price per acre or square foot is so unrelated, I can’t even recommend it as a secondary adjustment.
In the third (and final) post in this series, I’m going to walk you through the more accurate Comparable Sales method of valuing a waterfront lot. It, too, will be heavy on the nerd factor, but somebody’s got to crunch the numbers in order to speak real estate truth. Thanks for hanging in with me – I hope this is time well spent.
If you want to talk Lake Martin real estate – any topic, not just lot values – I’d love for you to give me a call 334 221 5862, or click here to contact me.
Links to Related Material:
Lake Martin Waterfront Lot Pricing: An In-Depth Study Part 1
Lake Martin Waterfront Lot Pricing: An In-Depth Study Part 3