I took a look at the Lake Martin Multiple Listing Service (MLS) to derive some answers. Our MLS doesn’t have every single home sale in the lake area. For instance, a home sold “For Sale By Owner” wouldn’t be included, and occasionally developers choose not to publish every sale in the MLS. But, it does have a very high percentage of waterfront sales – I would hazard a guess at 90 percent of them. I think it is an extremely reliable indicator of value. Besides, local MLSs are where newspapers like the WSJ get their information.
I don’t often explore the non-waterfront section of our MLS, but this article made me curious. Which type of home has been selling more quickly lately? Waterfront or non-waterfront? And how would that stack up to the national average?
When comparing to the national numbers quoted in the WSJ, I decided to use more than one month here at Lake Martin. We are in such a tiny market; monthly statistics can be heavily influenced by one or two outlying sales.
My first step was to take a look at the average home sold in our area. According to the numbers reported by our MLS to the Alabama Center for Real Estate in 2016, using every home that sold, both waterfront and non-waterfront, the average Days On Market was 177. That is quite a bit higher than the national average of 53 DOM in February.
Then I looked at waterfront homes only. I found that in the three months ended March 31, 2017, the average Days On Market for waterfront only homes was 187. I can’t say that I was surprised. The 187 here at Lake Martin is a lot higher than the nation’s overall luxury market average of 100 DOM. But, we do follow the nation’s trend in that our luxury sales take longer than the average home sale.
What if I looked at the highest 10 percent of sales in the Lake Martin MLS?
When diving into these types of statistics, especially in a small market like ours, it is easy to end up comparing short-term results to long term ones. It would not be entirely accurate to compare, say, one summer month’s sales to an entire year or five-year trend. Since the WSJ article cited February, I wanted to be close to them with my end date. On the same token, we can’t really compare monthly sales in our tiny market to national statistics.
Therefore, I chose to look at an entire year but to end that year on March 31, 2017. In the 12 months from April 1, 2016, to March 31, 2017, 337 waterfront homes were sold. The top 10 percent would be about 33 homes. The top 33 homes sold in that period ranged from $825,000 to two homes that sold for $2 million. Those 33 homes had an average Days on Market of 166. The lowest was a home that sold in zero days, and the highest was one that took 532 days to sell. But the average was 166, or about 11 percent lower than overall waterfront’s 187.
This finding was very curious to me. Up until now, Lake Martin has followed the national trend. A home for sale in our “luxury market” (waterfront) takes longer to sell than the average. But we buck the trend when it comes to the top 10 percent of highest priced homes sold. The national trend of 34 percent higher DOM than luxury did not hold with us.
I have a theory as to why. The top 10 percent group is pricing homes more accurately. There might be more buyers in that segment proportionally, but that would be hard to measure. We know we are in a seller’s market, so the overall market direction can’t be to blame. The same agents are selling the top 10 percent that are also selling the rest, so that is a constant. That is how I arrive at price. It is about all that is left to explain it.
I am not surprised that Lake Martin’s Days On Market is higher than the national average. We are always higher in that category, no matter what type of market – a sizzling seller’s or a drought-filled doldrum. We have limited supply and about 80 percent second home ownership. As my fellow agent John Christenberry said, “We deal with buyers that don’t have to buy and sellers that don’t have to sell.”