Articles & News
Smooth Waters Ahead
Real estate market settles into normal rhythm
Sales for the last 16 months have been very busy for lakefront property, historically busy. The only comparable period on Lake Martin was 2005 through 2006, and recent sales volume and units sold have eclipsed those banner years. Business has been so brisk, in fact, that real estate professionals have been challenged to find available property to meet the demand.
As usual for our market report, we have compiled sales data for the last twelve months and compared it to the same period the previous year.* The most recent available data is for the 12-month period ending on July 31, 2021. That data indicated that gross dollar volume for waterfront residential property sales increased 34.5% over the previous year, while units sold increased 13.5%.
While both of those metrics are very impressive, the rate of increase is leveling off to some degree. Last month, we noted that the metrics for gross sales posted a 51.9% increase, and units sold increased 27.6%. This month’s lower rate of sales activity points towards a potential plateau.
The reason for the plateau is not due to a decrease in demand; rather it is due to a decrease in available supply. At the end of July, only 71 residential properties (single-family, townhomes, and condos) were available for sale on the 880 miles of shoreline. That supply is 37.2% lower than the same period the prior year. Property is selling much faster as well. Current average sales pace is just 102 days (a record low), well below the 170 average sales pace last year.
Property values are still rising
As you might imagine, with decreased supply, there is likely to be an increase in prices as well. The most recent metrics for residential waterfront indicate that both average price (up 18.5%) and median price (up 25%) are notching impressive increases. The list-price-to-sale-price ratio—a key indicator of demand—is higher this year as well. Over the last year, properties are selling at 98.1% of list price, compared to 95.6% for the same period the previous year.
These increases continue a multi-year trend for property values on Lake Martin. A steadily improving economy coupled with historically low interest rates supported early increases in values. The last 12 months’ increase in values were enhanced due to the lake’s peaceful lifestyle and the ability to practice safe social-distancing.
What to look for
We expect that average sales prices will continue to rise due to the likely limited supply and stay at or near these levels. We have noted that most sales for lake property are facilitated by low fixed-rate financing to well qualified purchasers. Past real estate bubbles ended after interest-only and adjustable-rate mortgages (made to unqualified buyers) reset to higher rates. That forced excess inventory onto a market already over-supplied with speculative inventory.
Current sales are to end users, not speculative builders, or buyers seeking to flip at a higher price. The foundation supporting recent sales values and the lake market appear to be on much safer footing. The addition of new dining and retail development in Alexander City and new lake community amenities such as Fanny Goldmine Diner and The Heritage Coore-Crenshaw golf course adjacent to Wicker Point will make the lake area even more appealing.
For potential property owners or for those considering the sale of their lake property, there is an abundance of recently purchased comparable sales data to review to determine a fair value. Our Realtors® have access to sales data that can aid in your decision making as well as the newest property offerings. If you would like to learn about values or available property, give one of them a call today.
*All data is developed from sales and listing information accessed from the Lake Martin Area Association of Realtors® Multiple Listing Service.