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Taking a Profit
Three case studies reveal “hidden equity” in lake homes
We have been reporting for some months now that the average price for a lake home has increased dramatically over the last several years. In fact, the single-family lake homes that have closed in the 12-month period ending September 20, 2021, increased 14.2% over the same period the previous year.
When we talk about this metric, we hear people say, “Well the average is higher because there are many more expensive lake homes that are selling. The same house is not worth significantly more than it was say seven or eight years ago.” While it is true that there are more expensive homes selling, there are more homes of every price selling. The only fair way to answer this question is to sample recent closings reported to the local Multiple Listing Service to see what that same house sold for in the recent past.
We are presenting three case studies below to see if lake homes are indeed appreciating that dramatically. To respect the privacy of both the seller and the buyer of these properties, we will be referring to the general area that the properties were located. The only methodology we used was to 1) stay at or below $1,000,000 in sales value, 2) select properties in different areas of the lake, and 3) look for the first sale date to have occurred in 2013 or 2014.
Case Study #1
For our first case study, we selected a property on the north end of the lake in the Manoy Creek area. The property sold in 228 days in 2013 for $489,000 with a list price of $497,000.
The property consisted of 4 bedrooms and 4 ½ bathrooms with a total room count of 14 rooms. The house was built in 2007 and had roughly 3,000 square feet of heated and cooled space, covered outdoor living and no garage.
The recent sale, which occurred this October, occurred after just 61 days on the market. The sales price was for the full asking price of $859,000, an increase of 76%. To be fair, the property had a face lift and enhancements made to the piers since the 2013 sale. The darker décor that was popular when the house was built in 2007 was updated to lighter and brighter schemes that are popular today. No significant additions were made to the house other than a new paint scheme and pier enhancements, so we think most of the value upgrade was market driven.
Case Study #2
This property is in the central part of the lake in a “mature” Russell Lands neighborhood. Like many homes in this neighborhood, this property was built in the 1970s—1975 to be exact. The property sold in 2013 for $600,000 with a marketing time of 57 days.
The house has 3 bedrooms and 3 baths with a 2-car carport. Square footage, according to county records, is approximately 2,050 square feet.
The recent sale, which also occurred in October of 2021, was for the full asking price of $975,000, an increase of 63% with a marketing time of just 44 days. Like the property in Case Study #1, this property did receive a new coat of paint but had no other extensive renovations. Again, the increase in value was market driven.
Case Study #3
This property is located on the southwestern portion of the lake near Nero’s Rock. We saved this case study for last because there was an unsuccessful attempt to sell the property in 2018, which gives us a read on the current strength of the market as well.
The first sale of the property was in October of 2014. The list price was $449,500, and the sales price was $430,000. The property was on the market for 238 days before it sold. The house was built in 1983 and consists of two structures—main house and guest house—totaling 5 bedrooms and 3 bathrooms as well as a detached garage.
The buyer performed fairly extensive renovations to the décor which included a full upgrade of the kitchen inside and the covering and screening of the outdoor terrace. In short, the house was transformed from a “cute cabin” to an “upscale cabin” with gourmet kitchen inside and out. A rough estimate would be around $125,000 in improvements.
After the improvements were complete, the property was put on the market in 2018 for $899,000, then reduced to $849,000. The property was on the market during the peak of the summer selling season and then withdrawn from the market.
This year, the property came back on the market for $1,099,000 and sold in 94 days for $1,000,000. To do an “apples-to-apples” comparison, we think it is fair to adjust the sales price to $875,000 to account for the renovations noted above. That results in an increase of 110% in just seven years. We would propose that the combination of the market and the renovations created a very attractive return for this owner.
These are just three random selections. Even so, we can make a case now that the prices for three individual homes on Lake Martin have indeed increased significantly over the last seven-to-eight-year period. This trend has definitely accelerated over the last two years as Case Study #3 would seem to indicate.
Clearly, people see a value for owning property in such a beautiful place. Over the last two years, having a place that you can practice safe-social distancing without being locked indoors has proven to be a blessing to those fortunate enough to have access to a lake home.
We hope that you find this to be helpful. If you would like specific information related to the value of your lake home, or one that you are interested in buying, please reach out to one of our Realtors®. They will be happy to help you determine the right value.