Market Report

Values continue robust increase

Spring has arrived at Lake Martin. This is the season temperatures rise, the lake levels rise, and property values rise. Temperatures and the lake level are guaranteed to rise; that comes with the season. Property value increases are not guaranteed, especially if the Federal Reserve is increasing the cost of financing.

We have watched the national real estate market with a great deal of interest in order to get a sense of what effect higher rates might have on the market. Judging from national statistics reported by the National Association of Realtors (NAR) and the Wall Street Journal, many market areas in the country have been adversely impacted by higher interest rates. But as the old saying goes, not all markets are the same. Especially Lake Martin.

Below are charts that graphically show key metrics for Lake Martin single-family waterfront homes. Each bar is the sum of 12 months of activity. For this study, we looked at the most recent data, ending February of 2023, and back to each February for the last 10 years. The charts are:

1. Current active listings for the last 10 years.
2. Units sold for the last 10 years.
3. Sales volume for the last 10 years.
4. Average sales price for the last 10 years.

The big story for the local market is not increased interest rates, but rather decreased inventory levels for available homes. The lack of available “for sale” properties has definitely put a crimp on the number of units sold (See chart below). As the old grocer said, “It is hard to sell from a bare shelf.” The COVID event, which created new and renewed interest in waterfront homes, cleared available inventory in 2020 through 2022.

Sales in 2021 reduced the inventory left for sale at the end of 2020 and virtually all of the 345 properties listed in that same year. Likewise, sales in 2022 sold the even fewer remaining homes and nearly all of the 317 properties listed for sale in the same year. That diminishing inventory has been a drag on unit sales (See Units Sold chart below). Since inventory levels were not being replenished at a rate sufficient to maintain sales pace and interest, the number of sales decreased.

Basic economics can predict the outcome for low supply and increased demand—higher prices. The chart below shows how lower inventory levels have continued to drive higher prices for single-family lake homes. Prices in 2014 averaged $508,167. Currently, the average price has more than doubled to $1,235,801.

That higher price per property has resulted in the third-best overall sales volume level in the history of Lake Martin, even with a rather “average” number of sales (See Sales Volume chart below). 2018 was the best year on record, prior to 2020, for sales volume on the lake; now that year ranks fourth-best on record.

Will the trend continue?

While market dynamics do change, we can only judge the future market by current sales activity for the last two months, which are very close to last year’s levels. The story will ultimately come down to demand, and current demand remains strong. A recent example: A newly listed property (listed below $1,000,000 asking price) had 11 property showings to qualified buyers in the first 5 days of hitting the market. The property sold for just above list price within the first week.

Local agents all report having multiple potential buyers with limited completed homes to offer. Much of the available inventory is “under construction,” when finished homes are in demand. Clearly there is continued interest in lake property, which suggests a continued healthy market.

While we do not expect a 26% increase in average property values like we experienced last year, the trend toward continued increases in values seems to be nearly certain given the supply of available property. This is the time of year when a new batch of listed property comes on the market. Given the numbers above, we hope that it is enough to supply demand. Time will tell.

If you need help making sense of the market, our Sales Executives stay on top of the market and the newest property offerings. If you want to know more about the upcoming opportunities on the lake, give them a call at 256.215.7011 or email [email protected] today.