Question: Are you finding any significant reductions in price on lakes such as Rennie or Spider? I own a home on Rennie… Last year when I looked, it did not appear that the lakefront homes in the $250,000 to $350,000 range had softened much and still seemed pretty highly priced based on the rapid appreciation over the past 5 or 6 years. Your opinion? Thanks, Terry
Hello Record-Eagle readers,
Generally speaking “Yes,” there have been significant reductions between the initial asking prices of homes with frontage on Spider and Rennie Lakes, and what those homes actually sell for, if they sell at all, over the last couple of years. What has been occurring on Rennie and Spider Lakes has been mirrored on other inland lakes in the Grand Traverse area as well.
Property values were increasing rapidly every year through the first half of this decade. 2005 brought a sudden leveling off of the usual steady increases in value, but most lakefront sellers (and most of their real estate agents) didn’t want to believe the bad news, and were slow to adjust accordingly.
Asking prices continued to climb through most of ’05, even though buyers were suddenly unwilling to pay evermore for frontage. Over time, asking prices have moderated as the market works its way through the relative abundance of property for sale. These trends are evident across virtually all of the Traverse City real estate market categories and price-points.
Keep in mind, only two Rennie Lake waterfront homes sold since January 1st, 2007, according to the Multiple Listing Service (MLS). There are presently six actively listed for sale, suggesting there is a three-year supply of inventory, if no more Rennie Lake waterfront homes are listed.
Spider Lake fared a little better last year, but not by much. There was also a 14-acre, 2,500+ frontage feet parcel that sold last year that will undoubtedly be developed into waterfront parcels, so there will be vacant waterfront lots available in the future, too.
We are not going to see additional or significant reductions in property values in Northern Michigan. We are basically looking at the bottom of the downturn right now. As the warmer weather moves in, real estate market activity will begin to heat up again — in fact it is already — and eventually all of the properties will start gaining value again. It is only a matter of time before the momentum of buyers builds, and the market swings back towards a balanced middle ground.
There is only so much waterfront property, ever more people, and our markets do not go through the 20-40 percent annual value swings the way some other markets like Las Vegas, Phoenix, or Tampa do. Plus, our property values are still very reasonable compared to most other similar locales across the United States.
Let us suggest this advice: Our local real estate market is currently what we call “Seller-Soft,” but this is a phenomenal time to buy homes and property. There is a wealth of properties available, interest rates are at lifetime lows, and to put it bluntly, with so many households facing foreclosure or at least financial difficulty relative to their oversized debt, much of the buying competition is being sidelined because of now-poor credit and an inability to borrow money.
Hope this is both interesting and helpful. Don’t hesitate to respond directly to TEAM MIKE with a comment below, or you can email either one of us at MikeGaines@C21Northland.com and Mike.Annelin@C21Northland.com. Just so you know, we got Terry’s approval to post his question here on Ask the Realtors — we will always respect your privacy.
Any of you who have so successfully been “Thinking Snow!” with us, you can knock it off now.
All the best,