The Lake Martin real estate market was honored again on November 9, 2006, by the Wall Street Journal’s RealEstateJournal.com, by being named a Top 12 Vacation Home market in the United States.
Regional and even national accolades are becoming common for Lake Martin. In other words, the news is getting out. I usually don’t pay much attention to such press, but this one really got my attention. Not that I don’t agree, I honestly believe we have a national treasure in our backyard. I can’t understand why anybody wouldn’t want a place on Lake Martin. I guess what really got my attention was the source: THE Wall Street Journal – the Beacon of Capitalism, the paper divinely scribed by Adam Smith’s Invisible Hand itself. I love it. I could read it with my hair on fire, as they say. So when they honored the lake – I noticed – and so did millions of other readers.
Economists and writers can study and parse data all they want, but they are merely confirming what we all know to be 
true. That is, while Lake Martin real estate prices have certainly risen in the last five years, on a national level we are still a relative bargain. And here’s a more important fact but you can’t graph it – Lake Martin is one heck of a beautiful place. I grew up on the lake, and therefore have talked to a lot of people about their families’ experiences here. Maybe I have only met the happy ones, but I have never met a single person that said “you know I really regret buying that place on Lake Martin.” Plenty have said “man, the biggest mistake I made was selling (or letting mama / daddy sell) that lake place.” Nobody ever quotes their Return On Asset or their Debt To Equity Ratio of their lake home. They talk about memories, fun, water, boats, fish and sun.
If you don’t like to hear all of that stuff, I’ll return to the hard facts of the Journal article. Sure, Lake Martin has beautiful water, great views, peaceful mornings, fun nights – a rich, memory making Petri dish. So do a lot of places in the nation. But what we do have – that most don’t – are low property prices relative to the rest of the country. I know it sounds crazy to the folks who have watched the prices rise – but the Journal’s statisticians looked and found that the property prices in Dadeville, Alabama – one of the towns close to Lake Martin – had really low property prices for second homes relative to local income and other economic factors. In other words, they found that chances are slim that we are experiencing a dreaded B-word in real estate prices. I agree with them. I also agree that there are certain segments of the market that have a lot of supply or are overpriced or both. But, when compared as a whole to the rest of the nation’s vacation markets, we’re still a bargain – and a memory maker to boot.
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I visit and boat over Lake Martin throughout the year, I see that most homes are just empty: no play, no swimming, no barbecue, no laughter. Except 4th of July or labor day, most houses are just sad and silent.
So, I wonder if the market is not just driven by speculation rather memory making- Just take note of how many properties are owned by real estate agents!!! But, I understand them, the prices in the last 3 to 4 years just went CRAZY.
Just like many others, I find it just stupid to try to own a home today on lake Martin. For the price of a cabin with a nice view, I could stach that cash and use just the interest to take my family every other week-end to Vegas, New York, Orlando, and similar top spot places and stay at 5 star hotels (including air fare and food!!!)
Condos already show signs of weakness: there are a lot of them unsold for many many months. The developers are maintaining the crazy prices, but throwing in so many incentives…. As for houses, I saw drops of 12% in value while other sellers drop in incentives such as leaving in place furniture, their water toys or paying one to two years of APC (Alabama Power Company) lease….
A value of any good is fundamentally tied to how you use it: at this time, it is much much too expensive to own and build memories in a cabin lake that starts at 400 to $500,000. It just does not make any sense, the market will correct itself, it already started correcting itself at Lake Martin.
Sam - thanks for the comments. You make some interesting points. I agree with you that prices have appreciated a lot. The first lots in Willow Point sold for $9,000 in the early 1970s. Now they are priced closer to $900,000. I also agree with you that there are a lot of condos unsold out there and that a lot of sellers need to adjust prices down.
That is about where the agreements end, though. Econ 101: the value of any good or service is tied to the law of supply and demand, nothing else. It’s worth what the market will pay, and for the past 40 years, the market can’t get enough of Lake Martin property. If you look at what property has sold for in the last 30 years, it has averaged more than a 12% increase per year.
As to you seeing “drops of 12% in value” - you must be referring to sellers dropping their asking price. Asking price and selling price are 2 different things. I agree that some sellers were asking ridiculous prices. Just because they drop the price and sell doesn’t mean they are losing money. The key is to study SOLD price data.
I disagree that the market is correcting itself. Over the past 3 years we have seen sales price increases of 30% per year. Obviously, no market can sustain that. I think it will drop back down to gains in the high teens. But to say that it will “correct” - like the stock market, as if the market will fall to price levels where people will sell at a loss - I would disagree there. True, there have been real estate bubbles at the beach and elsewhere in the USA but (so far) this hasn’t happened at Lake Martin because of tight supply. In most market segments, the buyers still outnumber the sellers. And long term, because of articles like the above, I think that will remain to be the case.
Thanks for commenting Sam! I love to hear different ideas and perspectives. You have added a lot to this blog by providing yours. Please don’t be a stranger.