2013 real estate recap/2014 projections
By Bev Knight
Thanks to the high lake levels, recovering economy and low interest rates, the year 2013 saw a healthy improvement in the Lake Lanier real estate market. We’re starting to see a modest return of new construction, and the number of distressed property sales continues to decline. The inventory of lake houses on the market is substantially lower than in recent years, so there is more competition for the best-valued properties. Consequently, we are moving from a buyer’s market to more of a seller’s market, particularly in the lower price points. Competition among buyers means homes sell for higher prices which drives up all lake values. Buyers are still price-conscious, but they are somewhat more flexible than they were during the height of the recession. There are some fixer-uppers selling, but the fact that they are not move-in-ready substantially affects the price and increases the time it takes to get the home sold.
The Lake Lanier sales statistics through the end of November show a 28 percent increase over the previous year’s numbers. According to the First Multiple Listing Service (FMLS), a total of 214 lake homes with private docks sold in the first 11 months of 2013 compared to 167 in 2012. The biggest increases were in Dawson County which more than doubled the previous year’s sales, and in Forsyth County which enjoyed a 36 percent increase. Gwinnett and Hall counties’ sales remained about the same.
Regional home prices in general are on the rise, but the average price of Lanier homes actually dropped slightly from the 2012 average of $480,000 to $471,000 in ‘13. Contrary to what you might think, this does not mean that individual lake homes actually lost value. That’s not the case. Instead, it’s just reflects the fact that a lot more high-priced homes sold in 2012 which skewed the average price a little higher from a relatively small market sample. It is estimated that individual Lake Lanier home values rose between four and six percent in 2013.
There are several other statistics that add to the optimism for the 2014 lake market. First, the number of days on the market for lake sales dropped from 224 in 2012 down to 147 in 2013. In addition, sellers are getting much closer to their list prices up from 92 percent (list price/sales price) last year to 95 percent currently. That improvement is the result of a number of factors. First, sellers are pricing their homes more realistically. Internet-savvy buyers know the prices, features, and history of the lake homes currently for sale. Given the lessons learned in the recession, they are still very price/value conscious and will not buy a house that is perceived as overpriced. Sellers have gotten the word and adjusted their expectations accordingly. In addition, the lower inventory has created more competition for the most desirable properties. Not only does that cause the buyers to be less picky, but it ultimately drives prices higher. Other factors that continue to influence the market include the lake levels that have remained at or above full pool this whole year, interest rates that have stayed low, and the decrease in the number of distressed property sales.
So, what can buyers and sellers expect from the 2014 lake real estate market? There are several economic and financial trends that will impact our sales. Experts predict that interest rates will go up by approximately one point this year. On a $400,000 mortgage, the payment will go from just over $2000 per month to just under $2300. That will cause some buyers to have to look at lower priced homes. There may also be changes in the way individuals qualify for loans. For example, depending on what type of loan you are considering, the debt-to-income ratio may drop making it harder to qualify for a higher loans. That means there will be an even bigger buying pool for lower priced lake homes and fewer buyers for high-end properties. For the first time in a long while, inflation is expected to be a factor in this year’s economy. While that is bad news for some aspects of the economy, it’s usually good news for property values.
Going forward, experts are still predicting sustained growth in Lanier home prices between four and seven percent in 2014, especially if the lake level stays high. The number of homes purchased through non-jumbo loans will continue to grow at a faster rate than the more expensive homes due to the changes in lending rules and rising rates. Sales will continue to be particularly hot in the GA-400 corridor, especially in Dawsonville where the price points are a little lower. Though buyers are still concerned about the depth of the water at the dock, the longer the lake remains at full pool, the less that matters, at least for some people. All in all, the signs point to another great year for Lake Lanier real estate in 2014.
Bev Knight is lead agent for The Good Life Group at Keller Williams Lanier Partners, specializing in Lake Lanier property.
Posted Online 12/30/13