If you’ve always dreamed of living on a lake, now is the time to buy, according to real estate professionals who specialize in marketing lakefront properties around Oakland County. But while the current market conditions continue to favor buyers, the county’s lakefront market has become more competitive among buyers when it comes to move-in-ready homes; so, if you’re serious about buying, you’ll probably need to strike a deal fast.
While inventory still remains high overall, there were 26.2 percent fewer residential listings on the market in March 2011 compared to March of last year, according to Realcomp in Farmington Hills, a provider of multiple listing services and real property data for Realtors. In March 2010, there were 11,041 total listings in the county, while in March of this year there were 8,149 residential and condominium properties up for sale in Oakland County.
The average amount of time a property remained on the market as of March of this year was 107 days, according to Realcomp. This is four days longer, on average, compared to those properties listed as of March of last year. Lakefront properties listed as of March 2011 had remained on the market slightly longer at an average of 170 days.
However, many of those houses that are staying on the market longer are what would be considered “fixer-uppers.” And according to Lee Embry of SKBK Sotheby’s in Birmingham, most buyers in the market are looking for houses that are ready to be immediately occupied.
“The market has changed considerably in the last three or four years,” he said. “(In the past,) people wanted to buy a house and fix it up — or buy it, tear it down, and rebuild. But right now people are buying homes that have already been fixed up and are ready to move into because banks are not making building loans and are not financing vacant property. Therefore, there are very few good homes on the market. There are still a lot of homes that need to be fixed up and those are just sitting there.”
Cheryl Yeager of Real Estate One in Commerce Township agrees.
“Price-wise it’s (still a buyer’s market), but trying to find the nice (homes) is a little harder,” she said. “There is a lot of competition for the good ones. There is a shortage of clean, ready-to-move-in houses, and if they are out there, typically there is more than one buyer for it out there.”
“We’re seeing prices down on everything, so if there ever was a time for someone who ever wanted to be on the water, this is the time,” she added. “There are houses that are in good condition and still have good value for the buyer, but you have to sift through so many houses that aren’t so good. If it’s good, you have to move quickly because other people recognize it.”
Cyndi Robinson of Real Estate One in Milford is seeing the same thing.
“We are getting multiple offers on lakefront properties,” she said. “Prices are low enough that it becomes a bidding war for a good one.”
Bradley Jernigan of Century 21 Town & Country in Clarkston said he has also noticed that, with fewer houses of good quality on the lakefront market, people are quicker to make an offer on a nice house.
“Inventory is much lower than in the past,” he said. “There’s less choice. It’s the time to make a move because when property comes on the market that represents good value, it goes quickly.”
For example, Jernigan cited a lakefront property in Springfield Township that has a sale pending at $38,000.
“Obviously it needs work, but to even buy a lot on an all-sports lake (for that price) is a great deal for someone looking to move onto a lake,” he said.
And people recognized its value because the property sale was pending just 20 hours after it became available on the market, according to Jernigan.
But it’s not just move-in-ready and “low-end property” that’s selling fast in northern Oakland County, Jernigan said.
“There’s currently a home sale pending on Middle Straits Lake (in West Bloomfield Township),” he said. “It was originally listed at $1.2 million and sold for $875,000 — which is a great deal for a prestigious lake like Middle Straits. The price was lowered on March 25, and we had an offer four days later.”
However, most buyers today aren’t as concerned with the “prestige” of a lake as they were in the past. Instead, it’s more about just being on a lake.
“Lakefronts are more desirable, and there are a limited number of lakefronts as each lake can only have so many properties available,” said SKBK Sotheby’s Embry. “It’s not like you can go out and tear something down and erect another subdivision.”
As for what county lakes are “most desirable” to live on, it all depends on what the buyer is looking for, according to area real estate professionals.
“Obviously, people buying lakefront have to consider what they are using the lake for,” Jernigan said. “Do they want a larger, all-sports lake? A private lake? If they like to fish, they want something with less traffic. So we are seeing deals basically on all the lakes.”
Real Estate One’s Yeager agrees.
“It’s all in the eyes of the buyer,” she said. “Some want private, no-motors-allowed lakes, and some want bigger ones. It’s whatever suits their needs.”
For some people, that depends on what school district the property is situated in.
“Lakefronts in the Walled Lake and Huron Valley school districts sell more (in my area),” Real Estate One’s Robinson said. “I think school systems are a big draw because the people with lakefront (property) are typically people with kids — so they can boat, ski and jet ski. Lakes are family-oriented.”
Yet, it essentially all boils down to the property itself.
“I deal with lakes all day and all night long, and it looks like all the lakes are starting to sell again,” Embry said. “There’s no rhyme or reason to which lake is better. It’s what houses come up for sale on the lakes. If there is a good house that needs no work, has a good price, and has good value, the house will sell right away, no matter if it’s on Williams or Deer or Lake Angelus, Orchard or Pine (lakes). The buyers out there are savvy enough and looking at lakes enough that they know a good deal when they see one come on the market.”
“It all has to do with the desirability of a property itself,” said Pam Ford Morgan of Morgan and Milzow in Clarkston. “It depends on now well it’s maintained and how well it’s priced.”
And prices right now are favoring the buyers in the market, due in part to a relatively large amount of inventory created by foreclosures and short sales.
“There’s too much supply,” Robinson said. “There are a lot of distressed sellers, but there are also a lot of people who may not be in distress, but they lower their price just to compete. So it’s a good time to buy for people with money and a job.”
Embry is on the same page as Robinson.
“It looks like the homes that are selling are selling at record-low prices,” he said.
Prices are also favoring buyers since many sellers have become more realistic in setting their asking prices.
“Pricing is far more favorable now,” Ford Morgan said. “Sellers understand more where we are. I think a lot of lakefront owners were hoping for a quicker recovery. I think now they are more realistic.”
However, not every seller has made adequate price corrections. Ford Morgan said there are still lakefront homes on the market that are “grossly overpriced,” and Century 21 Town & Country’s Jernigan said he has seen the same thing.
“I think more people are getting realistic about the value of their homes, although not all because some have that personal connection to the home,” he said. “So they won’t accept what a real estate agent says is a realistic price. They won’t accept what the market is telling them.”
This can pose problems for some buyers, according to SKBK Sotheby’s Embry.
“There’s still a lot of homes that need price corrections, but for the people who have already made corrections it’s a problem because in the market, buyers can’t differentiate between what’s already been corrected and what hasn’t,” he said. “So the buyer comes in with 30 percent below the asking price whether it has already been corrected or still needs to be corrected.”
And although there will always be people looking for a better, cheaper deal on a house, for the most part, Realtors agree today’s buyers are more educated.
“I think buyers have a better understanding of where we are in the market,” Ford Morgan said. “I don’t see so many people looking for a real great deal because I think most people realize houses are priced well. Buyers are very educated.”
Real Estate One’s Yeager agrees.
“If it’s something they want, they need to step up to the plate and not hold out (for lower prices),” she said. “And when they see a good deal, they are stepping up because they are so educated.”
While it seems that both sellers and buyers are now more educated, some Realtors say they believe that price corrections have almost gone too far, a symptom due in part to appraisals.
“Banks make it a buyer’s market because they are artificially keeping prices of homes down because of appraisal issues,” Embry said. “In order for you to get a mortgage on a house, you have to have an appraisal on the property, and there aren’t enough comparable (home sales) out there to get appraisals on a house. And with foreclosures, banks are not appraising properties correctly.”
“Banks have done an over-correction in the wrong direction,” Yeager said. “There are good houses out there, but they’re not appraising (correctly) because of the deflated prices from foreclosures and short sales.”
Nevertheless, Realtors specializing in Oakland County lakefront properties remain optimistic about their prospects for the remainder of 2011.
“In 2009, we had a minimum amount of houses sold on lakefronts, and in 2010 we doubled what we sold in 2009,” Embry said. “Now we’re on our way to double that again this year, which is still not getting us back to where we were but if we can double everything each year, we might get back eventually. And the upper-end lakefront homes seem to be coming back. They were virtually at a standstill in 2009. But they doubled (sales) in 2010, and it’s on line to more than double this year. And we are talking about $1 million-plus homes here.”
A big part of that is because there have been such dramatic decreases in sales prices.
Ford Morgan said she’s seen a slight increase in home sales because of slashed prices across the board.
“Houses on the market were $500,000 and are now selling at $400,000,” she said. “The reason they are selling is because they are priced more favorably.”
Century 21 Town & Country’s Jernigan and Real Estate One’s Yeager agree.
“Sales have actually gone up a little from last year due to inventory levels,” Jernigan said. “That’s why people are seeing more sales, because people are realizing homes won’t be staying on the market as they have in prior years. If they are going to make a move this year, they need to be serious.”
“If someone’s hanging on the fence, there is never going to be a better time (to buy), between prices and interest rates,” Yeager said. “If they wait, they may look back sometime in the future and ask themselves why.”
Although it will take a while for the county’s lakefront real estate market to favor sellers again, Realtors also say they feel the values for lakefront homes are showing signs of edging upward.
“They are increasing because they already hit bottom,” Jernigan said. “The market got rid of people who had to sell. Now people might want to sell, but they don’t have to. They don’t have to sell unless they get their price. Before, they were forced to sell because they found a job elsewhere.”
And while some agree with Jernigan, others remain cautious.
“I hope they’re at a bottom now and stabilizing somewhat,” Yeager said. “But I think we really won’t know until get past the lakefront time this year, which is typically as the weather breaks — through the summer is when people get the bug for it.”
According to several Oakland County assessors, lakefront property assessments continued to slide in most communities last year, just as non-lakefront residential property values did. In some communities, lakefront property values are falling at the same rate as non-lakefront residential properties in the same community. That’s a departure from recent history and tradition — lakefront residential real estate traditionally has increased in value at a greater rate than non-lakefront residential properties, or at least held its value more so than homes situated away from the water. But, not any more in some county communities.
Waterford Township Assessor Don Wood said he saw a parallel decline in values for lakefront and non-lakefront residential properties during 2010.
“Both values are falling,” he said. “Both (lakefront and non-lakefront residential properties) fell about 14 percent. Now, some went down 20 percent, some just 8 percent — it’s been all over the place. But on average, (lakefront and non-lakefront homes) went down at the same rate last year.”
Yet, Wood said lakefront residential property is still more valuable than non-lakefront residential property.
“We’ve always had two levels of residential property — lakefront and non-lakefront,” he said. “Non-lakefront historically has a lower value. If you have a 2,500-square-foot non-lakefront house, the same 2,500-square-foot house on a lake still costs more. It’s just that they’re losing value at the same rate. They’re parallel.”
In some cases, the drop in lakefront values wasn’t as great as it was for non-lakefront residential property values in the same community.
West Bloomfield Township Assessor Lisa Hobart, who last year at this time reported that lakefront home values fell for the first time in that community based on 2009 sales comparisons, said lakefront property values fell 6.5 percent over the last year, while non-lakefront home values fell by an average of 7.9 percent.
“This would be more representative of the traditional, historical wisdom (that lakefront property holds its value better than non-lakefront property),” she said.
Tracy Jones, chief of equalization for the Oakland County Equalization Division, said lakefront parcels in the communities contracting with the division for assessing services have held their values as well as they have in the past, or at least held them as strong as the non-lakefront properties.
“Any real estate professional will tell you that in a good market, buyers generally perceive waterfront to be more valuable and are willing to pay more for it,” Jones said. “However, the economy in the last few years has not been ‘good.’ This might explain why some of the sale values have not held as strongly as in the past few years.”
The following are the latest percent decreases in assessed values for both lakefront and non-lakefront residential properties in several Oakland County communities that contract with the county’s Equalization Division for assessing services:
• Commerce — Lakefront property values fell an average of 6.99 percent in the last year, and non-lakefront properties declined 6.55 percent in value. Last year at this time, the Equalization Division reported the township’s lakefront property values had declined by an average of 14.8 percent, while non-lakefront property values also fell an average of 14.8 percent.
• Highland — Lakefront residential property values dipped 6.95 percent on average during 2010, while non-lakefront property values slid 9.24 percent. A year ago the Equalization Division reported the township’s lakefront property values were down an average of 13.2 percent, compared to a 14.2 percent drop for non-lakefront residential properties.
• Orchard Lake — The city’s lakefront residential properties declined an average of 5.63 percent in the last year, while non-lakefront property values dropped an average of 5.66 percent. A year ago, it was reported that the city’s lakefront residential property values fell an average of 15.56 percent and non-lakefront property values decreased an average of 16.2 percent.
• Walled Lake — Lakefront property values around the lake (situated in both Novi and Walled Lake) dropped an average of 5.62 percent during 2010, with non-lakefront values in the two cities falling an average of 12.8 percent. Last year at this time the Equalization Division reported lakefront property values were down an average of 12.3 percent, while non-lakefront values sank by an average of 17 percent.
• Sylvan Lake — The city’s lakefront property values plummeted by an average of 25.89 percent in the last year, while non-lakefront residential property values slumped an average of 15.73 percent. Last year the city’s lakefront property values were down an average of 9.19 percent and non-lakefront values plunged by 15.1 percent.
• Keego Harbor — Lakefront residential property values have tumbled in the last year by an average of 9.46 percent, compared to an average 14.04 percent fall in non-lakefront property values. According to the Equalization Division, the city’s lakefront property values were down an average of 14.8 percent at this time last year, while non-lakefront property values ebbed an average of 17.7 percent.
• Orion Township — Residential lakefront property values are down an average of 8.26 percent, and non-lakefront residential property values are down an average of 9.08 percent. The township’s lakefront property values were down an average of 12.2 percent at this time last year, and its non-lakefront property values were 13.1 percent off the previous year’s mark.
• Oxford — Lakefront property values have come down an average of 2.34 percent in the last year, and non-lakefront property values are down 3.28 percent. Last spring lakefront property values were down an average of 14.9 percent, and non-lakefront values were 14.4 percent below the prior year’s figure.
• Holly — Lakefront property values receded by an average of 2.21 percent during the last year, while non-lakefront property values tumbled an average of 7.19 percent. At this time last year, the Equalization Division reported lakefront residential property values down by an average 14.1 percent, compared to non-lakefront residential values lagging by an average of 15.1 percent.