I recently finished an appraisal assignment on a lake front home in Shelby, Alabama and thought I would share with you my findings. As in other sectors of the Birmingham, AL area real estate market, lake front home have experienced a decrease in sales volume. Check out the numbers below going back to 2005.
As you can see, from the 6 year period being looked at, the sales volume peaked in 2006 and then started declining. Over the past four years it has fluctuated in the 10-15 unit range. This is not unusual considering the fact that overall sales volume has been down, and since many of these homes are vacation get aways, buyers have not been as willing to purchase these homes with the uncertainty of the economy and job situation. Take a look at sales prices on these lake front homes in the chart below.
There does not appear to be a significant declining trend in prices but we do see less sales in the more recent years, which we saw in the previous chart as well. So it looks like while there has been a decline in sales volume there has not been too much of a drop in sales prices. At the current time there are approximately 26 lake front homes for sale in the Birmingham MLS, ranging in price from $148,000 to $649,900. At the current rate of sales this creates an oversupply of inventory, approximately 20 months worth. This oversupply is tied to the number of homes for sale as well as the rate at which these homes have been selling over the past 12 months. What do you think about these statistics?
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I would be interested in your opinion of houses located on Lake Heather in Inverness. How much, if any, do you believe they have decreased in value since 2008?
Thanks.
John David Hutto
Historically that area has been rather strong due to its popularity, however I have found that each segment of the market (different price ranges) performs diffently. For example I know some homes in that area are in the upper price bracket and those homes over $400-$500,000 have generally shown some decreases due to lack of available financing and the limited number of buyers for homes in that price range. Homes in the lower price ranges, which are more affordable may not be affected as much. I know there is some new construction in the area and that is providing lots of competition to the existing home inventory. The builders that are still in the business are cutting their prices to be competitive and this may be driving prices down to a degree. I don’t mean to be vague but each property is unique so I can only speak in generalities unless I had more info. on a property.
Thanks Tom:
One more question: Specific to Heather Point, would you venture an opinion as to what a lakefront house appraised for $680,000 in January, 2008 should appraise for today? The ad valorem taxes have decreased very little in that time frame?
Thanks again.
David Hutto
That would be very difficult to determine without doing an appraisal because the market has changed so much. Give me a call if you would like me to look at it more closely.
“Lakefront in Shelby County” probably doesn’t mean too much. You pick up the (Shelby County) side of Lay, not the Talledega side; Deerwood, Smyer, Wehapa, Pumpkin Hollow, etc, and a few houses on retention ponds in the upscale SDs. Given the disparities between these markets, grouping them all under “lakefront” isn’t too meaningful.
“Lay Lake Market”, like “Smith Lake Market” or “Lake Mitchell” would be more interesting and valuable to local apraisers.
Thanks for your comments Reese. You have a good point. I guess I could have been more specific regarding what sector of the market I was measuring. I will try to do that in the future. I was actually doing an appraisal on Lay Lake in Shelby county so that is where my data was from. The sales would have been homes on the main lake and not any of the smaller lakes like Deerwood, Smyer, Wehapa, or Pumpkin Hollow, which I am very familiar with. As you said, “Lay Lake Market” may have been a better description.