Market Report Past, Present and Future?

The combination of a declining stock market, growing unemployment and uncertainty about the results of the 2008 elections made 2009 a real estate market to forget for most! While we’re still a long ways off from the hay days of 5 or 6 years ago, 2010 did feel like a period of stabilization to some degree. People took some time to save a few pennies, get their finances in order and realign their financial priorities. While this will be a terrific shift in the long term, it will definitely keep real estate values on Northern Michigan vacation homes in check for some time to come. There just are not a lot of young families anxious to put themselves at risk with the purchase of an expensive weekend getaway. More difficult financing requirements will keep those who might be willing to take the plunge from being able to complete the sale.
Fortunately for us, we’re seeing the leading edge of The Baby Boomers heading north to retire. While many in this generation were hit hard with declining investment portfolios, most have put themselves in a position to comfortably retire and Northern Michigan is becoming an increasingly popular place to do so. Statistically, this generation of individuals is really a couple years away from retirement age, but they should continue to drive the market for the next 10 to 15 years.
This shift from vacation buyers to retirees is the reason that some segments of the market are performing much better than others. There simply aren’t a lot of people looking for a modest cottage to get away for the occasional weekend. Because this was the largest segment of available properties over the past few decades, there are a lot more available cottages than buyers looking to purchase. Until the economy takes a dramatic turn upwards and confidence climbs, we believe prices in this segment will likely decline a bit more until the supply reaches the demand. Having said that, many sellers have done a good job of setting their prices at a fair market value. Looking at comparables that have actually sold will provide the best gauge on whether or not to purchase a particular home and for how much.
The flip side of that coin is properties well suited for retirement buyers. Low maintenance, energy efficient homes with single story floor plans, easy walkout access to the lake or river and in need of no cosmetic updating should be in a good position to sell for reasonable dollars. Proximity to city centers and amenities like dining, shopping and cultural events are also big bonuses. Competition for these homes remains fairly high and sales prices reflect it.
There are a lot of terrific homes out there that were built in the 80’s and early 90’s that were never updated aesthetically because they were used only on the weekends. The green shag in some looks as if it were installed yesterday. Today’s buyers seem unwilling to take on a home of this type which will require substantial effort and cost to bring the home up to today’s standards of finish unless the price is set extremely low. Other properties that will continue to be difficult to sell are those with split level floor plans that were so popular over the past few decades or those that have steep slopes to the water. Baby Boomers are looking ahead to the days when their knees and other joints may not allow them to attack a set of stairs like they can today.
The best advice we can give sellers today is to do everything possible to update your property to make it as appealing as possible. “Turn Key” is what most buyers are looking for. Paint old brown paneling with light neutral tones and change dated carpet to something more modern. Change dated linoleum flooring to tile. Get rid of any fixture or appliance that is Harvest Gold or Pea Green and, if your refrigerator has a Ford logo on it, replace it with a new one! The site of Rose Formica counter tops is not going to be an attribute in the minds of most buyers. Make small floor plan changes if possible to allow for a main floor master bedroom and bath or a laundry on the main floor instead of in the basement. Also do what you can to improve access. If you have a narrow goat trail leading down a slope to the lake, invest in a nice stairway with a bench halfway down.
In many segments we feel the “bottom” may have been reached while others have a ways to go most likely. Do what you can to make your property stand out against the competition, set your price relative to other similar properties that have actually sold, and listen to the advice of your Realtor so long as you’ve chosen one that’s forthright in letting you know what “needs” to be heard.