In the spring and early summer of 2023, the lakefront market introduced a meaningful supply of new inventory priced between $3.2M and $7M. Historically that price range would not operate as one market segment, but last summer that’s exactly what happened. The low end of that spread sold quickly, but the homes priced $4M to $7M did not. There wasn’t enough of a quality spread between a $6.9M listing and a $4.9M listing, and so the market viewed these as one market segment. Buyers borrowed a line from a conversation between Mr. Gilmore and Mr. Barker and summarily responded to pricing by telling sellers that the price is wrong. The result of this push back was a drop in list prices and the ultimate return of some buyer control.
Fast forward to this late spring and those lakefront homes have largely all sold. Most of them only sold after some significant price reduction, although you could wonder if I had more of that aforementioned inventory perhaps that wouldn’t have been necessary. Alas, it was necessary and the properties sold. The market has demand, it just needed to be matched with accurate, not aspirational, pricing.
Today, this isn’t about the lakefront market. It’s about a lake access segment that I see adding significant inventory over recent weeks. The question is whether or not buyers will continue to snap up the inventory in this particular segment, as they have been doing with vigor over recent years, or will they see a flush of inventory and assume, as the lakefront market did last year, that pricing is no longer accurate. I’m in the front row watching, eating all sorts of terrible movie theatre food, wondering what will happen next.
My bet is that any segment that sees a rush of new inventory will struggle to see it all absorbed. If we’ve learned anything here it’s that market time is detrimental to value, and so we should expect to see pricing soften somewhat in this particular vacation home segment. On the other hand, if this market absorbs the new inventory I’ll take that as a harbinger of the broader market and assume there is more strength out there than I might have otherwise thought. The good news is that markets don’t lie in hindsight and at some point I’ll be able to tell you what happened.