On one hand, I know that market corrections are common. I know that they’re necessary. I know that the money that evaporates isn’t really evaporated unless I sell. I know that the money that evaporated will come back, so long as I have a long enough time frame in mind. I know all of this and yet when the market punishes me for participating I can’t help but feel the need to make sure my wife knows we are broke. Groceries are unnecessary luxuries. What are we, the Rockefeller’s? Gasoline can be cut with water, right? Haircuts? I can cut hair, I used to cut my own hair when I was in high school, there’s not much to it. Kids college bills? These don’t even have my name on them!
Today the debate rages. Buyers see this equity downturn and say it’s going to mean they get to be more successful in negotiating. Sellers see the downturn and say it’s just a blip, just a needed correction. That it’s nothing to worry about and scarcity overcomes all. The question this morning is who is right? Which sentiment will gather steam and potentially adjust the lens in which we collectively view the lakefront and lake access market here? I have a few thoughts.
We’ve been through this before. Many, many times before. Most recently last August when we had a growth scare. Then again in the fall of 2022, back when we should have bought all of the equities. Those two sell offs were followed by rallies, so perhaps those aren’t the same as today. Time will tell if this is a market correction or something more meaningful, but this isn’t about the equity market, it’s about the lake house market. What will the pain of the last month mean for your lake house search or sale?
We can’t pretend that buyers don’t have more leverage today than they had a month ago. How could we be so simple minded as to suggest there isn’t some variety of impact from a 10% drop in equities? Let’s assume a contract negotiated today has some level of increased buyer advantage. That should be agreeable to all. The question I have is more related to the nonexistent supply of inventory. Will this downturn shake out some owners who were thinking that they’d just keep waiting for the market to move higher and higher still? I think it has the potential to do that, yes, but certainly not the guarantee. The August sell off didn’t induce inventory, for whatever that comparison is worth.
One of the issues with an open and free market is that buyers are free to make egregious mistakes, and there are a few such moves occurring right now. Sellers will see those moves in due time, and they’ll be emboldened by the reckless nature of a very tiny percentage of buyers. Buyers will see those moves and cringe. I suspect the market is going to build a few pieces of inventory in the coming month or two, and I’m going to be here to help buyers and competing sellers navigate the ever changing lakefront market. The mood today is anything but sanguine, but if this growth scare turns out to be indeed just a scare, then we can expect the sellers to retain control of this locked up market. But if the market sell-off continues and we all end up just a bit poorer, then buyers just might start to find some delicious seller flexibility that in recent years has been difficult, if not impossible, to find.