The Second Home Market – Healthy, And Only Getting Healthier
Near Northport there is a luxury house along the sandy Grand Traverse Bay shoreline listed for $1.38 million, which recently hosted a flurry of interested buyers and basically serves as an economic barometer for up-and-coming real estate professional Aric Browning.
“We are getting a lot of baby boomers and it’s not about downsizing anymore,” Browning said from his Traverse City office. He explained how second home searchers from places such as Grand Rapids and Cincinnati, Ohio, are coming back “up north” to find their perfect getaway.
Northwest lower Michigan’s traditionally powerhouse second home real estate market purportedly didn’t take as bad of a fall during the recent economic recession as the homestead market did. In fact, key players in the area’s premiere real estate industry contend they are essentially returned to business as usual.
The region’s base price for deluxe second homes typically is $500,000, though many boast price tags closer to the $1 million-plus range. That’s especially the case in Leelanau County, where records show 15 big properties hit the market since January last year and all beyond the million-dollar mark.
“The luxury home market in Leelanau County has definitely skyrocketed,” said Browning, of Coldwell Banker Schmidt Realtors. “It’s back on track. You can see a dramatic increase from just 2012 to now.”
Since the start of 2014, the highest listed price in Leelanau County is $3.9 million and the highest selling price is $3.1 million, according to figures from the Northern Great Lakes Realtors MLS provided by Browning.
Some of the economic strength there is thanks to other sorts of developments. Again, take Northport for an example. What once resembled a bit of a bleak ghost town, especially during frigid winter months, now swings with year-round activity.
“Northport has rejuvenated itself,” said Browning. “There was nothing to do in Northport, but now retirees are moving in and running new businesses, like bars and restaurants. And it happened in the blink of an eye.”
He’s not the only one who has noticed the luxury home market turnaround.
The entire Antrim, Benzie, Grand Traverse and Leelanau counties’ premiere home market is on an upswing, said Perry Pentiuk, a top local builder and real estate broker.
“Home values decreased for about three or four years until about the end of 2011,” said Pentiuk, who nearly three decades ago founded Leland-based Venture Properties and Coastal Building Company. “Some areas declined by over 30 percent during that period. In most areas we have regained that amount and more since then.”
Pentiuk further explained how vacant land in some areas struggled in recent years because of the high cost of building new, which makes existing homes “a bargain” for buyers.
“East and West Grand Traverse Bays in Grand Traverse, Leelanau and Antrim counties … all have recovered nicely in general, with most appreciation and demand being away from overly busy roads and not too far from Traverse City or coastal villages,” Pentiuk said. He further added that split-road frontage — private waterfront separated by a road — is a much tougher sell than direct waterfront but is priced much lower.
Browning said he believes the area’s combination of natural beauty and abundant fresh water bodies is now again driving the property value growth. It also helps to stay a bit tucked away from bright city lights, he said.
“Traverse City is getting packed in,” Browning said. “Leelanau County maintains a sense of seclusion. It’s Leelanau County. It’s sacred in its way.”
There also is significant luxury real estate growth on the eastern side of Grand Traverse Bay and as the coastline continues northward toward the Straits of Mackinac. Plus, a lot of the major action is not always on a Lake Michigan coast, one expert said.
“There are some areas that are not as impacted by the economy,” said premiere properties agent Kyle Lieberman, of Petoskey-based Kidd & Leavy Real Estate firm. “Walloon Lake has been really, really busy. Its dip was a lot shorter and a lot shallower than other areas.”
Add to the market equation a more limited luxury inventory than six-to-eight years ago and the listed property turnover rate becomes much shorter, he said.
“Our inventory is about one-third of what it was during the sluggish part of the economy,” Lieberman said. “In the last couple of months we’ve done a couple transactions on properties that had been on the market for years. The older, stagnant market is starting to move again.”
When it comes to the Lake Michigan shoreline through the Charlevoix and Emmet counties’ region, Lieberman points to Harbor Springs as the current hot spot to rise out of the economy’s recently static ashes. “We’ve seen a lot more activity in the last six months there than the last several years,” he said.
So where’s the best place for shoppers to find the real steals?
Lieberman said along the inland shoreline of Burt Lake and throughout Michigan’s northern Inland Waterway is an area where values remain a bit sluggish and it’s been “slow to get its feet up.”
“Along the Inland Waterway, the next handful of people to make their move will get the best deals,” he said.
But longtime broker Pentiuk encourages secondary home buyers to make their own choices and become well-educated before making purchase offers.
“Find an area that you are passionate about and do your homework,” he said. “Enlist the service of a local agent or broker who has a proven track record in the area of interest and learn all you can.”