Advantages for the Short Term
It is no secret that the national real estate market is in a slump. This slump has hit investors especially hard, and those holding waterfront property at Smith Mountain Lake, VA, are not exempt. This is the very reason that now is the time to buy real estate! There was a time back in 2005 when it seemed that waterfront property was being priced out of reach for all but a small percentage of buyers. We regularly heard comments from disappointed clients who said they had planned to purchase here for years, but by waiting thought they had missed their chance forever. Three years later we’ve learned this is not true.
It is no secret that the Kennedy fortune was made amidst the plummet of the economy during the Great Depression. In a recent interview, Donald Trump, recently commenting on the current state of the market, said, “This is where fortunes are made”.
It is a great time to invest in real estate at Smith Mountain Lake, but the window will likely close again soon. Here are some compelling reasons to buy waterfront property during 2008:
- Price Flexibility.
Sellers used to be reluctant to consider anything less than a near full-price offer and bidding wars were common. No more. This can be especially helpful with the massive equity that many sellers built up from the 1990s to the start of the slump. There is often plenty of room for sellers to slash prices and accept lower offers – and they are doing so.
Buyers in today’s market can choose from a vast selection of homes in all price ranges. There are over 400 waterfront single and multi-family homes plus nearly 500 waterfront lots on the market now. This imbalance of supply and demand provides the opportunity of a lifetime to find the waterfront property you’ve been dreaming of.
- Location and Features.
Buyers in the first half of this decade often had to compromise on the location and features of their SML home. Buyers today have a wide selection of both.
- No Competition from Investors and Builders.
Speculators and builders were gobbling up lots and other properties from 2003 to 2005, which artificially inflated prices. Those same folks are now selling their properties, so not only are you not competing against them – you are taking advantage of their misfortune. Another reason it is a great time to buy!
- Low Interest Rates.
Recent drops in mortgage rates mean thousands of dollars in annual interest reductions for most buyers. This means savings for you by buying now, but the stimulus from lower rates could also signal the beginning of the end for this unique buying opportunity.
I can hear the objections: “What makes you think the lake will turn around? What if prices continue to drop?” Why am I bullish on the long-term prospects for the lake? What makes me, and many others, think that prices in the lake are on a significant upward track over time?
The Long Term Windfall
Come short-term boom or bust, there are many reasons that buying at Smith Mountain Lake, VA may be the best investment you ever make. I have chosen to invest a significant portion of my portfolio here, and many others have done the same.
The retirement of the Baby Boom generation means that tens of millions of people are in the process of finalizing their plans to make their big move in the coming years. The majority of Americans live in the East and will likely remain in this part of the United States upon retirement. It is no secret that a significant proportion of these retirees are looking to live by the water or in the mountains. They want to slow down their pace, yet they still wish to enjoy the culture of nearby cities.
Smith Mountain Lake truly has all of this and much more. Every year we hear the same comments over and over. Recently, a couple from Pennsylvania who found Smith Mountain Lake on a map scheduled a two-day visit to check out the area. They had been looking all over the Northeastern seaboard for a place to spend their golden years. Their trip turned into six days. They bought a beautiful waterfront lot, and their home is nearing completion. They said they never imagined it would be so beautiful here. It’s people like this that are causing SML to grow in popularity every year.
Did you ever consider why the retirement of Baby Boomer Generation is so significant to the value of resort properties like those offered here? Statistics say the Baby Boomers have the greatest wealth of any group in the history of the world. One reason for this is the significant income earned by these individuals in recent decades. Much of this has been plowed into retirement plans that will be available soon. Many people think that there is no better use for these funds than to purchase a place to enjoy and continue to see grow in value. (I can’t sip coffee and watch the sun rise from deck of my mutual funds!).
A second reason for this Baby Boomer wealth is the unprecedented growth in home equity during recent decades. I regularly interact with clients who bought a home for around $100,000 that is worth close to a million dollars now.
Another often overlooked factor is the release of massive funds through inheritance. Statistics say that $8 trillion (eight with 12 zeroes) is being inherited from the passing of the WW2 generation in one decade. Amazingly, these funds are being received by the same people with the incredible wealth in retirement plans and home equity! And these are the same people who often want to live near water and mountains, often in the Eastern US.
David Stevens is the former Senior Vice President of Freddie Mac and the current President of Long & Foster’s Affiliated Businesses. David passed over waterfront properties all over the East Coast to purchase a vacation home here at SML. David said, “The Smith Mountain Lake area is a hidden gem for long term investment value. The ability to buy waterfront property at affordable prices, on one of the most beautiful lakes in the nation, still exists at SML. With the aging population aiming towards retirement on or near waterfront in temperate climate areas, combined with the unique timing right now of almost record low interest rates and a wonderful inventory to choose from, buying a home at SML in 2008 may prove to be one of the wisest investment opportunities for real estate available in the mid-Atlantic or Southeastern US. The reality is that this combination of great selection and low rates won’t last forever, which is why 2008 is such a key year for investing here.”
The wealth of Baby Boomers through retirement plans, equity growth and inheritance as well as their increasing penchant to live by water and mountains – many reasons to buy here. High inventory and selection, lower prices and seller flexibility, lack of competition and low interest rates – many reasons to buy now. The pieces of the puzzle fit together well. Does it make sense for you to invest in a piece of paradise at Smith Mountain Lake? I believe it does. But don’t delay – this window will close again soon.
Paul Moore is a realty agent with the Smith Mountain Homes Team at Wainwright and Company REALTORS® and author of The Definitive Guide to Smith Mountain Lake Real Estate (Morris Publishing 2008). He was Finalist for Michigan Entrepreneur Of The Year in 1996 and again in 1997 before relocating to Southwest Virginia.