From 1998 to 2005 Maine Waterfront real estate, including lakefront property, appreciated at a rate of 10 to 15% per year. Since Autumn 2005 property values have stopped climbing. In fact, in some cases, they may have fallen a bit. However, the bottom has not fallen out of the waterfront real estate market in Maine. Lakefront buyers who are waiting for a big drop in values might regret their decision to wait. Here's why.
The real estate here in Maine is different than elsewhere. Let's compare the market here to the one in Florida.Maine Waterfront compared to Florida
New Home construction in Florida was unprecedented from 2000 to 2005. Builders were building as if the demand would never slow. Oversupply had as much to do with the bubble bursting there as the slowing demand. During the same period, lakefront home values rose here in Maine because of strong demand for a limited fixed supply of lakefront property.
When it comes to lakefront property, God only made so much of it. During periods of high demand we can't make more of it. So when demand is high, values rise. When demand softens, values tend to even out or "plateau". Therefore the fixed limited supply of lakefront property gives stability to waterfront real estate values.Peaks and Plateaus - The History of Maine Lakefront Values
By the way, I picked up the term "plateau" from a seller client of mine. He purchased a modest camp on Big Sebago lake in 1962 for $12,000. Over the next 41 years his family enjoyed golden sunsets, sandy beach swimming and great boating and fishing. He maintained the camp but never got around to making any major improvements. I listed his place in 2003 for $549,900 and sold it for $529,900.
I would say that he made a pretty good investment. He described to me how the value of his property had trended up over the 41 years but never in a straight line. He said that the value would rise quickly for 3 to 5 years then plateau for 3 to 5 years then peak for 3 to 5 years again. This pattern of peaks and plateaus repeated itself throughout the term of his 41 years of ownership.
The Bottom Line
The sky is not falling and neither is lakefront property values. We've been plateauing for over 2 years. Should one wait till prices begin to rise before one buys? Should one deprive one's family the superb pleasures found in lakefront property ownership trying to time the market? Over the course of our lives we have only so many summers. On this cold and snowy winter's night your very special summer place beckons you with open arms.
Submitted by Tom Ferent, MrLakefront
Want to check out Maine waterfront real estate for real? Go to Lakefront Locator and see all that the state of Maine has to offer. Read more blog postings like these on the MrLakefront blog.
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