Homeowners biting at lakefront living in Tennessee; $1.8B in homes are for sale
Terry Bowman and her husband Barry Owens grew up around Indianapolis but when they wanted a second home they looked at lakefront properties across the South.
“We wanted a relaxing place where we could boat and water ski on a lake of some size,” Bowman said.
Ultimately, the Indiana couple bought a lakefront home last month on TVA’s Watts Bar reservoir in Ten Mile, Tenn., where they found both plenty of land and more reasonable prices and taxes than most other lakefront properties.
“The mountains of East Tennessee were very attractive and, after buying and living in nine different homes through my life, this seemed like a great place to live,” Bowman said.
Bowman is buying into East Tennessee’s growing billion-dollar lake real estate market, which has slowly rebounded from the housing collapse of a decade ago. A new report by Lake Homes Realty, a Hoover, Ala.-based real estate agency that specializes in buying and selling lakefront homes in 19 states from South Carolina to Minnesota, found more than $1.6 billion of lakefront property listings on the 43 lakes in Tennessee.
With lake real estate listings totaling more than $137.6 million, Chickamauga Lake has the sixth-largest lake real estate market in Tennessee. Nickajack Lake sports a $59.6 million active listing value and has the second-highest average lake home listing price at $766,611.
But the values of lakefront homes, which soared more than a decade ago before the housing collapse depressed prices and forced major waterfront developments on Watts Bar and Nickajack lakes into bankruptcy, haven’t yet rebounded to their pre-recession levels.
“I see a great market right now with a lot of interest buyers, but we have a major inventory problem,” said Daniel Burnside, a real estate agent for the past 15 years in Chattanooga who joined Lake Homes Realty last December to focus entirely on lakefront homes. “God is not making any more property and there is tremendous appeal by many people to live on a lake. Once you find your ideal home with a dock on the lake, you probably don’t want to sell.”
The tight inventory tends to push up prices, but lakefront properties are not soaring to their pre-recession heights due to a more cautious attitude among both buyers and lenders, Phillips said.
“Unlike prior real estate cycles, most markets are seeing a new buyer behavior,” said Glenn Phillips, president of Lake Homes Realty. “As a whole, lake real estate buyers are not yet in any rush to pay higher prices even when supply is very limited.”
Lake homes priced at $1 million or more are selling, but Phillips said “these are still not in high demand in most markets.”
Chickamauga Lake currently has 22 homes listed for $1 million or more, including three in Harrison priced at $2 million or more. Nickajack Lake has 16 home listings above $1 million, including two homes along Hillcrest Drive on the river near the Chattanooga Golf and Country Club priced at $2.75 million and above.
“Many buyers who can afford such a highend home learned during the past real estate bust that they may not be able to easily sell such a home in the future and they don’t want to trap their money,” Phillips said. “Second, we’ve shifted culturally. The “Age of Opulence” has passed, and it is no longer as popular to own these types of high-end homes. Many high-end buyers are considering smaller and lower priced lake homes.”
Burnside said those trends are helping many lakefront developments in Tennessee, especially in more affordable areas such as Watts Bar lake where property prices and taxes are lower than in most other states.
“This area is especially appealing because of our mountains, mild climate and accessibility to major markets like Atlanta, Nashville, Birmingham and Knoxville within a two hour drive,” Burnside said.
Nonetheless, Phillips said even in markets with high demand sales may not jump that much this year.
“This is not due to a lack of buyer interest,” he said. “The issue is a limited number of “sellable” homes in many lake markets. (By “sellable,” I mean homes in good condition, on decent water, that are not over-priced.). Today’s lake buyers (and home buyers in general) quickly spot overpriced homes and they avoid them.”
Phillips said lake homes priced between $175,000 and $750,000 will continue to sell well over the next couple of years “when priced appropriately for age, location, and physical condition.”
Lake Homes Realty specializes in compiling lake property data and employers Realtors who concentrate on lakefront properties across its 19-state footprint (www.lakehomes.com). The agency projects the next two years to be “active, but not hyperactive” for lake property sales with rising interest rates and limited inventory, even with some new construction, offsetting the expected rise in demand from an improving economy and aging workforce.