Market shifting away from lakefront

The numbers show a clear trending of property sales away from the lakefront in Michigan City as fewer properties become available north of U.S. 12.

In 2020, a total of 178 properties were listed for sale in the beachfront area, and every one was sold, more than 100 of them in the first 90 days of listing. The total value was over $89.2 million, and selling prices ranged from a low of $90,000 to a high of $3 million, with a median price of $404,500.

A year later, in 2021, only 128 properties were listed, and again, all but 28 within the first 60 days of listing.  The total value was about $75.8 million, and selling prices ranged from a low of $80,000 to a high of $4.325 million, with a median price of $510,000.

While fewer homes were listed and sold along the lake in 2021, the interior of the city (south of U.S. 12) picked up the slack in the market.

In 2020, there were 359 properties listed in the city and all of them sold, 178 in the first 30 days of listing and over 300 in the first 90 days. The total sales volume was $43.1 million, ranging from a low selling price of $10,000 to a high of $530,000 with a median price of $112,000.

In 2021, a total of 456 properties were listed in the inner city, and again all of them sold, 382 within 30 days of listing and all but 39 within 60 days. Total sales volume jumped to $69.7 million, with a low price of $19,000 and a high of $1.47 million, and a median selling price of $138,000.

All the figures are preliminary, and were provided by @properties from the Rapattoni Corporation.
MICHIGAN CITY — Home sales continued to boom in Michigan City in 2021, with one very distinct change – for the first time ever, sales of homes away from the lakefront led the way.

Despite low inventory along the lakefront that hurt real estates sales volume in 2021, off-the-lake sales filled the gap, providing a $10 million boon to the local economy.

That’s the word from a local realtor, who said “unmet demand” was the big story last year.

“I personally could not wait until the end of the year to be able to aggregate the data to quantify what we could feel going on,” said Micheal Conner, realtor and investor of @properties.

“Title companies seemed overwhelmed and there were multiple offers on properties. It seemed very difficult to get a survey or inspector, which led many realtors to believe demand was high,” he said.

While it seems counterintuitive in an up market that there should be less sales on the lakefront in 2021 versus 2020, the short answer is unmet demand, Conner said.

“The buyers far outweighed the sellers, leading to an inventory shortage. We would surely have outpaced 2020 if there was supply. That also explains a 26 percent increase in median home prices in 2021 over 2020,” he said.

“In some cases, premiums were paid due to short supply.”

And he sees that trend continuing in 2022.

“There will be equal demand for the second home market in 2022 and this begs the question of supply. Some of those who could not find homes decided to buy lots. There will be a building boom in 2022 in the lakefront area that we have not witnessed before,” he said.

“And now, with a shrinking supply of lots and very little land left, I can see a strong sellers’ market for the foreseeable future.”

Conner said that bodes especially well for area off the lakefront.

“With continued unmet demand, buyers and developers will have to look to areas just off the beach to fulfill that demand. We can expect to see some speculation just off the beach, where access to the lakefront can be navigated with relative ease and land costs are a fraction of what they are north of U.S. 12.”

He said that trend started in 2021, when the “clear winner” in the market was the geographical region just south of the beach.

“I predicted last year that gross sales in this area was headed toward parity of the historically much-preferred beach community. This had never happened since this data has been tracked.”

In the past, he said, there has always been a disparity of at least 50 percent. But with 456 transactions, $70 million in gross revenue and a 60 percent increase over the previous year, “this was by far the better performing area.”

Over the past six years, sales off the lakefront have increased by 130 percent.

“There are multiple reasons for this, but in short, the interior area of Michigan City is vast and presents far more opportunities than its lakefront cousin,” Conner said.

“The cost of entry is less, and by regional and national standards, there is very little risk. The fundamentals of the city were there 20 years ago and many, self-included, bet heavy.

“Growth had been really slow until about five years ago, and the people who invested in the last five years have realized a far better return than those that went in early.”

But now, “Everyone is happy with the current growth and I am happy to report that this growth occurred organically by the small people on the front lines who took all the risk.

“Small businesses, local realtors and local developers have put the city on the map. They chipped away at the naysayers and were diligent in their commitment and delivered.”

The question now, with demand and recognition having arrived, is how will this be managed on a larger scale, Conner said.

“There is a lot of talk about large-scale developments off the lakefront near the downtown. I cannot express how important strategic planning will be. What a shame it would be to have waited this long only for a few poor decisions that could set us back.

“Highly qualified professionals and strong leadership could win the day,” he said. “I see a bit of wanting to do too much too quickly. I am the last to try to slow progress, but building tall buildings that will be around for a hundred years begs taking the time to choose the right developer and the right plan.”

As for the economic impact of $145 million in gross sales on the local economy?

“We have grown in six short years at a rate of 78 percent in gross sales volume. I will make some assumptions to demonstrate where some of the winners of this boom are and where we might be able to do better.

“Accounting for brokerage fees, title companies, attorneys, home inspectors, contractors, loan origination fees, this easily exceeds a $10 million injection in one year into our local economy,” he said.

“By contrast, the casino gives the city between $8 million and $10 million a year, and is considered the great benefactor,” he said.

“The money spent by homeowners and investors also has a compounding element of bringing additional wealth to those who purchased. The real estate sales and support market will continue to grow and it is incumbent upon the city to nurture and develop a way to facilitate this growth, not hinder it.”

He also said the repair and contracting sectors are booming.

“It is safe to assume that my numbers to local contractors on repairs is very low, as evidenced by the fact it would be easier to get Warren Buffet on a call than a local plumber.

“I assumed only a $1,000 repair per transaction. And these figures do not include sales of items for support of the acquisition and support of these new purchases – everything from housewares to material for rehab.

“This estimate also does not include the additional assessed valuation that will be picked up by the local assessor, bringing in more tax revenue for the city.”

Conner said he hopes to see more homeowners getting in on the market.

“My experience is that many of the sales that drove the interior market were by investors. I encourage this activity, but would like to see more residents matriculate from renting to home ownership.

“This, for many, will be the way to develop some of the wealth that will accrue to those investors, and if anyone deserves this, it is the citizens who have lived here for decades.”
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