When those in the baby boom generation were in their 40's and 50's, they were clambering to buy their cottage "up north". It was almost a sign that they had "made it:". They didn't mind putting in a little work each weekend and had the know how to do many of the common household fixes that were needed. This drove prices through the roof until 2007 or so. Now those same buyers are still driving the market but they're looking for homes for retirement closer to amenities like health care, shopping and dining. They want to live up north, but now that they're going to be there full time and not just for a weekend, the importance of a larger community has moved to the forefront. A modest, charming little cottage was great for short getaways but many don't want to give up the comforts of their primary residence when moving to northern Michigan for good.
The next generation of buyers simply don't hold those same dreams or have the same skills. Frankly, many young professionals are living beyond their means already and coming up with the 20% down payment for a cottage just isn't going to happen. Even if they inherit the family cottage, the taxes may be too great and the idea of working every weekend they're up north doesn't sound too great. Perhaps more importantly many, younger buyers simply don't know how to do basic home repairs and would have to hire everything out at a substantial cost. They'd rather take a weekend getaway to Chicago or stay in an all-inclusive resort somewhere tropical. The mentality is simply different. There are, of course, exceptions and we're thankful there are more younger buyers entering the market all the time. Many who are interested in getting a second home and have the means to do it don't seem to want to settle for a modest getaway, though. Fine finishes and Pottery Barn decor are more the norm.
Where does this leave you as a seller? First, recognize the situation and plan for it. Simply waiting around for things to recover is not a strategy because it isn't going to happen anytime soon, if ever. The best thing to do is make your property as appealing as possible to those who are in the market and be realistic with your price.
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| This is not going to work today... |
#2. Price your home right. The market dictates what your home is worth, not REALTORS or anyone else. A solid agent can help show you the recent sold properties that are most like yours and help you determine a price that is within reasonable limits of what the market will bear. You may not have to sell, but many of the other sellers in your market do and they're going to be the ones to successfully do it because you're too stubborn to budge. Yes, there may be some rich guy out of Indianapolis with a pocket full of money to spend on a cottage up north. They did not get all that money by spending it on stupid stuff, however. They'll buy the home they like AND is a wise financial purchase.
#3. There are exceptions. We're seeing great activity in the lower price ranges (up to and around $100,000) for cottages closer to areas downstate like Clare, Gladwin, Houghton Lake, etc... We're also seeing an uptick in activity on nicer homes in these same areas thanks to the easy drive. Once you get beyond 2 1/2 hours or so from these areas, interest seems to wain quite a bit in the cottage market. It also appears that this distance from downstate areas has an impact on lakefront and riverfront getaways as well.
What does this mean for buyers?
#1. There are some amazing deals in areas like Crawford and Kalkaska Counties or the very northeast corner of lower Michigan. They're sort of falling in that gap where they're a little too far north for many and don't offer the amenities that a Traverse City, Charlevoix or Petoskey might offer. Especially if you're willing to do some fix up or remodel work, there's perhaps never been a time to get more for your money in these areas.
#2. You're going to have to get off your wallet in some areas like Traverse City if you want to get a great property. These conditions are basically concentrating buyers in areas like this and competition is high! All these articles you read about the amazing northern Michigan cottage market are mostly in areas closer to downstate and higher end communities.
3. Now is a great time to buy. Interest rates have bumped up a hair over the past year but are still absurdly low on a historic scale. If you can scrape together the down payment necessary, you can get a cottage for your family so they can enjoy some of the same great memories your parents made possible for you (Obvious guilt play there:))
Don't get all sad upon reading this. Consume the information. Read some other stuff to find out if you agree. Most importantly ACT! Do the upgrades, get your price in line and move on to the next chapter in your life!
