Unique Homes Blog

Sailing is Smooth for Property Values in the Great Lakes

While home values in some pockets of the country have jumped and dipped with the economy, residents of the Great Lakes have maintained a more even keel in their real estate investments. This is particularly true for the waterfront properties, which tend to hold their value.

“We have seen price declines on the lakefront properties, but they have not been as dramatic as in general housing,” says Ken Schmidt, the CEO of Coldwell Banker Schmidt Companies, representing properties throughout Michigan. “There is still a strong demand for those. You’re looking at maybe a 5- to 15-percent drop from the highs of 2005.”

Schmidt said a 5,000-square-foot house in his home area of Traverse City, Mich., would sell for between $1 million and $2 million. “Generally, the home prices get a little higher in the southwest side of the state near Chicago, and in the northern ‘harbor country’ communities like Glenn Arbor,” he says.

The Great Lakes tend to attract buyers more selectively. Unlike sunny coastal areas, the region does not bring a worldwide crush of buyers; so, home prices don’t soar year after year. But the area’s natural beauty and the presence of major commerce centers such as Chicago, Milwaukee and the Twin Cities create a solid stream of buyers that keep the market active.

“Home values in the Great Lakes grow, but at a more moderate rate than the rest of the nation,” says Patrick Bergner, a senior vice president and director of marketing for Prudential Preferred Properties in Chicago (one of Bergner’s listings is shown here). “In the past few years, we were looking at gains of 10 to 12 percent per year, while some areas of the country were hitting 40 percent.”

Bergner said market activity is picking up in Chicago after a slowdown last fall. “I think in the coming year, first-time homebuyers will drive up the market, particularly with interest rates low,” he says. The number of single-family home and condominium sales in Illinois increased two months in a row in February and March.

“People want to live on the lake and have the great schools and close commute to Chicago,” says Stephen Hudson of The Hudson Company, representing properties throughout the North Shore suburbs of Chicago. “I rarely see people buying a second home here; it’s almost all primary residences.”

A five-bedroom lakefront home with half an acre of land would list at approximately $7 million, he said. Home prices vary widely by lot size, and particularly by beach frontage, which ranges between 50 and 300 feet in the North Shore.

Tracee Lutes, the principal broker with Avenues Realty Group in Bloomington, Ind., said even when a home lies off the waterfront, the presence of nearby lakes and nature areas can add value to the property.

“The market for homes in the $500,000 range and over didn’t suffer with the economy, in fact, it grew in the past year,” she said. “We have communities near Lake Griffey north of campus and Lake Monroe south of campus, where in some cases, the home prices reached up to $2 million.”

Bloomington, known for its arts, music festivals and theater, has steady growth and ranks 11th on Forbes’ list of “best small cities to do business in.”

“John Mellencamp lives here, and he cruises through town and nobody bothers him,” Lutes says. “It’s such a peaceful way of life down here.”

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