Sunday, July 11, 2004
On golden lake
Baby boomers are driving the building boom, but they're not the only ones who want a stake in Smith Mountain Lake
The latest from The Ticker blog
Life on the water is getting more expensive.
Two years ago, realtor Glenda McDaniel saw lots at Smith Mountain Lake for $169,000 to $179,000. Lately, you can't find lots for less than $300,000, she said.
If you're having little success in the stock market, you might consider buying a lot at Smith Mountain Lake.
"The real estate market at the lake is returning better than the stock market," said Jay White, marketing director for East Lake Real Estate and Mariners Landing, a lake development that includes condominiums and a new condominium hotel and restaurant.
Luxurious living is an amenity at the 20,0000-acre waterway, which stretches into three Virginia counties.
Picture perfect communities with million-dollar homes, such as the Boardwalk and Park Place, are shooting up around the lake's edge.
A simple equation known as supply and demand is driving lakefront prices to a premium. They're squeezing out average families and reeling in upper-income retirees and others who can afford high prices.
They're housing people like Russell and Sarah Baskett. They vacationed at the lake for years, traveling from Richmond. A year and a half ago, they moved into a waterfront home to enjoy retirement.
"We don't even set an alarm clock," said Sarah Baskett, a retired psychiatrist. "We love being retired."
Taking a break from yard work, she gazed out at the water from her back porch. Her husband, Russell, a former college professor, waxed and oiled a canoe at their dock.
Expensive history
Ron Willard, a well-known developer of home communities and retail at the lake, can tell you a thing or two about how much house values have gone up over time.
In 1966, some lots at the lake were $516 to $600, he said. Prices were up to about $5,000 in 1968. They steadily rose to $23,000 in 1976. They even seemed high in the 1980s, hitting $50,000.
"Now, it's not unusual to pay a half million for a lot," Willard said, sitting back in a chair in his office's conference room.
"There are people who are investing in Smith Mountain Lake who were never investing in it before. We're in that boom that Hilton Head had several years ago."
Willard said bidding wars increasingly are knocking out potential buyers. And prices for prime waterfront houses and lots have increased 25 percent in the last 18 months, he said.
Although Smith Mountain Lake is no Caribbean, many real estate and business sources are quick to say that it's becoming a resort community.
"If you start looking at lot prices of a half million to a million dollars, you're really looking at prices that are for the high-end resort communities," said Ted Koebel, director of the Center for Housing Research at Virginia Tech.
Several new retail developments, such as the Westlake Towne Center, which holds a Kroger, several shops and soon will have a movie theater, are sprouting up. The Pointe at Mariners Landing, which includes a conference center and a 35-unit condominium hotel, opened last week.
Vicki Gardner, executive director of the Smith Mountain Lake Chamber of Commerce, said there have been a "huge number" of people who have requested information about lake living this year.
"The request for information is dramatically more than last year," she said. "Is it because people have found Smith Mountain Lake? We don't know. Twenty years ago, people found it by default. It wasn't that there was a campaign going on. Now people know. And people tell people."
Whatever the reason, the waterfront supply can't handle the demand. The imbalance is driving up prices, said Jim McKelvey, the developer of Park Place, a lakefront community.
"Everybody says it [prices] can't get any higher," he said.
And economic factors in the last year point to the rising housing wealth of the nation, Koebel said. Low interest rates have made housing more affordable. And increased refinancing is helping second home purchases.
In Virginia, home prices rose by 40 percent from 2000 to 2003, Koebel said.
It makes sense that retirees would be some of the largest drivers of high value home buying at the lake.
"The baby boomer generation is just starting to reach retirement age," Koebel said. "It's a generation with a substantial amount of housing wealth. They will be looking for nice locations and water typically is a nice location."
Lake lift
Richard Cairns and his wife, Pam, decided that lake life suited their retirement perfectly.
They left Washington, D.C., and moved into a waterfront, two-story home at the lake's Park Place community last May.
Many mornings, Richard Cairns, 58, watches the sun rise across the lake from his bedroom's double glass patio doors. Their home has a long wooden back patio that overlooks the water and a boat dock below.
"We found Smith Mountain Lake and fell in love with it," Richard Cairns said.
He would not discuss how much he paid for the two-story house, but he pointed to a lot next door on which a home was being built.
The lot cost $450,000, he said.
"There are a growing amount of baby boomers who can afford to have this lifestyle," he said.
But baby boomers aren't the only homeowners at the lake. Real estate professionals and developers said sales of off-water home lots are taking off, including those in golf course communities and in condominium complexes. And more residents are younger and may commute to Lynchburg or Roanoke for jobs.
Condo living is such a "growing market" that plans already are in the works for Oak Harbor, a condominium development that will go up near Hales Ford Bridge in Bedford County, said White of East Lake Real Estate and Mariners Landing.
"Waterfront is such a premium right now, and it can be expensive, but if people want the lake lifestyle, they can get some of it off-water," he said.
There are homes for off-water living at various areas of the lake, including Mariners Landing. Hal and Kelli Clary said they plan to build a home there because they can't afford to live on the water.
The couple has a 1-year-old son, and a 3-year-old son.
For many off-water lots, families can rent boat slips for use on the lake.
"Water's great, but you don't have to live on it to enjoy it," Hal Clary said.
Cindy and Don Barber live on the lakefront at the Boardwalk. Cindy, 40, drives to Lynchburg during the week to work in the finance department at BWX Technologies. Don, 38, is a pilot for United Parcel Service. They have a son who is 6 and a daughter who is 3.
Cindy Barber said her children love the community pool. The family also are members of the Smith Mountain Lake Water Ski Club.
"That's the draw for us," Cindy Barber said. "We spend all of our time on the dock."
How high can they go?
Koebel said home values at the lake probably will continue to go up, and people won't be clipped by them.
"Each generation has consumed larger and better housing than the previous one," he said. "As long as the economy continues to expand and real incomes go up, you shouldn't see any drastic change."
Spillover growth, similar to what has occurred at Lake Norman, just outside Charlotte, N.C., won't occur at Smith Mountain Lake, Koebel said. Lake Norman is growing rapidly by drawing commuters and others from surrounding larger cities.
"Smith Mountain Lake is not in a commuting threshold for a larger high growth metropolitan area," Koebel said. "Roanoke is very, very slow growth, and it's not a larger metropolitan area. If it [the lake] was adjacent to Charlotte, it would be doing even better."
White said he doesn't plan on Smith Mountain Lake becoming another Lake Norman.
"Developers like us see that people who come to the lake come here because it is rural," he said. "We'd be stupid to commercialize it to such an extent that its innate beauty is lost."
