Rising lake levels accounted for the pending sale of at least one Hudson Bend waterfront property, said the owner’s Realtor, Alex Landry of Keller Williams-Lake Travis.
The Lake Travis home had been for sale for a couple of years during the region’s drought, she said. Prospective buyers told Landry they loved the photos of the home but were dismayed when they saw it had a dry dock, she said.
“People would ask, ‘Is the water ever coming back?,’” Landry said. “When there was no water [in Lake Travis], even for those homes with [a good] price value, we still had trouble getting people in.
“As soon as it started raining, there was a huge uptick in showings.”
She said the home is under contract following negotiations with multiple buyers.
Other local real estate agents say they are not quite as certain that the dollar signs on waterfront properties will follow the increase of recent lake levels.
Economics of lake real estate
In September 2011 the Lake Travis Coalition—including Austin, Briarcliff, the Hurst Creek Municipal Utility District, Lake Travis Chamber of Commerce, Lakeway, Lago Vista and Spicewood—released its Lake Travis Economic Impact Report that assessed the financial effect low lake levels have on the region. The report, prepared by consulting firm RCLCO, found a correlation between lake levels and property values, with Lake Travis offering $8.4 billion in assessed property value at the time.
“A full Lake Travis generates revenue from property, sales, hotel and mixed-beverage taxes that buys ambulances, maintains schools and provides state government with needed funding,” the report stated. “When lake levels remain below 660 feet, visitations decline and businesses contract.”
However, not all experts agree that waterfront property values rise and fall with the lake level.
For the past 40 years, droughts have had little effect on lakefront property prices, said Mark Sprague, state director of information capital for Independence Title Company. Homeowners have mortgages and owe money, he said. During times of drought they are not going to accept a lower offer when selling a home, he said.
“[With the May rains], sale prices [of waterfront properties] won’t go up, but you will see a higher number of offerings,” Sprague said. “In the last 40 years, we have not seen prices go up dramatically [after a drought] or go down dramatically during a drought. What does change is the amount of [sales] volume you are going to see out there.”
He said higher lakefront property prices at this time are not workable because a home will not appraise for more than it is worth, and the market is sophisticated enough that buyers will not overpay for these parcels.
Real estate broker Brian Talley said any change in waterfront pricing will come slowly. He is the founder of Regent Property Group and sells waterfront homes in the Lake
“Real estate [pricing] doesn’t turn quickly,” Talley said. “Even in a steep [economic] downturn, sellers lag behind in their perspective of value.”
He said the recent increase in lake levels will bring out more buyers but not necessarily more people willing to spend additional money unless the levels are sustained for a period of time.
“Buyers will be wary of buying a [waterfront] home that has water now and did not during the drought,” Talley said.
Time will tell
Talley said he has had an increased number of hits on his business’s website since the lake levels rose.
“I have seen more activity—even a little above [typical] seasonal activity—but it does not lead me to believe things will turn around overnight,” Talley said.
Marya Crigler, chief appraiser at the Travis Central Appraisal District, said it is too early to determine what effect the higher lake levels will have on surrounding property values.
“We will have to wait to see if [the lake levels] will make a substantial impact on the sales prices or the volume of sales [of waterfront properties],” she said.
Crigler said that with the recent economic upswing, the Austin urban housing core has rebounded more quickly than the lake area.
“I do think your waterfront will begin to sell with more rapidity and frequency now,” Sprague said. “During the last seven years, [Lake Travis] has not had water, so people who do want waterfront are going to ask, ‘Is it going to stay like this?’”