Lakefront sales dip interior holds strong

20 million less in sales on the lakefront may be the largest dip I have seen in many years. There are two factors that influenced this sizeable decrease: the higher rate environment and inventory.  The pullback from the unknown of where rates might go by the consumer put some buying on hold. Combine this with fewer sellers that wanted to enter the market to sell and then try to repurchase at current rates.  Less buyers did not affect the median home value which stayed almost identical to 2022 at 532,000.00. That is the silver lining in this lower velocity sales year. There were also plenty of people on the sidelines who did not purchase, waiting for some reprieve on rates. That is the other good news. There was demand for the area, but prices held firm for the bargain hunters who were looking for a discount due to a downward push on value that higher rates can bring on but did not materialize locally. 

            The best indicator for 24 is the signal that interest rates are expected to be cut. This recent news has already created more demand as we saw real estate sales spike towards the end of the year when they traditionally slow down. The weather only helped accommodate this move. Buyers can now, with a degree of confidence, pull the trigger and know that rates will come down and refi later. When that was not certain, buyers tended to pull back despite promises from mortgage brokers that they could refi later into lower rates.

There has been a lot of chatter about the two big projects in town. The new residential development at 11th Street around the new train station and the SOLA mixed-use project next to City Hall.  The 11th Street project is, by all accounts, moving forward and will have a transformative impact on downtown.  It will become a hub of commuters reaching Randolph Street in just over an hour.  That will inspire more people to live here and commute and bring more vacationers as well.  All of this traffic will also create a need for more food and beverage options in the immediate area, as well as more transportation opportunities for people who will need to get from the station to their destination. This project could also spur on future residential projects around the station.  There has not been a confirmation that the SOLA project will launch or not. I have previously discussed the hardships of finding funding for a project of this scale.  Being the first one to pitch a project this large is not easy. The 2nd project, by nature of looking back at and pointing to success, will have a much easier time. This project, if launched, could be the catalyst for other medium-scale projects that will owe in part their success to SOLA.  Having said that, this project will add in one year over 60,000.000 in sales, which is nearly doubling the size of the 2nd home market in 23, which had 68,000.00 in sales. This, I am sure, is adding to the difficulty of financing, which is the question of absorption.   I remain bullish and really want this project to launch and give faith to the rest of the market, which will bring more projects. 

The shining star in 23 was the interior market. It remained steady with a marginal decrease from 22.  What we can glimmer from this is that interest rates had little impact on the investment market. In just two years, over 120 million in sales in the interior is nothing short of miraculous. Historically, the interior (everything south of 12 ) has been a fraction of the lakefront sales, and now we can count on close to parity moving forward in annual sales.  Other brokerage firms that would have never considered Michigan City as a vibrant market are now here soliciting business. That’s a credit to the message that is permeating the market.  Its time has come. So many unfulfilled promises and bad planning ideas over the course of 20 years have led many to believe Michigan City is the train that just can’t leave the station. While many are trading on the good news that hits the press from the Economic Development Corp, some prefer actually to see the shovels hit the ground.  The speculators are here, and thus far, they have been rewarded in a pretty vibrant market.  2024 also promises a new administration. This administration could actually lead and make some great progress on many fronts. Everyone remains hopeful, and there is reason to be so.  A critical part of this administration will be the planning and inspection department. With over 350 sales in the interior of Michigan City in 23, this office is overwhelmed by the permit process. The permit process in earlier years was one of the driving reasons why people liked to do business in Michigan City. The lack of bureaucracy and the speed relative to Chicago. A building permit for a new house could have been delivered in seven days a few years ago.  They need to staff up in order to keep the investors moving along from project to project.

  2024 will be a good year for both markets in Michigan City. The beach area will rebound in sales, and there are plenty of opportunities remaining in the interior. All signs lead me to believe that 2024 has the makings for a banner year. It will be important to watch the mayor's first big moves to get a glimpse into her goals for the city she was raised in.

 Wishing you all a great year.

Sola mixed-use project in Michigan City a step closer?