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	Name:	Bob -
	Subject:	comment on John G's Blog
	Date:	8/8/2007 8:22:18 AM

John, I enjoyed reading your analysis on the real estate market at LM. I agree with you that the ultimate problem is supply and demand and I do not not see that improving much for a while. You mention that we now have 600+ properties for sale on LM compared to 126 in 2005. While true, the explosion of Condos probably represent more than 50% of this growth and they have a market that, while similar, is certainly more "overbuilt" than the housing market at present.

Now I will argue that the low water levels are having much more impact than you would like to admit. The ONLY thing that will fuel LM property values to new heights will be increased demand from out of state. Yes, this means people from Atlanta. The metro ATL area has nearly 6mm people, more than Alabama and Mississippi combined (Est.). People from the ATL metro area fueled the boom in the last few years (one need only look at car tags to confirm this anecdotal observance). These same people have not grown up their whole lives visiting LM and if their first exposure to LM has been recent the low water levels will have destroyed their opinion of the lake. I am not talking to the lucky few with deep water but I would gues that 85% of the properties currently listed have current water levels that seriously impair their ability to use and are far less aesthetically appealing.

Keep in mind that new demand from ATL is at risk to competition that include lakes in Georgia with the same problems as LM but also include lakes with steady water levels as well. New buyers do not want to buy a second home that may be "impaired" by water levels. Now, if this proves to be a 50 year "anomaly" the buyers will return with a vengeance. The new Karis Park Development near Chimney rock is proposing 51 new homes starting at 1.1mm and that is just one of several such developments in the making. Without the ATL market (and other out of state markets) to fuel demand these developments have no chance.

The current credit market crisis is also having a much greater impact on this than people know as well. "Easy Loans" no longer exist and second home mortgages have always been harder to get. The days of interest only, no money down, second home mortgages are nearly over and will be available only to those with the highest credit ratings.

So, a much lower supply due to credit markets, dependendence on out of state money to fuel the boom, and low water levels that influence the buying decisions of the already shrunken pool of out of state buyers have led us to where we are today. I still predict 10% growth in 2009 but it will be rocky between now and then...

Bob