2017-09-09 / Top News

Mackinac Island Real Estate: A Market Like No Other

By Jacob A. Ball

Richard and Danette Thomas of Carson City look at property listings in the window at Mackinac Island Realty Tuesday, August 15. Mr. and Mrs. Thomas were recently married on Mackinac Island. Richard and Danette Thomas of Carson City look at property listings in the window at Mackinac Island Realty Tuesday, August 15. Mr. and Mrs. Thomas were recently married on Mackinac Island. For a place where a fraction of the land is private property and building or remodeling has unique challenges, Mackinac Island has a surprisingly diverse real estate market that’s recovering from state and national economic recessions that hit hardest in the years between 2006 through 2010.

There are only 440 acres of private land among the Island’s more than 5,000 acres and the rest is mostly state park land, yet it’s a dynamic environment in which everything from undeveloped lots to historic century-old mansions are available in proximity.

A would-be summer or year-around resident right now can scan listings of 39 lots for sale at prices as low as $35,000 and as high as $215,000, a few condominiums available at $87,500 to $575,000, and cottages ranging in price from $1.1 million to nearly $6 million.

The Mackinac Island Realty staff, outside its offices on Market Street, is (from left) sales associate Syndee Borst, owner Bill Borst, and sales associate Tom Marx. Not pictured is associate broker Julie Lipnitz. The Mackinac Island Realty staff, outside its offices on Market Street, is (from left) sales associate Syndee Borst, owner Bill Borst, and sales associate Tom Marx. Not pictured is associate broker Julie Lipnitz. The Mackinac Island State Park Commission wants to sell three wooded lots in Hubbard’s Annex on West Bluff - half an acre offered as a single parcel - for a minimum bid price of $248,000. Additional lots could become available in the city-owned Edgewood housing project in Harrisonville through efforts to develop more-affordable year-around homes for Island residents.

Mackinac Island’s real estate market shares similarities with other notable tourist destinations, but geographic isolation, a summertime ban on motor vehicles, and a prodigious commitment to historic preservation separate it from the others. Its limited private property makes ownership special, somewhat insulates it against downturns, and creates a small community lifestyle that’s a selling point.

There are those, however, who believe the Island lacks amenities found at mainland tourist haunts. Dispelling this notion is an obstacle Bill Borst has learned to overcome in his 30-plus years selling real estate on Mackinac Island. Since 1984, Mr. Borst and his team at Mackinac Island Realty have handled sales and marketing for what he estimates now is 95 percent of all listings, including home sales in the year-round Harrisonville neighborhood. The remaining realty sales on Mackinac Island are predominantly properties for sale by the owner.

While marketing is necessarily more digital these days, weekly advertisement in the Mackinac Island Town Crier and Mackinac Island Realty’s window on Market Street remain integral parts of sales promotion on an Island that holds onto history.

“It has to be one of the most looked-in windows on the Island,” Mr. Borst said.

His first Island real estate venture was selling lots along Grand Hotel’s Woods Nine golf course. He nurtured a positive image and focused on raising the famous Island’s profile as a place to live, not just visit. The market, while doing well, is so small, Mr. Borst says, that it is difficult for new competitors to enter.

“Mackinac Island Realty has helped make people know this is a great place to be,” said Mr. Borst, who employs three fulltime real estate agents.

Matching clients with property on Mackinac Island requires an understanding of the benefits and drawbacks of a lifestyle reliant on bicycle and horse-drawn transportation – snowmobiles in winter – and deliveries made by dray. Some clients enjoy the seclusion and privacy of properties in Stonebrook or Woodbluff, but others will consider only dwellings close to downtown.

Large, private homes, or cottages, in exclusive areas along the East and West bluffs or Hubbard’s Annex attract people of means who treasure them as family summertime gathering places. Condominiums tend to be sold to couples and younger buyers who just want to be here. Younger folks buy empty lots that can serve as an investment or down payment on future plans.

“It always depends on the client“The biggest challenge is convincing people it is not as difficult to live here as they think.”

Other tourist locations in Michigan, such as Harbor Springs, Bay Harbor, and the Leelanau Peninsula, are often compared with Mackinac Island, as are notable east-coast destinations such as Montauk, Long Island Provincetown, Cape Cod, and Hilton Head, South Carolina. While some of these communities have similarly restrictive covenants regarding restoration and construction of historic homes, and others may rely on ferries to transport goods and people, none can match the tranquility offered by Mackinac Island’s motor vehicle ban.

Only 11 other U.S. Islands prohibit motor vehicle use, but four have only partial bans, one is a state park, and one is remote Isle Royale National Park on Lake Superior. Of the remaining five, two are in New York City, so Mackinac Island is one of only three communities in the country that offer a car-free summer retreat.

Those who believe Mackinac Island can’t offer all the amenities they expect are surprised to find it has a medical center, trash pickup, restaurants, golf courses, a thriving recreation program, K- 12 school, and conveniences found elsewhere, minus gasoline fumes, traffic jams, and blaring car horns. Its quaint version of gridlock is the mix of pedestrians, bikes, carriages, and wagons downtown in July and August.

Lack of motor vehicles leads to an outdoor lifestyle and exercise gained from riding place to place on bicycles – snowmobiles in winter — hiking trials in expansive Mackinac Island State Park, riding horses, or touring in wagons with rows of seats.

It did become more difficult to receive the asking price for luxury homes on Mackinac Island during recessionary times. From 2007 to 2010, there was an estimated 10-percent to 20-percent reduction in closing prices for luxury homes on Mackinac Island.

Mr. Borst said this really was a sign Island houses retain their value better than in traditional tourist communities or metropolitan areas, where the drop was steeper. Based on a comparison of listings from August 2006 and August 2017, Island prices are moving back toward prerecession levels.

The asking price for Woodbluff Lot 15 in 2006 was $135,000, for example, and the same parcel is for sale today at $105,000. A sale is pending at $87,500 for a condominium in a development downtown where a similar unit in 2006 was listed at $100,000.

Still, that is far from the more than 50-percent drop in prices experienced in the affluent Detroit suburb of Birmingham following the financial crisis, according to the Detroit Free Press.

The luxury market seems fully recovered. In 2006, a four-bedroom East Bluff home was listed at $1.1 million and currently a six-bedroom East Bluff home is available for $1.25 million.

Unsurprisingly, luxury homes on Mackinac Island don’t sell as fast as those listed at lower prices. There are fewer homes in the $300,000 to $600,000 range, where the average time on the market for them is less than 90 days. Downtown condominiums can sell even quicker, reflecting a preference by today’s younger buyers for proximity to nightlife and entertainment.

High-priced luxury homes can take years to sell. Cairngorm Cottage, an 8,000 square-foot West Bluff cottage built in 1888, is listed at $5.85 million and could take up to two to three years to sell, according to Mr. Borst. There are nine private homes available on Mackinac Island at more than $1 million each and only four homes available in the mid-tier range. One luxury home priced at more than $1 million went to a new owner in a rare cold-season sale completed last winter, Mr. Borst said.

The turnaround time also is typically longer for historic buildings owing to the demanding care required for older cottages. Stringent building and landscaping regulations can discourage buyers who are less committed to historic features that must be maintained.

Buyers also must be made aware of Island rental regulations. Most private homes can’t be rented out for less than 30 days. The city regulation is intended to maintain the Island’s close-knit sense of community and avoid the use of private homes to compete with hotels and bed-and-breakfasts on the Island. Some properties are zoned to accommodate nightly visitors, mostly in the Stonecliffe area, with a couple downtown as well. Cottages on the bluffs are are restricted by the Mackiniac Island State Park Commission to a twoweek minimum rental.

For vacant lots, there can be five to seven changes in ownership before anything is built. Sometimes that’s the result of unforeseen circumstances, but speculation also is a motivation.

Mr. Borst said that there still is room for those interested in living on Mackinac Island. In the last 35 years, about 300 lots have been developed on the Island. He said it will be at least another generation before all development ready property is sold and, even then, the resale market will continue to thrive.

In addition, many homeowners have bought multiple adjacent lots to give themselves more space. Those lots could become available if demand and prices rise significantly. In the meantime, the market remains strong, at least by Island standards: some 20 properties have sold this year and a dozen or so more are in the process of closing.

Mr. Borst said fall usually is a busy real estate season. Buyers finally close on their new summer homes at the end of the season, which can lead to additional sales before the end of December. The Island attracts interest across the country; Mr. Borst recently sold a condominium to a couple from California. Others will investigate, however, without taking that step.

“Quite honestly, it is not for everybody,” Mr. Borst said.

The reach for Island realty sales now is nation-wide, through off-island advertisements and the website. Some buy on impulse, others take decades to find a home that fits their dreams. Regardless of the circumstance, Mackinac Island offers a unique summer getaway or special place to live year-around – for those who can find the right property.

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