Lakefront property market

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By Mark H. Stowers

Home to nearly 1.3 million people, Oakland County encompasses 62 cities, villages and townships, spanning 907 square miles. According to the Oakland County Water Resources Commissioner office, there are 1,400 lakes intertwined in those square miles with scores of lakefront homes. Homes on water and those that are not considered water-improved total about 567,000 living units.

If you are like most lakefront homeowners, you no doubt have two concerns each year – the latest assessed value of your property and how the overall housing market is performing, regardless of whether you are actively considering selling at the time.

Up until this past June, assessing housing values in Oakland County mostly involved only county and local government assessors determining the assessed value of real and personal property. Assessed value is constitutionally required to be 50 percent of its true cash value as of December 31, using a two-year sales study. This data, managed by the Oakland County Equalization Department, is primarily used to determine taxable value or calculating property tax bills. With a higher-than-expected increase in the county cost of assessing property, some communities ended their county contract and hired private companies to perform the work. Assessment Administrative Services (AAS) was hired by Commerce, Oxford, Lake Orion, Walled Lake, Independence, and Springfield, each of which had opted out of the county’s services. The new Oakland County contract standardized rates that forced cities and townships to look elsewhere for assessment services are $22.25 per parcel in the first year, rising to $32.11 in the second year and $42.38 in the third year.

There was a time, prior to the late 1970s, when homeowners both on and off the water faced rampantly increasing tax rates each year. And in the case of lakefront homes, value increases each year were generally higher than if your home was not near a waterway.

But state voters in 1978 approved the Headlee Amendment to the Michigan Constitution which ushered in a number of tax limitations. Among the changes was a limitation on the overall state equalized value (SEV) for a government jurisdiction but the SEV for an individual parcel could still have a higher taxable value. If the overall community SEV growth produced more tax revenue than originally approved by voters, then the community would have to rollback the millage rate applied to the overall community SEV.

Then in 1994, voters approved Proposal A which dealt with school financing and at the same time limited the growth on taxable value of individual properties to either the rate of inflation or five percent, which ever is less. When a property is sold or transferred, the taxable value is reset to the SEV, which equals half of the cash value of a property.

The Michigan Constitution requires that property be uniformly assessed and not exceed 50 percent of the usual selling price, often referred to as true cash value. Each tax year, the local assessor determines the assessed value of each parcel of real property based on the condition of the property as of December 31 (tax day) of the previous year.

Rob Scripture, Assessing Director of West Bloomfield Township Assessing Director for the past decade, offered more explanation.

“I try to make things fair in terms of paying property taxes. My job is to make sure that I allocate property values to where they’re supposed to be,” Scripture said. “Michigan uses a mass appraisal assessing system. There’s just too many properties for appraisers and assessors to go visit every individual property so we use a mass appraisal system that uses rates from the state of Michigan. These rates are reviewed every year and once approved, are adopted for assessors use.”

There are 26,000 properties to assess in West Bloomfield. And of that, 1,600 are lakefront properties. Armed with this annual rate, assessors go to the properties, measure what’s there, and enter the information into the system. They also use aerial imagery and online listing information to help with accuracy.

“They use the sales that have occurred in the area comparable, whether it’s lake frontage or a typical neighborhood subdivision, a condo complex, whatever is similar,” Scripture said. “Whatever sales occur in that area, they then look at whether the values are increasing or decreasing or staying the same in that area. Assessors are then charged to make the changes to those properties.”

Market sale transactions for real property are used by Michigan assessors to compare assessed values with the actual sale prices (market values) for those same properties. Market value can be defined as the most probable price, as of a specific date.

“We also maintain records, which if nothing’s changed, we have an updated record. We also review by going to properties to take updated pictures for our records and to see if there’s any changes made to the property. We’re pretty active. We do about 6,000 reviews every year, whether it’s at the desk or in person,” Scripture explained. “It is really about making sure records are accurate because my biggest fear as an assessor is assessing somebody for a wing in the house that they don’t have or a deck. And we do whatever we can to make sure that what’s there is being what they’re feeling assessed for.”

He said his department also “Works closely with the (city) building department and the planning department and the code enforcement officers. Anything that may need our attention, we work closely with our departments to make sure we go out there and record any change that’s occurred throughout the year.”

He noted that most of the value of an appraisal is the square footage.

“We also have the age of the home as it depreciates every year. We have bathroom counts in terms of fixtures that are in the property, which means that if you have a regular colonial subdivision, all made by the same builder to the same general specification. Those don’t vary much but someone might opt for granite countertops and crown molding. That’s going to be a little higher. If someone has the base model, that’s a little bit lower. In terms of lake frontage, the more frontage, usually the higher land value. With assessing, we respond to what realtors know. They’ll know before us as to what the market’s doing. We respond to the sales to say what the market is actually doing.

Proposal A’s formula makes sure a property’s taxable value does not grow as fast as the property’s assessed value, which should be at or near 50 percent of market value. However, once the property is sold, the taxable value is uncapped and increases to the assessed value for the year following the sale.

Property taxes are calculated by taking the taxable value of the property, which is approximately half of what the property is worth, and multiplying it by the number of mills imposed by local authorities, which can include such things as schools, libraries, and the Detroit Zoo, among others. The assessment can be contested by homeowners. In West Bloomfield, Scripture does see this, but he explained it’s “0.2 percent, way less than one percent. Some just appeal to protect their rights, just in case they want to appeal further. Some just want to know what the process is about, but it’s a normal process. It’s available to every one of our residents and everybody in the state of Michigan to look at and check out, but it’s really nothing to be afraid of.”

When talking to neighbors, no two taxable values seem to be the same. Scripture offered insight.

“Everybody’s taxable value is unique. You can have two identical homes sitting side by side, and one person has a taxable value half of the other person’s just because they’ve lived in the house since the start of Proposal A. And the other individual just bought last year, so they’ve become uncapped. The taxable values are unique to the date a property was purchased. If your taxable has a large spread between taxable and your state-equalized value, that means you’ve been in there for a while,” he said.

For homeowners concerned with not passing on a tax increase to their children, there are ways to keep the property from being uncapped, according to Scripture, for “first blood transfers is a very complicated topic, but you can transfer from family member to family member so long as it meets the qualifications that the state has put into their laws.”

Scripture has worked in the assessing field for more than two decades and has seen values increase with the one anomaly being the 2008 housing crisis.

“I was at the county when the market did this little downward spiral. But since the bottoming of the market, the recovery and the increases are beyond where we originally were, they’ve been pretty consistent, especially in West Bloomfield. We are 92 percent residential, which is nice because you do not have the huge fluctuations when certain branches of the businesses get in trouble that cause certain class of properties struggle. Being a mostly residential property, we see pretty steady increases every year. From 2024 to 2025, the residential market increased by six percent. And then from 2025 to the assessments going out, the residential market is about five percent.”

He noted that it’s not easy to show what the lake properties are as a percentage because “even a uniform lake might have three or four different neighborhoods on it because of all the intersecting lines between school districts, old neighborhoods and new neighborhoods. We do have four lakes in West Bloomfield and we monitor sales for non-motorized lakes and motorized lakes because they do have differences in valuation for those willing to pay more for certain lakes or not. Both of those have 4.5 percent increases on average this year moving into 2026.”

Scripture added that for uncapped properties, the taxable value increase is 2.7 percent, up from 1.7 percent in previous years.

“Across Michigan, uncapped residential taxes can only go up 2.7 percent, that’s state law,” Scripture said.

Oakland County Equalization Director Micheal Lohmeier explained more about the property value increases.

“The overall tentative assessed value change for residential is 5.46 percent, for commercial is 3.46 percent and industrial is 4.48 percent. Land value, particularly vacant land, is influenced by multiple factors, including overall market conditions (time), location, site size and shape, frontage, accessibility, topography, soil conditions, supply and demand (scarcity), and interest rates. In water-influenced markets, scarcity of available frontage and buyer demand are often key drivers, but values are ultimately influenced by a combination of market and physical factors.”

Lohmeier provided SEV information for Birmingham, Bloomfield Hills and Orchard Lake ,showing the SEV increases in each community the past five years.

In Birmingham, there are 9,208 total parcels and nine are lakefront with an SEV total of $10,605,260 in 2020. There was a lakefront percent change by SEV in 2021 of 4.16 percent to $11,046,620; and 2022 saw a staggering increase of 15.64 percent; 2023 had a 10.99 percent increase and 2024 topped out at 19.67 percent. The increase for 2025 was 4.27 percent with an SEV of $17,707,910 and the 2026 increase is 8.45 percent to $19,203,380. Non lakefront SEV totals in 2020 were $2,800,865,210.00 and saw increases of 4.51 percent in 2021; 4.22 percent in 2022; 6.37 percent in 2023; 8.80 percent in 2024; 8.47 percent in 2025; and 6.20 percent in 2026.

Bloomfield Hills has 49 lakefront parcels from a totql of 1,769 parcels. Their lakefront percentage of SEV had much smaller increases. Lakefront SEV totals were $32,236,340 in 2020 and increased 2.15 percent in 2021; 2.14 percent in 2022; 3.53 percent in 2023; 7.17 percent in 2024; 3.53 percent in 2025; and 3.83 percent in 2026 with a lakefront SEV total of $40,116,950.

Orchard Lake lakefront SEV totals for 2020 were $383,433,630 for 391 lakefront parcels of the community’s total of 1,015. The lakefront percent change by SEV was 2.34 percent in 2021; 1.53 percent in 2022; 2.49 percent in 2023; 5.81 percent in 2024; 8.44 percent in 2025; and 6.96 percent in 2026 with a lakefront SEV total of $501,118,800.

Lohmeier added, “The 2026 values reported above are tentative and will remain until finalized after the March board of review and equalization processes are completed. Data has been adjusted to accommodate splits and combinations.”

In terms of the general markets for lakefront properties, we turned to a few of the more experienced real estate professionals dealing with lakefront sales for a look at the past and projected current market to determine what to expect.

Among the group is Kathy Broock of Kathy Broock & Company at Max Broock in Birmingham; Stacy Peardon of Epique Realty in Rochester; Steven Stockton of Keller Williams in Commerce; and Susan McFarland of RE/MAX Classic in Milford. Each of these Realtors have multiple decades of experience and have a deep understanding of Oakland County real estate, especially lakefront, and have helped appraisers fine-tune their numbers when it comes to home values.

The COVID boom saw homes increase in a sellers’ market where values ballooned due to overbidding, according to Broock

“Values went up a lot with COVID, like everywhere. And now they’ve evened out. We’re not seeing a major jump like we did in ’20 and ’21 and ’22. We had a 30 to 40 percent jump. Some people who bought during the peak and are trying to sell now may be losing some money. We had such a demand during COVID because people were working from home. And they’re just not selling them what they bought it for. We had such an increase that it’s more of a balanced market now. It’s not just a seller’s market. Some homes are selling at asking or closer but not every house is selling over asking like it did during COVID.”

There is still a small inventory of lakefront homes, according to Broock.

“There’s such low density for lakefront that it’s always just lower inventory. We just don’t have a lot of lakefront inventory. Certain locations on certain lakes command bigger numbers, faster sales. There are always certain streets that might command a higher number,” Broock said. “But a good house on water is still selling. It’s always pretty much a seller’s market no matter what.”

She noted the market is stable, but there are areas where buyers are getting a better deal than they did two years ago.

“There’s more negotiation than we have seen in the past. It’s a very stable market for both buyer and seller. It’s location, location, location, like anywhere. If you have a really good house and a good location on water, you’re going to have more people wanting it. You may have more aggressive negotiations going on in locations like that, but it’s still a very stable market. We have seen some price reductions on water, but premium streets on premium lots, if it’s a good house, are still selling strong.”

Peardon continues to see the upgrading of homes on lakes due to limited inventory to buy.

“I live on Lake Oakland and that lake is actually split between Waterford and Clarkston,” Peardon said. ”And over the past five years, I’ve noticed a major transformation in some of the vacant land or older, smaller cottages, more than ever a surge in people buying those properties and demoing them and then building nice, larger new construction properties. That’s just based on the fact that there hasn’t been any inventory for them to actually buy.”

Peardon noted the market for lakefront has always been a sellers’ market, even in downtimes.

“There is only so much lakefront land, so it’s a limited product. Even during the crash, it was a little bit more of an insulated product,” she said. “If you are looking at it from an investment standpoint, it’s always been a safer investment as well as your ability to improve the property. Your return is greater. As far as additions, renovation work, and landscaping, the percent return that you’ll receive on improvement of a lakefront property is going to be significantly greater.”

Even in the stabilized sellers’ market, initial pricing strategy and staging play an important role.

“Right after COVID in 2020, we had a surge where it honestly didn’t really matter what you did for a staging perspective or how you prepared the property, or if there is anything wrong with the property. It was just going to get bid out and bid over no matter what,” she said. “Then we had the wall when interest rates rose, so that affected people’s buying power and their liquidity to do any sort of renovations. I think we’re normalizing a little bit more. I wouldn’t necessarily say with lakefront properties that it’s a balanced market. It’s a little bit more of a balanced market in your non-lake properties, but for lake properties, I still think, depending on the actual house, you are still able to get multi offers overbids, and it really depends on your initial pricing strategy. If, you are going to shoot for the stars with your initial launch. And it’s a reach in terms of what you could actually get for the property, then you are probably not going to be in a multi bid situation. But if you are positioning it in a realistic manner and it’s a good property from either standpoint of the condition or even the specific position on the lake. One is not equal to another. It depends on whether you are on a back canal, or if you are on a sandy beach, or if you have a sunset view. There are a lot of factors in reference to your specific location on the lake. But I think if you are realistic about it and have good positioning and marketing, you are definitely still getting multi offers.”

She also noted that functional floor plans are in big demand.

“They’re older cabins that have been reconfigured to be family homes and unless people are buying it for a second home or vacation home, they’re buying it for their primary property. They want a good floor plan.”

Other factors that buyers are looking for include the position on the lake, more of a yard for recreation space.

“Those are always way more desirable than say when you have a drop off or your house, butts right up to a seawall or something. The ability to have some recreation space in your lot is pretty desirable. Obviously, most people want to have the lake view. It’s less desirable to be on a canal or a section of your lake that’s going to have a limited view or maybe more cattails or a no-wake zone. They’d rather be in the open recreational part of the lake.”

Stockton said he has seen “progressive growth since 2011” in lakefront values. “Our real comp, which is our multiple list system, year over year for December, was up 5.9 percent. For the whole year it was roughly four percent. We have about a three month supply of inventory. You have to have about a five to six month supply to be a balanced market. I would call today’s market a seller/balanced market. Sellers still have the advantage but the buyers at least have an opportunity to look and spend a day to make an offer rather than immediately write an offer over list price like they had to do a few years ago.”

Interest rates have slowed down sellers who are looking to get another lakefront property.

“Those folks have a two or three percent mortgage and when they start looking at the prospects of buying a new house and paying 6 to 6.5 percent, they’re not too excited about it,” he said. “Plus, they’re going to have a big jump in taxes because the new property they buy is going to become uncapped and the taxes will jump up.”

All sports lakes are the most popular for prospective lakefront homeowners, according to Stockton.

“The main reason why people want to be on the water is to be able to take a boat out, a jet ski, that type of stuff on the lake. When it comes to pricing on the lake, that’s the number one thing is what lake are you on. Because when you’re looking at value points you’ve got what lake are you on, what’s your competition, what kind of condition is the house you’re in, what kind of amenities, like do you have a walkout basement, is it finished, is there a first floor primary bedroom, do you have a pool? Pools are really big on lakes. What your frontage is like, what your views are like. Lakefront’s a lot different than regular residential because regular residential, you go into a subdivision and there might be two or three different models and everybody has pretty much the same lot and pretty much the same type of house. When it comes to lake property, every house is a Picasso. Every single house is totally different. You don’t see the same basic house in rows.”

Overall, interest rates don’t slow down many lakefront buyers, according to Stockton.

“When it comes to lake properties, it has the highest percentage of people that pay cash other than investment houses. And that can be in all price ranges. It’s not unusual to see $2 million houses that people are paying cash,” he said.

McFarland lives on Lake Sherwood in Commerce and has 42 years of real estate experience.

“Lakefront property has always been a great investment. There are times when it stabilizes a bit but then it always goes up because it’s a commodity,” McFarland said. “Even though this last year was a little challenging on the lake that I work and live on, a lot did go up three percent from the previous year. We’re in a correction mode where buyers get that interest rates aren’t going to go down.”

On average, national-level real estate data suggest that waterfront or lakefront homes often command premiums of roughly 20 percent (or sometimes more) compared to similar inland properties, due to scarcity, views and demand. These fixed plots of land with homes simply can’t be reproduced. Developers can build inland but not on additional shoreline, so buyers pay a consistent premium whether it’s for primary residences, vacation homes, or investment properties. ­­