The Iowa Lakers

There comes a time in the life of some upper middle class (or higher) folks when they decide it would be a good idea to buy a second home.  It may be a small condo in a multi-story tower in a warm climate, it may be a log house in the mountains, it may be mansion on a beach estate in the Hamptons, it may be a lot of other things.  Whatever it is, it's usually a getaway from an already very nice dwelling somewhere in suburbia.

Here in the Midwest, where there are no mountain or oceans, a lot of folks are gung-ho about spending time somewhere else, but not always over 1000 miles away.  To fulfill this desire, many local jurisdictions have allowed small lake areas to be developed for housing and recreational purposes.

More specifically to where I live in Iowa, only a few of these lakes are natural, notably the so-called Iowa Great Lakes around Okoboji, Iowa.  This is an area that would accurately be described a summer resort, with plenty of restaurants, shops, and entertainment venues to justify a premium, vacation home price point.  There are perhaps one or two others like it in the state.

Most of Iowa lakes, however, are small and man-made, the result of damning rivers and streams for flood control.  All of these lakes also contain a higher content of agricultural fertilizer run-off of both the natural and man-made variety.  And none of them have the restaurants, shops, or entertainment venues to be considered anything close to a resort.

This is where it goes wrong for me.  I've no problem with owning more than one property.  I may well want that for myself one day (preferably on a golf course in the Southwest).  Also, I've no problem with those who want to live on a lake; that isn't for me, but it's different and calming, and I get it.  But what I find confusing is the number of people willing to pay inflated prices for a small, very part-time second residence, in a remote location on or near a dirty lake, in basically the same climate in which they already live.

Over the years, I've known quite a few people with these type of second homes, most of them with mixed feelings.  It's no exaggeration to say that at some point, I've heard every one of those people complain about that extra home at some point.  Either the cost, or the maintenance, or the lack of amenities, or the fact the weather only allows for a few months of lake enjoyment to begin with.

Regardless, they believe the serenity of a lake house - on any kind of lake - is worth those downsides.  It also helps that over the last 10 years, most of those properties have skyrocketed in price, due to a good economy and plenty of maturing buyers.  That's a good thing.

At least it is until we have another recession.  Then it could be a very bad thing.  It could be a major depreciating asset that can't be properly monetized, next to a polluted body of water, in the middle of nowhere.

But hey, at least it has a view for a few months a year.