For a time it seemed that all Smith Mountain Lake could do was grow.
When the lake reached full pond 50 years ago, a rural farming area slowly transformed into a community with luxury waterfront homes. In the late 1990s and early 2000s, the lake swelled with new people, houses and developments.
In 1990, Gills Creek and Union Hall — the two magisterial districts that include the majority of Franklin County’s portion of the lake — had a combined population of 9,736. By 2010, that number climbed to 17,736, or an increase of more than 82 percent, according to census data.
Then that growth slowed and the lake community discovered it was not invincible.
In 2009, developer Trey Park filed for bankruptcy and had two developments, including LakeWatch Plantation in Franklin County, repossessed. The remaining LakeWatch properties were sold at auction last year. Meanwhile, Bridgewater Pointe Partners defaulted on a multi-million dollar loan for condos near Hales Ford Bridge in 2008. The condos sold far below 2007 asking prices in a 2010 lottery.
Smith Mountain Lake grew as it did because it appealed to many people: retirees, families looking for a weekend or summer getaway, northerners looking to head to a warmer climate. But when the economy crashed, those markets shrank or vanished.
“The person up north couldn’t sell what he has to come here,” said developer Ron Willard, of Franklin County. “The small business person’s business was so bad he couldn’t venture to buy a second home. And the person that was going to retire, that was going to buy the lot and build his house in three years, can’t make that long-range plan anymore because he doesn’t trust what the economics are of the country. So all that has affected what I call the housing sector of Smith Mountain Lake.”
But things are picking up again. Not at the pace of 2004 and 2005, but that might be a good thing. Bruce Shelton, manager of Capps Home Building Center, said then that there was more going on at the lake than the population could sustain. People were building and flipping relentlessly, because it seemed like the boom would never end.
Vicki Gardner, executive director of the Smith Mountain Lake Chamber of Commerce, cited several indicators of recovery: more real estate agents at the lake, extended store hours, new businesses, fewer “for rent” signs and more people coming into the visitor center.
Willard said his real estate company’s sales are on the rise. If the economy continues to improve, he said, he hopes to build a town center at Southlake in Union Hall. His plans to develop about 100 acres were put on hold when the market crashed. Willard said he thinks lakefront senior living will be the next big thing at the lake.
“I feel that 2016 is going to be the most promising year we’ve seen in eight years,” Willard said.
Home prices slowly inch back up
Last year was probably local real estate agent Penny Hodges’ best year. She said she hopes that carries through to 2016. She kicked off the year with five sales.
She said the lake has a shortage of inventory, especially homes in the $500,000 to $600,000 price range. She knows of someone who has built two “spec homes,” but otherwise, the houses on the market are primarily those people bought and fixed up or those owned for years by people now ready to move on.
Unless new houses start popping up, Hodges said, she wouldn’t be surprised to see prices start rising, given the demand and lack of inventory.
A multiple listings services search shows that 86 lake houses ranging in price from $499,000 to $700,000 were sold from January 2015 through mid-February 2016 .
Property values aren’t necessarily on the rise but have been holding steady for the past few years, Hodges said.
Hodges has witnessed the evolution of the lake economy and real estate market. She started in real estate in 1981, and the first lake house she sold went for $66,000.
Around 2006, things started to taper off, she said. Eventually, houses that would‘ve have sold for $700,000 to $800,000 were going for $550,000 to $650,000. Many people were “just totally upside down on their mortgages,” Hodges said.
Retirees continue to flock to the lake. Hodges said she’s seeing a lot of people buying now, looking to retire in the next three to five years. She estimates that 60 percent to 65 percent of the market is made up of retirees.
Real estate agent Dave Gresham has high expectations for this year; he believes 2016 will be the end of declining prices at the lake.
“The lake is coming back,” he said. “In fact, it’s slowly been coming back for a couple years.”
However, Gresham said, there’s too much property on the market, particularly undeveloped lots. Gresham said it’ll probably be a few years before those prices improve.
Gresham staunchly opposes Appalachian Power Co.’s shoreline management plan outlining regulations the company enforces as manager of the hydroelectric project. Featuring stipulations about recreational activity, such as building a dock, the plan is a point of controversy among some lake residents.
Hodges said it has led some to abandon the lake.
“I have lost some sales — thank you, Lord, not many — from people that have said, ‘Wait a minute, I’m not buying a property and letting them dictate to me what I can and cannot do. We’ll look elsewhere,’” she said.
Gresham said the plan hinders some people from moving to the lake.
Still, he said, “The sky is not falling. The lake is a wonderful place to live.”
A divisive number
Though longtime Franklin County residents have their gripes about the lake, most acknowledge its economic benefit. Magisterial districts Gills Creek and Union Hall bring in nearly 60 percent of the county’s real estate tax revenues, amounting to more than $22 million.
“The biggest industry that Franklin County has is certainly Smith Mountain Lake, because it produces all that tax revenue. It’s the biggest factory we have,” Willard said.
Boone District Supervisor Ronnie Thompson said he wishes that meaningful number — the one lake residents point to seemingly to prove themselves and their worth to the county — wouldn’t come up so often.
“It divides the county,” Thompson said. “That’s one of the things that I think we need to work at daily, is to try not to divide the county.”
While some people say they wish the lake had never been built, Thompson said, he’s glad it’s here. It created jobs and a major tourist attraction for the county. Without tourism at the lake — along with other area attractions such as Philpott Lake and the Blue Ridge Parkway — Franklin County’s economy more likely would resemble would that of Martinsville or Henry County, Thompson said.
Blue Ridge District Supervisor Tim Tatum is grateful Franklin County has a revenue driver in Smith Mountain Lake. He would “hate to think where Franklin County would be” without it.
“I have relatives that live in Patrick County, Henry County and places. Those areas are really struggling,” he said. “They just don’t have the tax base.”
Selling the lake life
Michael Burnette, Franklin County’s economic development director, said his department uses the lake to lure new businesses to the county.
“We always show the lake when we’re working with prospects so they get a better feel of the quality of life, but also we’ve had companies that have moved to the area that have brought their management team down who have decided to come here because they wanted to live at the lake,” he said.
Burnette cited Solution Matrix, which relocated to the lake from Pennsylvania, as an example. A location that a company can easily sell to its management team is key in attracting new business, Burnette said, and the lake helps.
“When people can see that kind of opportunity around the lake area, that’s a huge draw for them,” Burnette said.
The benefits are mutual: “The tax revenues that we’re able to bring in from that development,” Burnette said, “is what funds our excellent school system, it’s what funds us being able to do sites and buildings for economic development, so it kind of helps in that way as well.”
Seeking new amenities
The economic downturn provided time to think about the future of the lake, Gardner said.
Though the lake has seen significant growth in its 50-year existence, there is room for more. The question is, what does “more” entail?
Franklin County seeks to answer some of those questions through its village plan covering the area from Westlake to Hales Ford Bridge. An advisory committee made up of local leaders, business owners and residents is working to put their vision for the future on paper.
Gills Creek District Supervisor Bob Camicia, who organized the advisory committee, said one of the big questions is whether more steps will be taken to foster a suburban environment at the lake with things like walking trails, an expanded library and a community center.
Because the lake attracts so many retirees, it becomes more important to ensure the area continues to draw people, Camicia said.
Amenities could help. The community center has been an area of focus. Area businesses such as Kroger and Capps have become unofficial meeting places in lieu of a center, where people could gather, clubs could meet or classes could be offered, Camicia said.
A committee recently formed to explore the financial feasibility of opening a community center, likely in the Westlake area. The panel plans to hire a consultant, said committee Chairman Jim Laseter.
It would be another change after 50 years filled with them.
“The economy has changed. The landscape has changed. Everything has changed because of the lake,” said Gardner, who moved to the lake 30 years ago. “And it has taken five decades to get to where we’re at and I would probably say that in five years or in 10 years from now, it will have again changed substantially. We’re this lump of clay and we’re just morphing into lots of different things.”