Capsized by economy, Houghton Lake clings to hopeful signs on vacationers

UP, DOWN: Randy Krause invested in Houghton Lake’s vacation economy by buying a small hotel. He eventually lost his investment. “Weekends were busy, but that was all,” he said. (Bridge photo/Nancy Derringer)

PRUDENVILLE – Whether Randy Krause’s business was the victim of hard times, changing tastes or just plain bad luck hardly matters now. The East Bay Lodge, overlooking Houghton Lake, would be his retirement business, he thought, a small (27 rooms), manageable vacation spot where he and his wife, Lorrie, would welcome guests to a popular Michigan destination.

It didn’t work out that way.

Purchased in 2004 for $750,000, the East Bay had a few great years. But the recession hit its core demographic hard; even though the rooms were priced at an economical $75 a night, the sort of middle-class Michigan travelers that kept his lights on were cutting back on things like vacations.

“At first, from mid-June to the end of the season, you needed a reservation to stay here,” said Krause, sitting on the back porch of the lodge, on M-55 in Roscommon County. “By the end, you could fire a gun through the place. Weekends were busy, but that was all.”

Krause let the bank take it back on April 15 of this year.

The now-former innkeeper believes, bottom line, he was the victim of a changing Michigan, one where fewer families of modest means vacation the way they once did. A week at a Houghton Lake resort might shrink to a long weekend. Where once a sandy beach and fishing rod satisfied, today’s vacationers require Internet access. Miniature golf is less of a lure than a mammoth water park.

Mainly, though, there are just fewer of them to go around.

Property drop hits hard

James Herron is president of the Paul Bunyan Board of Realtors, which serves the area. He’s breathing easier these days; prices are finally climbing, after years of bumping along on the bottom of a 40 percent drop from their peak. He no longer has to be “that guy – the one who has to give people the bad news.”

Bad news was all over the place during the auto industry’s paroxysms; for generations, well-paid autoworkers from Flint and Detroit were the bread and butter of the seasonal economy. They had the money for second homes, and they lived close enough to visit nearly every weekend, bolstering restaurants and other businesses.

But as buyouts reduced their numbers and undermined their economic security, the damage was felt in Roscommon County.

“In 2009-10, it seemed every other property had a For Sale sign,” Herron said. “And 60 percent were foreclosures, short sales, just people letting those homes go.” Cottages were left closed during the summer season, or improperly winterized in the cold ones, and “from the time they’re abandoned and the bank comes in, that’s 18 months or more,” he said. “It took a toll on a lot of places.”

What was once a popular dance hall in Houghton Lake’s heyday as a summer resort became a theater. Today it is owned by the local historical society and is available for private rentals. (Bridge photo/Nancy Derringer)

Between 2007 and 2012, property values in the four townships around Houghton Lake fell at rates between 21 percent and 32 percent.

With prices finally starting to climb, Herron is getting back to a Realtor’s natural optimism, but even he is guarded.

“It’s not going gangbusters,” he said. “There are still a lot of great values out there. But it’s a good time to sell.”

Linda Tuck, president of the local chamber of commerce, isn’t unreservedly enthusiastic about the area’s fortunes, but like Herron, agrees things are better today. So much of the area’s success depends on factors well out of her control, from weather to gas prices. Recent warm winters have even put a dent in Tip-Up Town USA, the January festival revolving around snowmobiles and ice fishing.

“Two years ago, we had to cancel some activities because of no ice,” she said. “That’s the first time that’s happened.”

Dances, skating, big crowds marked heyday

Residents who remember Houghton Lake in its glory years are gray-haired themselves. Violet Gonzalez, president of the local historical association, recalls when dance halls and roller rinks would draw adults and teenagers alike. The old resorts offered rustic cabins or lodge-type rooms, and vacationers would flock to the area, even just for a night’s worth of entertainment, from as far as Mt. Pleasant.

But as has happened in many small towns around the country, mom-and-pop stores have given way to Home Depots and Walmart.

“Some of the smaller businesses haven’t reinvented themselves,” said Tuck. “We had a local grocery close not long ago. They might have made it as a niche market, but they couldn’t pull it off. If you don’t have a business plan, and stay on your toes, you’re not going to make it.”

So if the real-estate market is picking up, who is buying? Who will be the next generation of Houghton Lake cottage owners?

“We’re seeing a lot of retirees,” Herron said. That’s an observation seconded by Tuck.

Of the four townships that encompass the Houghton Lake community, population projections through 2040 call for a 1 percent decrease, she said.

“It is getting older,” Tuck said. But she believes the 22,000-acre lake, the largest inland lake in the state, will always be a lure, for this and future generations.

Even Krause, looking at his lost East Bay Lodge, isn’t entirely downbeat. The building is listed for $399,000, but he thinks it will go for closer to $300,000.

“But you could make it with a note like that,” he said. “That’s manageable. Ours wasn’t.”

Staff Writer Nancy Nall Derringer has lived in Metro Detroit since 2005, working as a writer, editor and teacher. She worked for 20 years as a columnist in Fort Wayne, Ind. and was a co-founder of GrossePointeToday.com, an early experiment in hyperlocal journalism.