Wow. That’s really all there is to say. Wow. Maybe Wowzers. The lakefront market on Geneva Lake is as heated as it has been since the summer of 2007. I was a player in the market then, but I wasn’t a large player in the lakefront market like I am today, so my view of that prior frenzy wasn’t from the front row. Today, with this front row seat underneath me, I find the market to be breathless. How I pine for the darker days when buyers had a few moments to gather themselves before making a lakefront decision. For those buyers who had lakefront opportunities during 2011-2015 and failed to act, this post should be sung slowly as a dirge.
Today there are 21 lakefront homes available in our MLS. There are an additional four pending sale. At least two others have offers in negotiations. At first blush, you won’t find this all that rare. In fact, our inventory has actually risen over the past three months, as for one period there were just 16 lakefronts available. There are two primary points of interest that have presented in this new market cycle. Yes, it’s no surprise that buyers still want 100′ of frontage and they want it now. Yes, buyers still love Viking ranges and Sub-Zero refrigerators. Yes, Calcutta marble remains in high demand. The things you know are still correct, but there are two new drivers of interest that have never, ever fared particularly well in the history of our market.
Buyers have shown that they love being near downtown Lake Geneva. They don’t just sort of like it, they love it. I sold 700 S Lakeshore earlier this year in large part because of its estate qualities and its proximity to downtown Lake Geneva. The two lakefront homes on Main Street just West of Library Park are both pending sale as of this week (mid $2s), and that’s significant as both of these homes have endured some lengthy market times over recent years. Buyers found motivation to snap up these two homes, and I’m betting large amounts of your money that the interest was driven primarily by the proximity to downtown. In prior years, such proximity would have often been viewed as a negative feature. The noise and commotion, the tourists, the higher taxes. Yet of late, buyers love downtown and so buyers are buying downtown. It’s super interesting to me.
The other curious aspect of this new market cycle is the liquidity at the top end of our lakefront. Homes over $5MM have never sold with particular ease. During the last bull run here, from 2000-2010, just three lakefront homes sold in our MLS for a price that exceeded five million dollars. Since 2010, eleven lakefront homes (and a vacant lot, making it twelve) have sold over that benchmark. Of those eleven, I’ve sold seven of them, including three of four to close over $7MM, but that’s not the point (actually, it’s always the point). This increased liquidity is being viewed by the owners as some new stable trait of our market. Something that has finally manifest, and should stay in place forever. I’d question that theory, and would encourage any owner in this range who might be considering a sale to hurry up and sell. This liquidity is beautiful, but cycles are cycles.
And that brings us the concept of a lakefront market cycle. How long will this cycle last, and where are we in the cycle? Obviously it’s impossible to know this, but we do have the benefit of history to look at as a guide. The last cycle began in the late 1990s and ran up through 2008. The cycle lasted around 10 years, with gradual price increases occurring each year during that cycle, including in the years immediate following the 2000 dot com bust. If we look at our down cycle as occurring from 2009 through 2012, we’ve been building towards a new bull market since 2012. Yes, extreme value existed up through 2015, but for the most part our market was in full recovery mode (increased liquidity and increasing demand) by mid 2012. With that in mind, it’s easy to say we’re about five years into our current bull run.
How much is left in the tank? Well, judging by the market conditions today, I’d say plenty. Does it last two more years? Does it go five more? That’s impossible to guess. Keep an eye on the stock market and on our inventory if you’d like a clue as to where the market is going. If the indices stay high and our inventory stays low, you have the makings for a continued bull run. If markets melt to any extreme level and our inventory swells, that would likely mark the end of these conditions that favor our sellers. For now, look at the market. Watch it. And don’t do as many buyers are doing right now and make a mistake. Let me be your guide. Not only will we have a lot of fun with your house hunt, you also won’t end up buying the wrong house in the wrong location.