Remember back in January of 2010, when I declared the lakefront real estate market would only have a good year if our inventory built to proper levels? I said we’d have a good year if pricing continued to drop, and if new properties were introduced to the market during the first and second quarters of the year? That little prediction is proving to be quite right, and the same low inventory troubles that plagued the lakefront market in the early spring are not the same inventory troubles that plague it today. With 38 true lakefront homes available in our MLS as of this morning (South Shore Club aside), inventory is at historical norms, and may even be leaning towards the higher range of what is a normal amount of lakefront inventory. The inventory isn’t really the problem, the problem is that after solid lakefront listing activity in the spring, our summer listing activity has all but dried up.
New inventory is like tinder for a fire. New inventory is essential to sales, as picked over inventory will still attract buyers, but new inventory has the potential to excite buyers in a way that existing inventory cannot. Existing inventory, those homes that have been on the market for three or more months, tends to have one, bent little arrow left in its quiver; its price. If a property has been sitting on the market for quite some time, there’s little that can be done to attract new buyers absent a significant price reduction. This isn’t Malibu, and rolling out red carpets and renting horses for open houses will only illicit groans and eye rolls from reasonable Midwesterners. You heard me Josh.
Of the 38 true lakefront homes available on Geneva as of today, only one has come to market in the past 47 days. Six weeks, and we’ve only added one lakefront listing to the inventory rolls. Higher inventory numbers are not always good, this much is obvious. If you live in a development with 30 homes and 18 of them are for sale, this is not good. However, if you’re talking about a lake with around 750 total lakefront homes, and just 38 of those are for sale, “high inventory” means something else entirely. I’d like to see another three or four lakefront properties come to market over the next month. If we can do that, there’s a good chance that one or two of those new listings will find the right buyer- if the prices are in line with current market demands.
On the lakefront right now, I can identify 5 or 6 properties that I find really intriguing. There’s an entry level lakefront in Fontana priced in the mid $1MM’s that I find wildly idyllic, even though a buyer would have to have vision to share my excitement. There’s a lakefront on South Lakeshore Drive priced in the mid $2MM’s that I’ve liked for quite some time, even though I’ve failed miserably in selling it. There are a couple others in the high $2MM’s and low $3MM’s that I have a sweet hankering for, even though the properties would have to sell for considerably less to be considered values in my mind. The market is ripe for a deal, as summer activity on the lakefront has been solid, but sales over the past month have been anything but.
There is only one lakefront home pending sale at the moment, and that, thankfully and appreciatively, is the contract that I have pending on a listing priced at $6.95MM on Geneva’s south shore. Aside from that, sales activity has gone a little stale thanks to a fantastically hot and equally sunny summer season. Look for buyer activity to pick up, but it probably won’t do so in earnest until September. In the mean time, there are deals to be made and sellers to abuse.