I pretty much knew this was going to happen. The entry level lakefront market on Geneva has yielded another sale, and it’s another sale that further proves the point that I’ve been holding steadfastly to since the beginning of 2009. Lakefront prices on Geneva didn’t have to drop. If sellers had no intention of selling, prices could have remained at pre-2008 levels, and no one, except the Realtors, would have been worse for wear. During the tailspin of 2008 and the bloody misery of 2009, lakefront owners, and their corresponding prices, were unwilling to concede that the market was indeed changing, and that it would ultimately affect even their prized piece of lakefront. 2010 has been a different year, and while the lakefront market has proven resilient, buyers have largely only taken notice of the entry level market as a result of some serious price reductions.
Last week, a lakefront in Wooddale closed for $1,050,000. With 75′ of lakefront and a home that could, in my opinion, be salvaged with a thorough renovation (watch it get torn down…) this property closed at a very low $14,000 per front foot. This home was originally listed in 2009 for $1.89MM, and then returned to the market this spring with an asking price of $1.5MM. Prior to receiving the contract this fall, it had been reduced yet again to $1.375MM. With that last reduction, the property passed through the secret wardrobe of magical price points at Geneva, and found a willing buyer. While some may enjoy this location, I generally feel anemic towards that stretch of the south shore. It’s not that I don’t like it, it’s just that my personal preferences are weighted in favor of Black Point west through Fontana, and the entire north shore.
This sale is the third entry level lakefront to have closed this year, and it further proves my previous posts where I’ve said that lakefront prices will only be allowed to drop so far before buyers snap them up. It’s not the sellers holding up the entry level market with lofty list prices, it’s the buyers who patrol the waters like so many sharks in search of a tender morsel that might be had for $1.35MM or less. The other two sales, my Sauk Trail sale at $1.313MM, and the Cedar Point lakefront at $1.145MM, make obvious where the market is for an entry level lakefront. If you have a small-ish house on a small-ish lot on Geneva, chances are the house needs to sell between $1MM and $1.3MM.
The problem at the moment is that we’re running out of entry level lakefront inventory. As of this morning, there are only four available lakefront homes priced less than $1.7MM. Of these four, one is quite strange, with prodigious amounts of frontage, but a severely limited lot and house location, and another is the reborn sheriff’s sale property that I’m not too keen on. That doesn’t mean these properties won’t sell, but for my money I probably look at the Birches lakefront and the log cabin in Wooddale first, and the others ones second. In light of the strong sales history this year that proves where the entry level market needs to be, it’s a difficult time to be an entry level lakefront seller if you’re intent on getting prices out of line with these three comparable sales.
The entry level market is full of life, and I wouldn’t doubt we’ll see another sale in this price range before the year is out. If you’re a buyer in search of entry level lakefront, we really need to start talking. Or emailing. Congratulations to the agent who closed this $1.050MM deal (not me), and a warm, but masculine, pat on the back to the buyer who just joined a very exclusive club.