Over the past three weeks there have been three lakefront closings. We haven’t talked about a single one of them, yet. So if we haven’t yet then it must be time now. Now, after the glorious weekend that has mercifully ended and allowed our skin time to deal with all that vitamin D that we forced upon it. The three sales of the past three weeks tell us an awful lot about the lakefront market, about the mood of the market, the stage of the recovery, and the mindset of 2013 buyers. These three sales are important, and not for the reasons that most of the sales that came before these were. Every sale is a good sale, for no other reason than any sale removes inventory from the market, and lower inventory is necessary for true market appreciation. No, these sales mattered, and not for that single reason.
Lately, I’ve been keen on telling people that most lakefront sales from 2009 through the middle of 2012 made sense. They made sense from a market perspective. When I sold the lakefront for $5.885MM in the summer of 2010, that sale made huge amounts of sense because it married a rare estate setting with a truly magnificent, newer home, for a price that was lesser than the two individual components. When I sold a big spread on Black Point for $3.25MM in the fall of 2011, that sale made sense because the buyer found wide frontage along with a fantastic house and forced the seller into a position where they succumbed to the market realities of 2011, even if they didn’t really need to or particularly want to. There have been other sales too, mostly the sort that made sense.
And then, the summer of 2012. Sales occurred, rapidly. Some sales made sense, some did not. For the first time in perhaps five years buyers were buying with motivation that listed dangerously towards blinding obsession. Then, 2013. The market behaved normally for a while, steady sales without much head scratching, but this tempered pace would not last. A sales burst came in the spring, and with it these three closings from mid June and into early July (none of these three sales involved me, which is sad). First, a sale on Bluff Lane in Wooddale. A nice cabin of sorts, with 80′ of frontage that didn’t entirely feel that wide, and an elevated perch. At $1.2MM, this sale is a quality sale at the right price, and it proves that entry level buyers will seek out those lower priced offerings and purchase them no matter if the cabin feels more at home in Viroqua than in Lake Geneva.
Then, a sale at 68 Oak Birch in Cedar Point for $1.375MM. This was a short sale, and the buyer isn’t an end user but rather an investor type. The price is significant because it shows that entry level hasn’t just stabilized, it’s appreciated. This is the first time I’ve used that word in that context in quite some time, or, since roughly forever. I think entry level has indeed appreciated- but only for specific property locations. Cedar Point Park entry level has appreciated, and if you don’t believe me, consider the property I sold next door to 68 Oak Birch for $1.225MM last summer. Or the one I sold in Dartmouth Woods this spring for $1.225MM. Certain lakefronts on the market today in the entry level range of $1.3-$1.5MM are destined to fall to the $1.2MM level if they wish to attract buyers, but this is not necessarily the case in high quality lakefront locations, like Cedar Point, Indian Hills, and others.
The sale that might mean the most to the market is the sale on Conference Point for $2.95MM. That listing was nice enough, but not quite as great as the nearly $3MM sales price made it out to be. The house was renovated, though there were a few finishes that lacked three million dollar status. The driveway access was shared, the views nice, the frontage light- just 90′. Ninety feet of frontage is great, but at that sales price the market expectation would either be for a vastly superior house or a superior location. I suppose the location was nice and the house was too, but I don’t know as though $2.95MM was a great price. That said, it was a great price for the market and proves that buyers facing a shortage of quality inventory will buy that which they perceive to be the best opportunity available at the time. This property appears to have benefited from a somewhat significant lack of inventory around the $3MM mark, and it would be hard for me to imagine this property selling for this price had there been a few more competing offerings in that range.
These three sales teach us a couple of things. First, entry level lakefront in the proper association has indeed appreciated off the market lows set in 2010 and 2011. Second, buyers will buy things that don’t necessarily make sense if the inventory is light and their motivation high. And third, Geneva remains the king of stability both now and likely into the future, owed in large part to the cash positions of many buyers here. All three of these sales were registered as cash transactions, leaving little doubt as to the capabilities of the alpha consumers that ring this incredible lake.