I wish I could get Keith Jackson to proclaim Geneva Lake the “grandaddy of them all”. If he’d do that for me, then it would be obvious that if the lake is the grandaddy, the property surrounding the lake would certainly be even more special. Then again, who cares what Keith Jackson thinks, and since when do we need someone else to tell us how great Geneva is? Whether it’s the 1800’s and you’re John Brink, or it’s 2010 and you’re some guy from Schaumburg, it’s not too hard to see how unique this lake really is. The lake is surrounded by private property, providing anyone with the budget and desire to vacation along its’ shores the welcoming opportunity to do so. Lakefront property has always been expensive on the lake, but it was really, really expensive from 2001 to 2008. I stopped short of 2009 on purpose, and it’s not because lakefront property suddenly became “cheap”, it’s just that much of it became much more affordable.
2009 was an interesting year for the lakefront market on Geneva, and it wasn’t because of particularly robust volume. The year was unique in the past decade, largely because sellers found some motivation that had not been common in the market over the past ten years. Sellers on Geneva famously do not have to sell, and when you have a sale that is discretionary, butted up against a purchase that is discretionary, it’s easy to see how prices can remain stable even when volume grinds to a halt. This historical grudge match between affluent sellers and affluent buyers changed a little in 2009, as several property owners succumbed to the new reality of the market and decided to sell at prices that were as much as 30% off previous market highs.
During the year, 13 lakefront properties sold on Geneva. The volume, far from impressive, needs historical context. 2008 yielded 14 lakefront sales, and back in the hay day of 2006, just 20 properties sold. The volume change from 2006 to 2009 of roughly 35% is comparable to the overall vacation home market here, which is obvious if you’ll read the previous two posts from this week. Value changes are extremely difficult to quantify on the lakefront, as most properties are probably off around 15%, even though some of the sales this year closed at prices that were probably as much as 35% off their market highs. Even with the lakefront market giving in to the broader market and easing on price, there are still plenty of lakefront homes that are incredibly desirable, and will find buyers even at prices close to their previous market highs. Low volume, low inventory markets can act like that, and Geneva is a classic example of a market that can, at times, make very little sense.
The lakefront hosted a foreclosure this year, and the sale in the City of Lake Geneva at $1.25MM represented the only lakefront foreclosure of the year. The property, as I discussed at the time, benefited tremendously from the magical marketing phrase “bank owned”, and sold for a price that I didn’t feel was a particular value. I haven’t seen any foreclosure filings involving lakefront on Geneva since that one, thought it wouldn’t surprise me to see a lakefront REO come to market at some point during 2010.
2009 might have been a year of near misses in terms of my own lakefront success, but I see better things on the horizon for 2010. We’re entering the year with two lakefront properties pending, which means we’ll hopefully record at least two lakefront sales during the typically slow first two months of the year. Much like the overall market, the lakefront is severely dependent upon quality inventory. I personally have several buyers in search of lakefront right now, and the selection is leaving them wanting. With only 27 active lakefront homes (including the South Shore Club) right now, we could certainly use more inventory. If we introduce some quality new inventory to the market over the next three months, I think there are plenty of active buyers to create a nice up tick in volume for 2010. Lower prices, combined with low interest rates (most lakefront purchases are cash here, even though financing is available and welcome), and an increase in stock market valuation, should create a nice confluence of positive factors that the lakefront market will benefit from.
With inventory at its annual low, January and February are still great months to attempt to take advantage of this market. If you’re a lakefront buyer, and have thoughts that 2010 might be the year you finally get over the hump and purchase a lakefront home on Geneva Lake, I’d encourage you to give the lake a once over during January. If you’d let me show you some property in your price range, you may just find exactly what you’re looking for. Not only might the property make you smile, your increased, off season enabled negotiating strength might as well. Oh, and it’ll also make your children, your children’s children, and their children, and your friend’s, and your friend’s kids, and their kids, and your Aunts and Uncles, and your parents, and your neighbors, and the couple from church that looks like they need a water based weekend, and old classmates, smile too.