As the fitting sequel to yesterday, today we must discuss those other lakefront homes, and the other lake access ones too. Those other homes are the ones not receiving the contracts. Those other owners are the ones not trying hide their unavoidable smiles, those telling signs of a smug satisfaction. Those other homes are the ones that we should now be watching, and it’s those other homes that are about to begin doing something that every buyer should be prepared for. There are price reductions coming. Plenty of them.
It shouldn’t be a surprise really, if you fully understand that this is a market of fits and starts and of thin times and thinner times. When your neighbor’s lakefront sells and yours doesn’t, what is there left to do? Can we throw broker’s open houses with hired models riding Lipizzan horses? Will that drum up the business? Or should we advertise in this paper or in that one, pretending that the problems are limited to finding the buyer instead of enticing the buyer? No. Instead, we should do what we must to make our product fit the marketplace. That is why price reductions in the Lake Geneva vacation home market continue even as volume rises, and that is why over the next 30 days you’re going to see a lot more price reductions than you have over the prior 30.
The fall market at Lake Geneva isn’t like you think. It’s active. It’s usually better to sell during September and October than it is during July and August, but these are the usually’s and these are just basic ideas. So if the summer market is as hot and bright as the weather, does that mean the fall market will continue in this elevated pattern? Not necessarily, but an active summer does bode well for an active fall. Perhaps some sellers will be more interested in selling this fall to avoid the possible capital gains tax increases that might arrive in 2013. I’d rather give a buyer a 5% discount than send that 5% to the US Treasury.
The reductions will increase as we move through this sunny July and into our lazy August, but don’t be fooled into waiting for broader reductions while others have already begun. Chief among the important reductions of late is my listing in the South Shore Club at 1588 Lakeside. This home was for sale last summer with another firm in the upper $2MMs. I listed it around February 1st for around $2.45MM, and then it dropped to $2.279MM not too long ago. On Friday it dropped again, not a small percentage drop engineered to flicker on your screen but a big drop, aimed at attracting a whole new buyer. From $2.279MM we reduced to $1.95MM. We are now the most economical offering in the South Shore Club, and we are poised to be the cheapest sale ever to occur North of the swimming pool. North of the pool lies the lake, so we’re close, and we have a killer view.
Listings on Geneva Oak and Folly Lane have endured systematic price cuts over the past six weeks, and you can expect more of the lakefront to follow that same path over the upcoming month. The fall market is the one we’re positioning ourselves for now, and as with all inventory at Lake Geneva it is a race to attract the buyer, not a competition to see who can dig deeper to uncover a buyer who doesn’t yet know he is one. For buyers, these price reductions are pure gold, but they can also be dangerous. A less than ideal piece of lakefront can reduce its price a significant amount and in doing so can attract a buyer who thinks first about the money and second about the value. This is why people will buy homes next to highways and boat launches and industrial parks. Cheap prices drive volume, but only value can drive future appreciation. Best work with an agent who knows the difference between cheap pricing and value.