Lake Geneva Market Update

Lake Geneva Market Update

At first blush, it makes no sense. Why, after so many years of a predictable pattern, are homes in excess of $4MM selling so frequently and easily in 2015? The hedge funds had their huge year in 2011, making it reasonable to expect 2012 and 2013 to be high flying years. The same years, the stock market gained and gained, allowing those with large scale equity investments to cash a bit out and buy real estate, if they so properly desired. If this upper bracket buyer was sensitive to interest rates, they’ve had years and years of them. The catalysts have been in place for several years, so why 2015?

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I think it’s private equity. You have Midwestern businesses of varying sizes and industries selling at premium prices. The simple logic goes like this. Mr. and Mrs. Businesspeople own a lake house. Because they’re successful in business and obviously intelligent, well rounded sorts, they own their lake house at Lake Geneva. Their lake house was bought when they ran that business, the one they spent so much time building. They bought that first house with revenue. Private equity found them, negotiated with them, and now our friendly business couple who already loves Lake Geneva just sold their business for many times earnings. They were rich before, revenue rich, but now they’re lump sum rich. Would it be strange to expect them to flip out of a $2MM lakefront and into a $5MM lakefront? Of course not. The lakefront market on Geneva has had a tremendous run at our upper range, and I say we owe it all to private equity.

You’ve likely noticed that I haven’t been writing market updates every day. I haven’t been doing this because the market is hot, and I grow tired of saying that. It’s hot! I say. Everyone else says it, too. They say it with fewer words, sometimes just breathless gestures, othertimes with pictures, but they’re all saying it. The market is hot, it’s active in all segments, and 2015 is shaping up to be a banner year. I think that would be boring to write about three days a week, so I sometimes choose to enlighten you with other meaningless tidbits.

The entry level lakefront has been offering up some tasty deals this year, and up until recently the market has mostly failed to take advantage of the ample inventory. This last week, two entry level homes have gone under contract. One near Abbey Springs, as in not sort of near, but right smack dab on top of it. Listed in the $1.1s, this home was cheap enough and a buyer finally looked past the oddly complicated approach. The other home was another that suffered through a slug of showings and a systematic chopping of the price. This Lake Geneva Highlands lakefront is now pending sale with an ask in the mid $1.3s. Think the market finally caught fire and gobbled these up because they feared they’d never find something quite so good? Think again. The prices came down, and buyers bit.

Other lakefronts under contract include a private listing in Geneva Bay Estates for $2.65MM, my listing on Bonnie Brae for $2.995MM, a lakefront lot in the Elgin Club ($1MM), a shingly thing in Cedar Point in the mid $2s, the bombed out cottage ($879k) shell near George Williams, an old house on the hill in Glenwood Springs in the high $1s, and the large Baywood Heights-ish ranch on Basswood just under $5MM. My listing in the South Shore Club is pending sale, as is the Pickell built home on the hill in Fontana. Expect sales of both within a few weeks. There is an offer on the large Fontana lakefront listed in the mid $4s, so let’s expect that contract is put together. That’s the sort of buyer that would have been better off looking seriously at 1014 South Lakeshore in the $7s, as the all in number for a land buyer in the $4s will likely far exceed $7.

The lake access market is active as well, with buyers reaching back towards off-water homes that lack slips in the $600k range. This isn’t a range I love, unless the house is somehow special. A boring house on a boring lot that lacks a view or a slip in the $500s? I’ll pass, thank you. For all the activity, I still see value in the sub $550k price range. There are some winning properties with slips that can be bought around $500k, and there are some reasonably nice lake access homes in the $300s that look interesting to me.

The lakefront condo market is just okay, with plenty of inventory and plenty of value offered. There’s a pending deal on another Geneva Towers unit, as the developer who wished to transform the condo market there has mostly, by my math, maybe broken even on the effort. Maybe he’s made a fortune, but it looks to this outside as an endeavor that maybe wasn’t worth the effort. Abbey Springs housing is hot, with three single family homes pending sale there priced over $550k, including my listing on Saint Andrews for $765k. Geneva National is similarly active, with loads of interest in the condominiums and single family homes. I have a deal pending on one of my Terrace Court condos, and another contract pending on the GN Saint Andrews.

What to expect this fall? The same. The market is active, deals are plentiful, and buyers have largely pushed aside any concerns over the stock market tumult. If buyers wish to make 2016 a lakeside year, then they’d be wise to begin the process now. Not in January, not in March, but now. Start the hunt. Identify the target. And most importantly, avoid disastrous decisions by letting me be your guide.

Above, my newest listing. An Eastbank townhome with 3300 square feet of brand new luxury. Four bedrooms, four baths, canopied slip, two car garage, lake views, and so much fancy. $1.299MM

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