Lake Geneva Upper Bracket Update

Lake Geneva Upper Bracket Update

Sometime during the deflation of the housing market in 2008, I had a very disturbing epiphany. Most epiphanies are pleasant ones. When I had a sudden realization last night that I don’t just sort of like homemade caramel corn, I love homemade caramel corn, that was a pleasant, waist swelling epiphany. This 2008 epiphany was more of a slow embrace of reality, but an epiphany of sorts nonetheless. In 2008, for the first time in my young life, I no longer thought I’d end up in a big fat lakefront house on my lake of choice. Up until that point, the sky was my only limit, and I figured a systematic conquering of the world was more of a inevitable journey than a life long battle. The dream of owning a sprawling estate on Geneva is still alive and well, but my induction to the club appears to rely solely on a winning combination of numbers. Which reminds me, if I’m ever going to win the lottery, I really need to buy a ticket once in a while.

The lakefront market is dreamy, whether it be a lakefront condo, entry level lakefront cottage, or an eye popping estate. All of the above sound delicious to me, but the estate itself is the long reigning king of the Geneva lakefront. While simple cottages with private frontage have shrunk in value to the low $1MM’s, the estates on the lake remain, to state the obvious, pricey. If you’re looking to spend $3MM+, chances are you can find a piece of property that would be what I’ll call an entry level estate. You’ll generally be able to buy a nice big yard with about 100′ of private frontage, and you’ll be able to entertain your friends and family in style on the shores of the most inspiring body of water around. While that estate is fantastic, the really big estates are a different animal altogether.

When I say “big estate”, I generally mean a piece of property that is at least 2 acres, possessing at least 120′ of private frontage, and a substantial home. That would constitute a big estate in my mind and in the mind of this market, but the estates that measure three or more acres and possess 200 or more feet of frontage, along with a substantial house, tennis courts, swimming pools, guest houses, and the like- those are the true estates on this lake. Thankfully, there are typically two of three such estates on the market at any given time, providing ample inventory for the discerning, affluent home buyer who is searching for his or her very own Lake Geneva trophy estate. These estates will typically run $4.5MM+, and escalate all the way to $10MM for several of the more impressive estates on the lakefront.

If you’re sufficiently convinced that I love lakefront estates, now it’s time to point out some pricing deficiencies in our upper bracket market. The pricing paradox of this upper bracket market spills over into the primary $2MM to $3MM lakefront market as well, but the statistics are more gaudy in the upper reaches of the lakefront market here. As I write, there are seven lakefront homes for sale on Geneva with asking prices in excess of $4.5MM. All of these statistics are gleaned from the MLS, so they won’t take into account private deals. Of those seven estates, three are priced over $7MM. Two of those three are truly magnificent homes, and anyone looking for a $7MM property would be impressed with these homes, even at those prices, even in this market.

With seven $4.5MM+ lakefronts on the market now, it’s important to look at previous sales in hopes of gaining some historical perspective on the prices. Since the upper bracket is a low volume market even in the best of times, let’s look at the entire last decade. Since 2000, the total number of properties sold on Geneva with sale prices exceeding $4.5MM? 28? 21? 16? Wrong, wrong, and wrong. Seven. There have been seven lakefront sales exceeding $4.5MM over the previous ten years. So if we use the ever-annoying statistical math that I loathe, we technically have ten years of inventory priced at $4.5MM and above. Try getting those sorts of numbers from another Realtor.

So if the upper bracket lakefront market is sluggish and proving difficult, what’s the problem? To be concise, the problem is in the pricing. Affluent owners believe the extreme upper reaches of the market are immune to price declines, and that belief is proving to be wrong. The ultra wealthy are, by and large, still ultra wealthy, but that doesn’t mean they’re not looking for value. The prices on many of these upper bracket homes are similar to the prices they would have been able to command in 2006 at the height of the market. Buyers are bored with prices that don’t reflect the softened national market, and as a result, inventory has swelled (if you can ever call 7 properties a “swell”) in a market segment that was never particularly liquid even at the height of the housing boom.

All that to say this. The upper bracket on Geneva has some falling to do, and hopefully the sellers will cut prices to generate a little more interest. The mid-range lakefront market, homes priced from $2MM to $3.5MM is still active, and this mid market sorely needs some more quality, well priced inventory. There are at least two lakefront properties that look attractive to me right now, one being an entry level lakefront in Williams Bay priced near $1.2MM, the other a mini-estate on the south shore of Geneva priced in the mid $2MM range. Value exists in this market, particularly for big picture thinkers looking to capitalize on a down market in order to establish a generational retreat on my peerless Geneva Lake.

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