Lake Geneva Vacation Home Market Update

Lake Geneva Vacation Home Market Update

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I was going to write about the Chicago Tribune’s ridiculous attempt at “discovering” the Lake Geneva dining scene, but I’d rather not. It should be enough to mention that they started off the article with a visit to Popeye’s, which is to fine or trendy dining what a 1992 Ford Escort is to remarkable car design. I’m only surprised they didn’t leave Popeye’s and head to McDonalds for desert before stopping at Burger King for a coffee. So, no, this isn’t about that article because my tendencies already veer towards a total elimination of fluffy nonsense, and today I don’t have the patience to consider the flaws of that entire, back page owning article. I suppose any time Lake Geneva receives press I should be happy, and in that, I will be.

Today we need to talk about the market. We need to huddle close, to whisper, to coordinate our offense and plan a path towards victory. The market, this glorious, wonderful, Lake Geneva vacation home market, is one in transition. The buyers who tour on sunny July Saturdays are all but gone, and the buyers that remain are the motivated sorts, the smart sorts, the ones who realize that this time of year is the best time of year to buy here. For this there are many reasons, but chief among them is that winter is coming, and with it the dark days and the cold nights and the soul searching that joylessly accompanies this coming season. Sellers that are still sellers at this late date are not happy, and their disappointment can and generally does create a buying opportunity. I’ve said that many times before, and I plan to keep saying it until everyone listens.

There are buyers in the market, plenty of them, but they are not uniformly dispersed. If another agent tells you the market is so remarkably hot, just remember that they mean whatever segment of the market they are personally busy with. The primary market may be on fire, but as I don’t sell primary homes I wouldn’t know. I don’t pay attention in any detailed way, choosing instead to only focus on the vacation home market. This is a benefit to my buyers and my sellers, as there is no wasted time spent touring other towns and other lakes. The market that I serve is rather active, but again, everything isn’t active at the same time, and that statement remains true on this pleasant November morning.

The lakefront market is, without any question, hot. It is. This is activity that can be attributed to a lucrative year in the financial markets, or activity that might be present because of increased liquidity in the move-up markets, those lake access homes and condominiums that buyers sometimes flee after a spell in order to find true lakefront bliss. These may be the reasons, but the only real reason is that this lake is 5400 acres of pure vacation utopia, and that should, and is, generally enough to warrant the activity. The lakefront inventory has been stable, which is a good thing for sellers and a difficult thing for buyers. The same homes are available, and buyers have picked through them for most of this year. Most of these over-looked homes will still sell, as old inventory is all made new again by the presence of new buyers.

New buyers are everywhere around the lake, and the fact that several of the lakefront sales this year make very little market sense serves as proof. The lakefront market currently owns an intense level of competition, as buyers jockey and stage, waiting for the next edible morsel to hit the MLS. If we are sellers contemplating a sale, this is a fabulous thing. This is the thing that will make our spring market start even earlier than it normally does, and I’m expecting spring inventory to hit the market in early January as opposed to late January. I’m also expecting prices of those new listings to be higher, as brokers and their sellers understand this is an inventory depraved market, and they’ll list accordingly. To sellers currently on the market, it may not be a smart move to pull the listing next week and wait until January to re-list, as has been a historical norm here. With inventory low and buyers plentiful, it’s best to stay in front of them, even if it feels bad to be continually overlooked.

This is the lakefront market, one filled with activity and haste, but this is not how the broad market is behaving. Abbey Springs is hot, great. Geneva National is just okay. The lakefront condo market has some activity, and will end this year with more sales than any year since 2007, terrific. The lake access market, that single family market comprised of various makes and models of off water homes, isn’t feeling the love. Consider that under $900k there are just two homes pending sale, and one of those has been pending for approximately 8 1/2 years, or so it seems. Excepting that Summer Haven listing at $299k, there is one listing pending in Cedar Point Park at $699k. That’s a parkway home, of sorts, and if you question the sales price let me remind you that there’s a Viking stove in the kitchen, and we all know that the buying mantra of location, location, location goes out the window when shiny, high end appliances are present.

Those are the only two lake access homes under $900k pending sale today, per the MLS. If this strikes you as being a few too few, you’re right. If it strikes your agent as being a SUPER HOT market, then this is something we could remedy together. Activity, judging from my own listings, seems to be somewhat solid, but contracts are obviously anything but plentiful. There are some great deals in this market, from a sweet entry level deal in the Loch Vista Club begging to be sold, to a possibly pleasing number on my cottage in the Lake Geneva Club that has both a view and a slip. There are opportunities in this market, but it’s that time of year where a buyer will need actual motivation to find them. This is not July, where buyers look on Saturdays and buy on Sundays. This is November, and even after a summer of incredible activity there is value to be found for those who aren’t afraid to get a little frost on their boots.

So, how’s the market? I suppose that depends on which one you’re talking about.

Above, my pretty great South Shore Club listing on East Lakeside Lane for $2.295MM

Lake Geneva Vacation Home Market Update

It is mostly true that for every home there is a buyer. There are buyers for the worst of homes. There are buyers for the best of homes. There are buyers for homes on highways and for homes that flooded a few years ago and will flood again in a few more. There are buyers for homes built on fault lines, there are buyers for homes on the sides of active volcanos. Most of these sorts of homes do not have any particular key attraction, but they sell anyway. The opposite sort of home is one that hits on so many levels of perfection that it has no choice but to sell. This sort of home sells because it must, because it’s too unique and too special to otherwise be ignored. This is why I sold my listing at 1606 West Main Street last Friday, and this is why the buyer who paid $940k for the gem of a house should be pleased with her purchase.

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This sale is just the latest on a laundry list of vacation home activity. The market is hot, and that really does apply to the broad Lake Geneva vacation home market right now, and not just a particular segment. The only possibly exception to that statement is the market segment that should be the hottest- the entry level lake access market. There are just three homes (per MLS) under contract priced below $400k at the moment. That’s odd, because interest rates are low and that segment should be the most sensitive to those rates. If you’re a buyer for something in that price range and you just read those sentences, consider this a nice reminder to act on your interest (call me before acting).

There are contracts pending in the $500-$700k range that include a cottage in the Lake Geneva Club, a fanciful house in Country Club Estates, and a modest ranch in Geneva Manor. There’s one other off water home pending sale in Knollwood, but that’s pending at $2.2MM so let’s not talk much about that. That’s an off-water home. Without a slip. But it’s beautiful and overbuilt, which will always attract attention. I have a contract pending on my listing in Abbey Springs ($765k), and there is a contract pending on a Fontana Shores condo listed at $349k. The lakefront condo market is still soft, but there should be some fall buyers that take advantage of that overall weakness. I still have a beautiful four bedroom condo at Vista Del Lago for sale, now reduced to $569k, and a two bedroom penthouse unit at the Fontana Club listed for $489k. Both of those condominiums had offers on them in the past few weeks, but neither deal came together. I’d love to sell those this year, and can promise a buyer that they will be finding value in either property.

While the gyrations of the broad vacation home market matter, the real spectacle right now is on the lakefront. The lakefront market is ripping, and though inventory is approaching all time highs, buyers are keeping up with the supply. There are no fewer than seven lakefront homes pending sale at the moment. That’s impressive, and though the only listing of mine on that list is the South Shore Club home on Forest Rest ($1.649MM), I like the activity anyway. There’s a listing in the Loch Vista Club pending with a $2.45MM ask. There’s home on Main Street in Lake Geneva pending at a $2.175MM ask. The good news about that listing is that I have a better home for sale right next door, and mine is listed at $2.375MM, so it should be deserving of your attention. A listing on Birch Walnut in Williams Bay that first came to market at a laughable $3.5MM ask is now down to $2.499MM and recently received an acceptable offer. There’s an entry level lakefront in Geneva Manor listed at $1.75

The small, curious listing on Outing in Williams Bay is under contract at a high $800k ask. This will look cheap to the market when it prints in the $800k range, but it’s a market price that makes complete sense. Yes, it’s lakefront in the 800s, which is good, but that’s all this house was worth. There are some big contracts pending on a listing in Fontana in the low $5s, and another fresh contract on a Basswood listing just under $5MM. This is significant activity, and I see in the current inventory at least 7 or 8 more lakefront deals that will be printed yet in 2015. If the pending contracts all close, and if my prediction for additional deals ends up being accurate (which it will), we’ll add 14 or so closings to the 12 deals that have already closed in 2015, making this year a record year in terms of volume. That’s a good thing, but it’s also leading some buyers to falsely believe there’s some bubble forming.

It is true that I don’t love every deal that closes. Some are bad deals. Some are overpriced. Some just make me sad. But most of these deals make sense, and the pricing is still largely under 2008 peak valuations. The best way to avoid purchasing a bubbly home in this market is to work with me. I don’t let my buyers purchase outliers, and we’ll be sure to make smart market decisions even in a hyper market. Remember the post from last week about the reductions, because while this activity is impressive, the sellers who aren’t receiving contracts are going to do everything they can to get the attention of the fall buyers. If this were Beverly Hills we’d be throwing champaign open houses with red carpets that we rented from the flooring store in town. But this is Lake Geneva, and we’re not that gullible, so we’ll just reduce our prices to attract interest, and if you’re a buyer on the hunt, I’m the best guide you could hire.

Above, my listing on Constance. It’s really a great house.

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