Well, well, well. Well. It looks like the old lakefront market at Lake Geneva isn’t quite finished for the year yet. This is going to be difficult for me to say, but, umm, wow this is harder than I thought it would be… I was wrong. There, I said it. I called the Geneva lakefront market down for the count for the rest of 2009, and I was wrong. No sooner do I write about what I saw as a slow ending to the year that the lakefront market sprouts two fresh contracts in the past week. The computer confirms only one of those pending contracts, but the other one I believe was also signed which brings our total pending contracts for lakefront homes on Geneva Lake to four. That’s impressive no matter how you cut it, and knowing what I know of activity on the water right now, I wouldn’t be shocked if we recorded two more sales before the end of the year. If we’re able to do that, we’ll surpass the 2008 volume and get ourselves on the road to that much anticipated volume recovery I was hoping would begin this year.
Something peculiar about all four of the contracts written in the past month is that they all involve entry level priced property. The uninformed knee jerk reaction from market haters would be to say “see Dave, you’re an idiot. The big money dried up and now people can only afford $1.5MM lakefront homes”. I may be an idiot, but I’m the idiot who keeps you informed about the Lake Geneva real estate market, so you should speak more kindly to me. I actually think the fact that the four pending sales are entry level is a better sign for the market than if the four pending sales were all $4MM+ properties, and as always, there’s logic behind my opinion.
Whether we’re in a recession or not, individuals with high net worth have generally faired pretty well over the past couple years. The exception to that rule may be those who had a significant amount of their wealth tied up in residential or retail real estate. There’s a general rule that I have that says there’s no better time to be rich than when everyone else is poor, and the wealthy remain wealthy for the most part. Seeing $3.5MM sales on the lakefront this fall would be great, but it certainly wouldn’t be an indicator of the overall health of the market here. After all, the ultra wealthy are still wealthy, even if their net worth dropped from $75MM to $55MM. That demographic continuing to purchase lakefront homes at the upper end would really just be typical behavior for this market, and it wouldn’t necessarily present any sort of a trend.
The four sales in the entry level market might not create a trend either, but they’re certainly a positive sign for the overall health of the lakefront market. The entry level buyer has largely been absent from the market over the past two years. I’ve had entry level lakefronts on the market, including the Sauk listing in Indian Hills, that didn’t fair well even though they were fine properties in a terrific price range. The entry level market needs a buyer that is, at times, more affected by the overall mood of the economy. Entry level buyers on the lakefront are usually younger, and they usually work full time jobs. This buyer might be a cash buyer, but many times he finances a portion of the purchase, so this buyer is also more concerned about interest rates than the ultra wealthy buyer who pays cash would be. In short, this buyer isn’t immune to the swings of the stock and job market, which means his confidence is a better indicator of future market health than is the confidence of the ever confident upper bracket buyer.
In short, take the four entry level contracts written this month as a great sign for the lakefront market at Lake Geneva. The bad news for me, is that I had a couple buyers who were actively engaged in two of the four properties that sold, which means that my buyers lost out. This late season market strength is encouraging, but it doesn’t mean that the key buying season that exists between Thanksgiving and New Years is going to be any less potent for lakefront buyers. Remember, I’ve said it a hundred times (no doubt other Realtors are saying it now too), but seller apathy if the key to late season negotiating at Lake Geneva. Of the 36 homes for sale on Geneva right now, 4 are under contract, which means I’m only going to be able to sell 32 more before they’re all gone.
I’m working all weekend as usual, and I’d love to be able to show you some lakefront homes. Fall colors here are at their peak, as is evidenced by the beautiful fall shot I took just yesterday. Come on, let’s get together and galavant. It’ll be fun, and you’ll probably love hearing a Realtor tell you that a house is a piece of crap for what might be the first time in your life. Tonight, I’m off to Chicago to see my pals from Seabird play a show, but tomorrow, I’m all yours. See you at the lake.
