Blog : Boatslip

Black Point Sells

Black Point Sells

One of the many benefits of this strong vacation home market is that I get to test my theories on a daily basis. These theories were first penned when the market was in rough shape, which was just a few years ago in reality but so much farther away in the minds of 2018 buyers. The theory relating to the off-water lake access market over $1MM was simple. If lakefront homes were plentiful in the $1-2MM range, then off-water homes in same range would suffer. Why buy off water when the same price put you in the front row? In the same way, if $1-2MM lakefront homes were scarce, then off-water homes in the range would attract buyers. Lake Geneva real estate can be quite simple.

Simple as it may be, the theory was difficult for many off-water sellers to understand. During those dark years, most off-water homes that sought to capture a $1-1.5MM sales price ultimately languished on the market and fell victim to the price erosion that is a hallmark of lengthy market exposure. Most of those homes ended up selling, but rather than finding buyers in that $1MM+ range, most of these homes sold between $900k and $1MM. Buyers rejoiced, sellers wept.

Over time the entry level lakefront inventory dried up, leaving available only true cottages on small lots in modest settings. As that inventory shrunk, buyers turned their attention to the off-water homes that meant something. A slip, a view, a pool, some privacy. Maybe a combination of all of those. In the fall of 2016, I printed the sale in Loramoor for $1.625MM. Then another sale in Glenwood Springs for $1.1MM. Then, in 2017, a super high priced print with no slip in Oakwood Estates north of $1.2MM.  In 2017, another in Maytag Estates in the same range. Then a sale in Fontana north of $1.3MM. The market was moving, and buyers were once again looking for off-water properties simply because the on-water options were so scarce.

Last month, a new offering in this range. This one on Southland, or Black Point, as the tax records would show. $1.699MM for a few acres of wooded bliss, some terrain, a pool and a slip, a large home with pedigree, outbuildings and more. This was a property that the market rarely offers, mostly because it has no true rival. There are locations where off water homes will sell upwards and north of $2MM, but those associations are rare and historically light on inventory. The Lindens, Black Point, The 700 Club, Loramoor, Glen Fern. These are the rare associations, made that way by decades of low inventory and highly polished homes. These are the associations that matter to this segment, and this particular home was among the most rare inside even unique settings.

That’s why a buyer whom I was pleased to represent jumped. We closed on the house last week for full price, which is nothing to be ashamed of. In this context, full price was required, and full price was still less than the seller had paid for the home in the fall of 2011 when the market was in awful condition.  To further prove the strength of this off-water market, consider the home that would come to market just a few weeks ago in the 700 Club. That home hit the MLS at $1.495MM and promptly received multiple offers before finally settling at a contracted price that is rumored to be far over the ask. The market doesn’t always love off-water homes over $1.5MM, but if you give the market something unique in a highly desirable setting, the buyers will find it.

To this buyer who let me guide them through this curious segment of our vacation home market, I thank you. There’s an opportunity at this property to transform it into something without equal in our market, and I’m hopeful that the end reality matches your unique and exciting vision.

Oak Shores

Oak Shores

When thinking of lake access associations, it’s best to think first in terms of the obvious. Once the obvious is understood, then it’s time to progress to the nuance. With this process in mind, it’s in the nuance where the good and bad decisions should be made. The obvious, in the case of the Geneva lake access market, pertains to location. A good house a million miles away from the lake is not as good as a bad house right next to the lake. This is generally the understanding. But even this understanding has some departures, as a large lot far from the water can indeed be superior to a tiny lot near the water. Still, closer is generally accepted as being better.

In the same way, smaller associations are generally better than large ones. This aligns under the obvious. The reasoning here is that pier systems tend to be similar in size, and so sharing a pier with 25 neighbors is better than sharing it with 125 neighbors. You might love neighbors, but I usually don’t. And so smaller associations are better, and closer homes within those smaller associations are better. These things are simple to understand, even for people who prefer to vacation in Michigan.

Along the nuanced lines, there are things that many buyers fail to take into consideration. Proximity to the lake is wonderful, and meaningful, but in this is a steep walk downhill something that we’d like between our lake house and the water? If you prefer the steep walk downhill, I won’t necessarily disagree with you. But it’s the walk back uphill that I consider an offense.  If closer is better and smaller is better then surely level is equally as important.

And if we’re looking for close and level and small, then shouldn’t we focus our attention on associations that match up with these preferences? Sadly, there are few associations that meet these criteria that are affordable. That’s because these are the more desirable attributes, and desirability leads to pricing power, and pricing power leads to $9handles on lake access homes. That’s not attainable for many, which leads us to the doorstep of my newest listing. Oak Shores. $624,900.

This listing combines these rare lake access attributes, and does so in an easy to understand, easy to manage, easy to improve package. The house is three bedrooms and three baths. It’s around 1940 square feet. It has a two car garage. It’s been well maintained. Best of all, it’s 714 feet from the house to the lake. Those 714 feet are level, making the walk more a stroll, the stroll more a saunter. At the lake, there’s a fully transferable boatslip with plenty of water depth for ease of boat maneuvering. If you squint through some trees, there’s even a lake view. The association is small, the ground level, the only thing between you and the water is a small association road that feels more like a private driveway.

This is an easy house. It’s easy to buy and easy to own and easy to have fun with. The current seller has enjoyed it for decades, and it’s now time to pass the torch to another family who wishes to enjoy this lake in an entirely different way. If you’re a buyer and you understand that countertops can be changed but location is forever, then let’s chat.

Lake Geneva Club Sells

Lake Geneva Club Sells

There are certain things that I know without the slightest inkling of doubt. I know that summer days are best spent lakeside. I know it, you know it, remote villages in Africa know it. I know that pick up trucks should not be lifted as high as the pick up truck at the gas station right now is lifted.  You can’t know this, but you’ll need to trust me on this one. It’s just too high. I also know that when a charming cottage in the Lake Geneva Club is listed for $600k it’s going to sell pretty quickly. These things are all different but all the same. They are summer-time truths.

You knew I’d sell this cottage. It wasn’t just my intuition. It was obvious. Yet, the first few buyers who looked at it didn’t find it to be an ideal fit. So the property sat on market for a bit longer than I would have thought, and last Friday it sold. $592k for cottage perfection, a boat slip, a large double lot, and easy access into the Lake Geneva scene. The property doesn’t require much explanation, it’s just an easy cottage in mint condition with a transferable slip and membership to a fantastic lakefront association. Beginning, middle, and end of story.

But the property does give us some insight into the broader market, and that insight should be shared. I sold this cottage in 2013 for $525k.  If you’ll recall, our markets in 2013 were in decent shape, but activity was much less intense than it is today. The price recovery had begun, but only modestly. I’d guess that by the summer of 2013 the broad Lake Geneva vacation home market was 10-15% above the cycle lows.  With a fresh sale at $592k, we can ascertain that the market has risen roughly 15% since that date in 2013. If we assume that the market was perhaps 15% better in 2013 than it was at the bottom of 2011, then we’re looking at a 30% increase from the bottom of our market to where we find ourselves today.

If we go a step further and remember that our market was knocked off 30-40% between the high of 2008 and the bottom of 2011, then it’s not a stretch to say we’re within 10% of our prior cycle highs. That’s not a universal truth, but it’s a pretty decent data point considering the history of this individual sale.  The reason this particular sale is a decent indicator is because the cottage, while maintained, was not significantly upgraded over those years. If I show you a sale from 2013 of an old house and then show you the same fully remodeled house selling in 2017, that’s not a very good data point as the property itself was not merely riding the market wave, it was forcing an increased valuation due to the work that was completed.

Today, there are only two homes for sale priced under $748k with transferable boatslips.  That’s remarkable, really. To make matters worse, both of those slips are far from ideal. So what’s next? What does this segment of our market do now? Well, likely nothing. Entry level lakefront inventory is light, which means the owners of a lake access home with slip don’t really have any immediate upgrade option tugging at them. Without that option to upgrade, the only people selling will be those who are no longer wishing to own a Lake Geneva vacation home.

A big thank you to the seller who let me represent them both in this sale and in their upgraded home purchase. And a big congratulations to the new buyer, who finally gets to look forward to the weekend.

Geneva Lake Access 2016 Market Review

Geneva Lake Access 2016 Market Review

The most economical lakefront home to sell in 2016 was an odd little house in Knollwood. $1,075,000 was the required minimum price for 50′ of frontage on Geneva Lake. Farther up the road in Knollwood, the most economical lake access home of 2016 sold for $69,000. Those two entry points won’t let us assume that Knollwood is a lower end association, because that’s not at all the case. Knollwood is a beautiful association that boasts what I believe to be the nicest large association lakefront park on this entire lake. But in 2016 if you were looking to eek onto the lake, Knollwood was in focus, and if you wanted to eek into the lake access market, you had no choice but to keep your eyes on Knollwood.  This post isn’t about Knollwood.

The lake access market had a solid 2016, though in comparison the lakefront market itself fared much better. In total, there were 77 lake access homes sold in the MLS, the most economical being the $69k Knollwood cottage, the most expensive being my off-water estate in Loramoor with 3 acres, pool, slip, large house, detached garage with studio, water feature, gated entry, etc and etc, at $1.625MM.   The lowest price paid for a home with transferrable slip was in Wooddale, that of a brick Arlington Heights-esque ranch that sold in August for $330k. The highest price someone paid for a lake access home  home without a slip was $800k in Geneva Manor. In total, 12 homes with slips or private piers sold last year. I sold four of those.  A few more with available ramps or buoys sold.   2015 recorded 68 lake access sales, so by any measure our 2016 was a fantastic year.

Of the 77 sales, five closed at $1MM or more.  In that upper bracket lake access market, some things were made obvious not because of what sold, but because of what didn’t. This year offered ample, rare inventory in that segment, with homes available in Glen Fern, Black Point, The Lindens, and Academy Estates. These homes lasted through 2016 and closed the year unsold, or expired. The inventory in these associations was in the low million range, and the availability of these homes was something that the market wouldn’t typically take for granted. A home one off the lake in the Lindens would be desirable, no matter the condition. Yet the market pushed back and these homes failed to sell. What is the takeaway from this? Well, for starters, if buyers are going off-lake in the million and over range they’re expecting something pretty special. Like the Loramoor property, with a slip and a pool and big lot and big, newer house. Or something unique like my immaculate, gem box on Oakwood that I sold in Glenwood Springs for $1.1MM. Give the buyer something unique and rare and they’ll buy it. Give them a $1.3MM fixer upper built in the 1970s and they’re going to take a pass, unless the lot is somehow so incredible that a tear down is warranted.

That 2016 sold inventory included two entry level cottages in our lakefront cooperatives. A small home in the Harvard Club sold for $510,500 and a cottage in Belvedere Park sold for $411k. The Harvard Club had a slip, but Belvedere Park has all-year municipal water and sewer service, so you can pick which one you’d rather have. Nothing sold in the Congress Club, though inventory existed there for most of the year.  Foreclosures were not common in 2016, but at least two homes did sell as REO,  though both were crappy and smaller and sub-$150k.  I don’t suspect foreclosure to play any sort of starring role in 2017 either.  Of note, 25 of the 77 sales were marked as Cash closings, which I find a bit surprising. Rates were remarkably low during 2016, and I would have expected more buyers in this range to take advantage of those rates. Instead, 1/3 opted to pay cash, which proves the strong position of many Lake Geneva buyers.

For 2017, we’re low on inventory. There are just 36 lake access homes available as of this morning. That’s a low tally, especially when you consider that seven of those are priced in excess of $1MM. Our core lake access market is the $450-750k home with a slip, and of those there are just three available.  Because of this inventory condition, the lake access market will follow the lakefront market for 2017 and find itself heavily dependent on adding quality inventory. If we can add inventory in the first quarter, we’ll have a solid year. Interest rates are rising but they aren’t rising enough to squelch the desire of city families to spend their weekends in a different state of being. Expect the lake access market to have a quality 2017, but volume will not reach 2016 levels. Much of the remaining inventory is now aged, so there is plenty of value lurking in the available homes. If you’re hunting for value, I’m happy to be your guide.