Blog : Entry Level Lakefront

Geneva Lakefront Market Update

Geneva Lakefront Market Update

This is the weekend we need. This is the weekend we deserve. This is the weekend that starts it all, really. There’s a long standing believe that Memorial Day Weekend is the kick off to summer. That’s nice that people still think that. I don’t. I think what I know, which is summer starts just as soon as the weather warms enough to turn our thoughts to it. A warm weekend in February doesn’t accomplish this. We enjoy the warmth but we know it won’t last. A warm weekend in April, now that’s the start of something. This is the weekend that starts it all. Seventies and sun, here we come.

The low inventory theme continues on the lakefront, though several “new” listings have come to market of late.  Of course most of these aren’t new at all, they’re just recycled inventory from last year that might have a better shot at finding a buyer now. On the lake there are at least six pending contracts, and three of those are deals in which I’m involved. I like that ratio, though 100% would be far more preferable than 50%.

I have a new contract on an entry level lakefront in the Highlands (my buyer, not listing). That’s a fixer upper and it’ll sell for a fixer upper price next month. My Park Drive lakefront with 60′ of level frontage is under contract with an asking price of $1.299MM. That’s a nice little house with a big view of the water. A listing on Constance in Williams Bay is under contract with an asking price in the low $2MMs. That’s a listing that I had a couple years ago but failed to sell. This is for my enduring shame.

The modern in Williams Bay for $3.4MM is still pending sale, as is the new construction on Sidney Smith in the high $3MMs.  New and of note is the pending contract on my listing at 700 South Lakeshore Drive in Lake Geneva. I listed this home last fall and told you that I would sell it. I wasn’t lying. It’s under contract now and will hopefully close this spring. If and when it does, that’ll be my sixth sale over $5MM since 2010.  The thing about being a luxury broker is that everyone can call themselves one, but it’s a lot harder to actually be one.

In spite of some new inventory,  we still have only 19 true lakefront homes (including the South Shore Club) on the market today. That’s remarkably low inventory, and it has left the market wishing for two very different things. Sellers love this environment, and hope it stays for the remainder of this year. Buyers are frustrated by this limited inventory and find themselves in foul moods as a result. I’m somewhere in between, hoping for new inventory but appreciating the environment for what it is today. The danger now is for sellers to not be too emboldened by the situation, and for buyers to not disengage from their searches just because they don’t initially see what they like. Sellers, stay smart, stay rational. Buyers, stay engaged, pour over the aged inventory and look for value while at the same time being ready to pounce on something new and exciting.  Buyers and sellers, work with me, and have a terrific first nice weekend of 2017.

 

Above, sunset at 700 South Lakeshore Drive, Lake Geneva.
New Geneva Lakefront Listing

New Geneva Lakefront Listing

The thing about entry level lakefront is that it’s entry level lakefront. It’s not fancy. If it were fancy, it wouldn’t be entry level.  Entry level exists in increasingly fewer locations on Geneva Lake, due largely to the fact that often times buyers of entry level lakefronts transform those once modest, affordable homes, into something entirely different.  If you’re a buyer for an entry level lakefront, this generally means you’re on the hunt for something priced below $1.5MM. In that segment, there are things you can expect but mostly things you shouldn’t expect. Like garages and level frontage. Entry level buyers rarely have a chance to buy those.

W3298 Park Drive in Linn Township isn’t going to win any design competitions. It’s a nice house, with nice enough things, but fancy it is not. There’s a concrete driveway, fresh landscaping, and a beautiful lakeside paver patio. There’s a terrific H-slip pier, traditional and sturdy. There’s some new siding and a newer-ish kitchen and three bedrooms and two baths. There’s plenty to like. But the rare bits are not those bedrooms or the bathrooms or the stack washer/dryer in the hallway closet. The rare bit, if we’re looking for entry level lakefront, is the 60 feet of dead level frontage and the existence of a two car garage. These are, in the context of entry level lakefront homes, among the most rare amenities.

The house should sell rather quickly in this current market. The renovation of this house, should a buyer choose to improve upon what it is today, would be fairly painless. It’s a simple house without a lot of moving parts. The layout is normal, which, if you’ve looked at entry level lakefront homes for some amount of time, you’ll recognize as being unique for its plainness. There are no spiral staircases here. There are no rooms that you’re not sure what to do with. There’s nothing here that doesn’t make sense. It’s just a house with a big garage and a completely level lot, with 60 feet touching Geneva Lake. The views, as an aside, are among the best on this lake. Facing towards the City of Lake Geneva, the lake here is wide and round, lovely.

If you’d like to tour this home, just let me know. But if you do want to see it, you should probably do so sooner rather than later.

Entry Level Geneva Lakefront

Entry Level Geneva Lakefront

My body is slowly succumbing to the course of time, to the insistent, constant force that seeks to whittle and pry and break and bruise, to the inevitable process wherein these ashes will find their way back to ashes. It’s sad, really, at such a tender age to be falling apart. I didn’t intend for it to be like this, but this is my first time in this aging process, and I’m no longer in control. I’m just a guy with creaks and cracks, and while others put up a most impressive facade, I’m nothing, really. I feel this way mostly because of my trip last week, a trip that started fine, included some wonderful skiing and the smiling faces of my children, and ended with my ear pressure being locked somewhere around the Vail Summit.

After driving deep into the far away horizon where the Denver International Airport hides, my ear pressure was the same.  Likely comfortable around 10,000 feet, but now I was at 5,000 and the pressure of those 5,000 feet was constant and unavoidable, ringing and pounding and bullying my inner ear. The flight would cure this, I figured.  When I landed at Milwaukee it was obvious then that my previous attempts to calm my worry were in vain. The pressure built,  my right ear finding some form of normalcy at 900 feet, but my left ear still stuck in the mountains. Certainly it wouldn’t last the night, but last it did. And the next day it would subside, obviously. But it didn’t. For sure the following day things would be fine and my 10,000 foot ear would slowly slip down to 900 feet. No. Such. Luck.

And so I write this morning, contemplating who might be my Gaugiun, but also contemplating the state of the entry level lakefront market on Geneva Lake. That market is one that I’d like to call our most interesting, our most confusing, our most obvious. But none of that is true, because all lakefront segments are that way, they are at once easy to understand and overtly complicated. They are nothing at all but everything, easy to dissect and explain until they aren’t. The entry level market, however, has some unique intracacies that are on display today. Notably, is there a top for this particular market?  Is the land worth what the land is worth and then the house might be worth whatever lofty price someone, someday, assigns to it?

Let’s consider a few things first. Not all entry level properties are created equal. A 50′ lakefront lot in Cedar Point Park that might be 300′ deep is not the same as a 50′ lot in the Lake Geneva Highlands that might only be 180′ deep. I could sell a 50′ lot in Cedar Point right now for more than I could sell a 50′ lot in the Highlands. That’s not anything but the obvious and simple truth. That’s because Cedar Point has proven the ability to sell re-built (whether remodeled or new construction) homes far above the cost of the dirt and the Highlands has not. In fact, fantastically improved homes in the Highlands rarely sell in excess of $1.5MM.

Another example of this is on Walworth Avenue in Williams Bay. This street is a nice enough street, with some condominiums and some entry level lakefront homes with very deep lots. Yet for all that depth, the market there has always struggled to sell anything over $1.5MM. In fact, a 100′ lakefront lot sold there for $1.2MM a few years back, at a time when a 50′ lot in the Highlands would have sold for similar dollars. If Walworth Avenue offered you a $1.2MM lakefront house you might think you’ve found something rare and incredible, when in fact, you’ve found something at nearly the top end of that individual market. Why is that the top end? Because you really can’t buy a tear down or supreme fixer upper on Walworth Avenue for $1.2MM and expect you have any margin in your all-in investment.

The same theory applies to most locations on the lake, excepting Glenwood Springs. In Glenwood Springs, the lakefront homes aren’t even true lakefront homes, yet an entry level home will sell for $1.2-$1.5MM and then the buyer may indeed tear it down. Does this make any sense? Well, actually, yes. Homes in Glenwood Springs have sold in excess of $2.5MM, and such a sale is not an anomaly. At the same time, a 50′ lakefront lot in the Highlands or on Walworth Avenue with actual, real, private frontage, would struggle mightily to achieve even $2MM, let alone $2.5MM.

As I was showing lakefront homes yesterday I thought about this market. I thought about the top end. I thought about where these prices might be able to go. And then I realized there’s likely a disconnect between what I think is reasonable and what a few individual buyers might think is reasonable. If I’m buying a tear down in a market that I believe to be capped in the mid $1s, I know that I’d want to have some margin for my effort. I don’t want to spend $1.5MM and a year of my life stressing out over a project that in the end will perhaps be worth $1.5MM. I want to spend $1.3MM to get to the finish line where a $200k equity bonus might be awaiting me. But perhaps that’s just me. And perhaps that’s just this 10,000 foot ear talking.