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Lake Geneva Market Update

Lake Geneva Market Update

Next week I’m going to do an in depth review of Abbey Springs, Geneva National, the lakefront condo market, and the secondary condo markets (Abbey Villas, Abbey Hill, Willabay, Bayside Point, etc). But today we’re going to look at the lake access and lakefront markets, because there are some interesting things occurring within these segments. I wrote earlier this week that each segment is active, which sounds like something easy to do and easier to write, but it’s not easy to do. Rarely do all pricing segments of one major market feature the same general mood. Rarely does a $200k cottage sell with the same frequency as a $4.5MM lakefront. But that’s what we have today, and it’s really quite amazing.

We know the entry level vacation home segment is super active with 10 out of the 28 homes priced under $500k currently showing as active with offer. What’s more interesting to me is that we have 22 homes available priced between $500k and $1MM and just three of those are pending sale. That’s not a terrible number, and that’s actually not what’s particularly unique. In this price range buyers will generally be able to find a transferable boatslip. Not always, but often. They’ll also typically be looking for a lake view, or proximity to the lake, or something unique about the house.  What’s curious today is that of the three homes pending sale in this segment, just one of those homes has a slip. The other two do not, and both are priced in the $600s.  Buyers buy for all sorts of reasons, so I would never seek to explain all purchase behavior, but if I’m a buyer in this segment I’m likely looking for a slip first, and every single other thing second. Buyers often think they won’t need a slip. Then, after the first weekend at the new lake house, they’re wondering where they’re going to moor the boat they’d like to buy.

The other range that continues to impress is the off-water lake access market over $1MM. This range was slow last year at this time, with ample inventory and few buyers.  The market has absorbed much of that aged 2016 product. Today there are 10 off water homes priced between $1MM and $1.7MM. Of those, two are under contract. That might not seem like a lot, but it is. As the entry level lakefront inventory shrinks (just two lakefront homes priced under $1.5MM today), expect to see this market garner more and more attention. The idea here is simple. If a buyer can’t buy lakefront, they’ll look for the next best thing. And if lakefront is rare and pricy, often buyers will seek some sort of off-water property with a slip or a view or maybe both. These are not market mistakes, generally anyway, but they are market moves born not out of pure desire, but simply out of limited options. I’d like to take the pretty girl to the prom, but she’s already going with the quarterback, so I’ll take this other girl, who likes fidget spinners and eats erasers, but her hair is okay.

Lastly, the lakefront market itself.  There are offers being flung around like so many pancakes at the fly-in-breakfast. The one out West of Walworth. These offers are generally coming together, but increasingly sellers are holding out for more money. Better terms. This might be a good idea or it might be a mistake, and I’m going to go with mistake. Some of the properties with offers are flawed- and the sellers used to understand those flaws. Now the sellers figure the market is in their favor, and their flaws are hidden by the hysteria of it all.   They shouldn’t be this way. The market can turn as quickly as a 10 percent correction in the S&P, so sellers should remain confident but cautious. New pending sale mentions this week include the Congress Club listing in the $1.6s, the north shore Fontana lakefront in the low $2s, and the lakefront on South Lakeshore in Fontana in the mid $4s. These sales will all make sense once they close, so I see nothing particularly unique or exciting here. Rounding out the lakefront activity, my pending contract on the Folly Lane property listed in the high $7s.

Inventory remains the question for each segment. The MLS only shows 17 true lakefront homes available this morning. Of those, there are some nice properties, some rare properties, and some that represent solid value. The low inventory situation will likely persist this year, though I’d expect several new offerings to come to market over the next 30-45 days. As always, if you’d like to know about these new offerings before the rest of the market, just let me know.   The lake today is buzzing with activity, and not just of the housing variety. Landscape crews are hustling to mulch beds and plant annuals. Pier guys are racing to install the last of the piers. Irrigation systems are being activated. It’s a frenzy, to be sure. But it’s our frenzy and I wouldn’t have it any other way.

Above, a new lakefront I’m bringing to market next week.
Geneva Lakefront Market Update

Geneva Lakefront Market Update

This time of year the Lake Geneva real estate market will do one of two things. It will either push slowly and methodically to the end of the year, or it will remain as active as it has been for much of the past several months. Under the first scenario, it’s just a tidying up of the closings on properties that are already under contract, inching inevitably closer towards December 31st. The market will calm, fresh deals will be fewer and far between, and we’ll focus our attention on closing out what will prove to be the best year ever for the upper bracket lakefront market. The alternative course is that we add some new inventory over the next few weeks and that inventory is met with buyer interest. If that occurs, we’ll also likely see a push on some of the aged inventory that has been clogging the market for most of this year. New inventory that sells quickly helps aged inventory simply because it shows buyers that time is, likely, of the essence.

It’s early fall here, but it’s late fall for the real estate market. We have plenty of time left of active selling season, as I’d just as easily sell a lakefront in October as in June. The serious buyers will remain engaged throughout the change of seasons, those who understand that this search should not be taken lightly nor should it be considered over just because the leaves have begun to change.  But the summer buyers who operate on whim and fancy, those buyers will slowly drop off as the temperatures cool and the leaves dull and fall. November, now that’s a month for the serious buyer. Things are brown, and the things that aren’t brown are gray. Daylight is limited, sunshine, too. The buyers that remain through October and last into November are the real buyers, and I think there are more of them in the market today than I’ve seen in a long time.

The issue today is inventory, as we only have 22 true lakefront homes available as of this morning.  We haven’t seen much by way of new product this fall, and the two of the three new lakefronts that have hit the market recently sold immediately (Lakeview, $1.3s, Sidney Smith, $3.8s). I continue to expect new lakefront inventory to come to market, but I continue to be disappointed with each passing day. In February, it’s no big deal when a week passes without fresh inventory, because the next week will be better and the week after might be March. But in October, the next week might also be quiet and the week after might be November.  Lakefront properties have been listed between Thanksgiving and Christmas, but that’s a rare seller who decides to present to the market during that traditionally slow market. Still, if a seller is paying attention to the limited inventory she would do well to list into that environment, no matter what the calendar says.

Today there are several lakefronts pending sale. There’s the entry level on Lakeview that I mentioned earlier, and there’s the Marianne Terrace listing in the low $2s. That’s right next door to my listing that’s offered at a similar price. Shamefully, I haven’t sold my listing yet. The new listing on Sidney Smith of a home under construction sold quickly, and that sale is a very important data point for buyers looking to build new. That property sold for $1.925MM in 2015, and the seller began construction on a new home just a couple of months ago. That home was new, but it struck me as being rather basic as presented to the market, yet it sold and it sold quickly.  For buyers considering new construction projects, this is a reminder that the market is quite liquid for newer construction on reasonably nice lots (100 or so feet of frontage) priced below $4.5MM. This is a segment of the market that wasn’t particularly tested until this year, and it’s now obvious that buyers will gravitate towards new construction in this price range.  Lastly, my lakefront for $7.95MM in Fontana is pending sale.

So which scenario do think will play out? Will there be new inventory that will be excitedly gobbled up by the market? Or will the market slow as a result of stale inventory? I think it’s likely the latter, but I also know that as soon as you count this market out and expect it to sleep for a few months, it has a tendency to surprise. Still, expect a normalized market as we head into fall. Buyers will revisit aged inventory one last time, and they’ll be ready to pounce if any interesting new inventory presents itself as we move towards winter.