Blog : Lakefront Market Update

Geneva Lakefront Market Update

Geneva Lakefront Market Update

The curious thing about Lake Geneva is that the market would potentially be fine even if another new customer never followed his roads to our roads and purchased a lakefront house.  No new buyers, no problem. Never, ever, a new buyer who needs figure out our scene in order to buy it. If no one ever came here again, we’d still have a market.

That’s obviously not entirely true, but at times it sure does seem like we needn’t another new buyer. We have enough, and they’re the people who are already here. One of my favorite transactions to assist in is the buyer who is new to Geneva Lake looking to capture something ideal. That buyer, someone with no prior experience here, hasn’t yet been confined to his developed tastes. He’s a blank slate, a clean canvas, and that buyer can look at this market without geographic bias. That’s a terrific sort of buyer, one that I highly value.

But that’s not the traditional buyer here. That buyer exists, of course, but that buyer isn’t what keeps this market humming. What keeps this market on the move is the lakefront ownership group. Those 600 or so discerning lakefront owners; that’s our market. One year they might wish for a big estate, with 800 hydrangeas and no fewer than 375 rose bushes. But three years later they may long  for the simplicity of a lakeside cottage, still with a slate roof, of course, but a cottage nonetheless. A pure lake experience, tidy and controlled. Who could tend to 800 hydrangeas?

Yesterday, a new sale on this Great Lake. The last time Clear Sky Lodge sold it was my listing as I represented Bank of America in the liquidation of that valuable asset that they came to own by way of court proceedings. That sale in 2012 was for $3,700,000.  Clear Sky sold again yesterday, this time without my involvement, which has put me in a sullen mood for such a lovely Friday.  The price? $5,715,000.

That’s a lot of money for this old log house, but I won’t say it wasn’t worth it. The house is rare and intensely magnificent. The location desirable, the views sublime, the logs super loggy. I like this sale for the market, but it’s a bit of a loss leader. The appreciation from 2012 of more than 50% isn’t reflective in the broad market. Some homes have appreciated this much, others have not. This is why it’s difficult to take individual sales and suppose that they are meaningful to the broader market segment.

If you’re sad that you missed out on this house, I have the next best thing available at Clear Sky Lodge, with tennis court, swimming pool, canopied slip, and beautiful privacy listed at $2.99MM…

The trend of lakefront owners swapping homes is nothing new. It’s a common theme here, but it appears to be on the rise. When the markets were bad I encouraged would-be-sellers to sell low and buyer lower. I argued it was, in fact, a better situation than it would be to sell high and buyer higher. Very few people listened, but those that did have found the new market to be rewarding.

The key for the lakefront market now remains inventory. We need more of it. Ready made inventory, easy houses with large lots. Others with small lots. We need all of it. If you’re a buyer on the hunt, let’s hunt together. If you’re a seller considering a move, you know who to call. (It’s me. Call me. Or Email, that’ll be easier. Text is fine, too.) 

Lake Geneva Prices

Lake Geneva Prices

There’s an interesting bit of information available this morning courtesy a recent lakefront sale. The sale was of an older house on a 90′ lakefront lot in the Birches. The property was fine. The MLS description made no mention of it, but I believe the house may have been a Zook.  Zook homes are a lot like Frank Lloyd Wright homes, in that the sellers care about the pedigree of the architect, but the market doesn’t.  This property was initially listed for $3.5MM back in 2008, and after a series of price reductions and listing pauses, the property mercifully sold this week for $2.3MM.  I didn’t have the listing or the buy side, which is pretty awful for me but worse for the buyer and seller.

The parcel of land was reasonably decent, though I don’t count Maple Lane to be among the best streets on the lake. It’s a fine street with fine homes, but it’s not necessarily a street that has a history of selling for elevated prices. Today isn’t about that parcel, it’s about the market context of this sale.  Brokers are clamoring over potential listings to such an extent that prices are being driven up less by market conditions and more by the breathlessness of agents who are new enough to the business that they have no way to be sure of valuations. It’s not their fault, they’re just chasing dollars.  To understand what this sale means to the market we must first look back at some very recent history.

In 2016 I sold three lakefront homes on Lackey Lane. Of those three, two were modest homes, one of which has since been torn down while the other was renovated. Those two properties that sold at land value printed at $1.9MM and change, for 100′ lots on a really desirable street. Geographically, Lackey and Maple are close, so we’ll consider them to be likely comparables for each other, even though I find Lackey to be far more appealing.  Those two sales printed at around $19,000 per front foot. This isn’t some long ago number, this is 24 months ago. Market conditions today have improved, but market conditions in 2016 were still quite good.

The recent sale on Maple printed at $25,555 per front foot. The overall land mass at Maple was larger than Lackey by two fold, but the market pays little attention to overall mass and focuses instead, perhaps at times incorrectly, on frontage.   The Maple sale closed 34% higher than the 2016 sales on Lackey. Does this mean the lakefront market has appreciated 34% in the past 24 months? Of course not.  Does it mean that some properties have appreciated that much in such a short period of time? Absolutely yes.

In 2016, those Lackey sales were not easy sales. Both properties endured some time on market. Both properties were overlooked, even by smart buyers who were working with me.  Today, the Maple property proves out what I knew then: 100′ vacant lots that are selling at land value are becoming increasingly rare. Just as we’ll someday run out of dumpy lakefront cottages that you might be able to buy for $1.2MM, we’re also running out of 100′ lakefront lots with older, modest homes on them.  This scarcity is driving up prices in both categories, though the entry level market remains rather stagnant compared to the 100′ market. Expect this trend to continue as buyers seek out properties that offer them some upward mobility should they one day decide to build new, or undertake a serious renovation.

Geneva Lakefront Market Update

Geneva Lakefront Market Update

In real estate, being shameless is quite important. I’ve struggled with this at times, most of the time, really. But I still tell you I’m this and I tell you I’m that, because if I don’t, no one will. But I’ve only developed some shamelessness when there was something to actually be proud of. Too proud, perhaps. The new market has generated so much shamelessness that you’d think everyone was the top agent.  Lakefront Specialist, that’s a common email tag. Lakefront Pro. Some opt for the shorter version, lest they spell specialist wrong. And others still, “The Most Powerful”. This is more like a Master’s Of the Universe theme, but in 2017, all of it has been adopted by my competition. It’s a bit dizzying.

The market appears to me today to be absolutely ladened with buyers. I say appears to me, because it’s impossible to know exactly what buyers are truly active and which buyers are just looking at properties because it’s 2017 and that’s the thing to do. I would guess there are more buyers in the market today than at any single point in the past 20 years. Yes, that’s a serious claim. But it’s likely accurate.  The smart ones are working with me, the others are working with the various and assorted Specialists that have very recently self-assigned that title.

Yet for all of these buyers, the market is still a Wisconsin market. We are still Midwesterners. And so we watch and we wait and we look for the right thing. Contrary to what your Specialist may tell you, the right thing is not always whatever was just listed.  This morning, there are just 22 lakefront homes available for sale on Geneva Lake. This includes the Trinke’s house that’s really just Trinke’s frontage, but we’ll add it in because we’re desperate for inventory.

Beyond those 22, there are others pending sale. A listing on Main Street in Lake Geneva in the mid $2s is soon to close. It should be noted that another lakefront in that area was under contract but has since returned to market. My marvelous listing on Jerseyhurst is under contract with a fall closing scheduled. A listing on the South Shore in the mid $2s is pending. And a small entry level lakefront in Fontana listed at $1.475MM is pending this morning. That’s a decent amount of activity, but it is not commensurate with the buyer activity on the lake.

There are several reasons for this. First, and perhaps most damning, is the absence of reasonable sellers. Note I say reasonable. The market is hot. Everyone knows this.  Even your newly minted Lakefront Specialist knows it. Sellers know it, too, and they’re attempting to capitalize on it. Sellers are listing aggressively, and we cannot blame them. But what we can do is blame them when they receive solid offers within mere percentage points of their bottom line and they choose to walk. This is foolish behavior. Sadly, this is the behavior many sellers have chosen to display. Perhaps the market run will continue long enough to prove them right, but perhaps their 2017 confidence is just a touch too much.

The inventory that deserves your consideration is both the new bits that have been trickling to market, but mostly the aged pieces of our market. If there’s a new lakefront for $3MM, guess what? You’re going to have to go for it quickly or someone else is going to buy it. That’s just the nature of this market. But if there’s a $3.5MM listing that’s been dying on the market for a year or two, isn’t this the sort of property we should be gunning for? I believe the answer is yes. Your Lakefront Specialist is reading this, furiously scribbling down notes, and he/she concurs.

So what comes next? What do we do with the rest of this superfluously soggy summer?  If we’re a buyer, we remain vigilant. We look for new inventory. We align ourselves with the only top agent in this market (spoiler- it’s me). We don’t chase every golf course hushed rumor down the rabbit hole. We don’t reach out to the new Lakefront Specialist. We just watch and we wait and when something looks right we take a run at it.  If we’re a currently listed seller, then we look at this market through a different lens. We consider our position in the market. We reduce if we haven’t had any offers in months, years. We look to position our property in the perfect light, with a hefty consideration for reality. And if we’re a lakefront owner considering selling, this is the easy part. We reach out to Dave Curry.

 

Above, my new Elgin Club lakefront listing. $1.975MM.