A little fresh video work this week. This time, it’s my listing at 412 Harvard in Glenwood Springs.
A little fresh video work this week. This time, it’s my listing at 412 Harvard in Glenwood Springs.
Wow. That’s really all there is to say. Wow. Maybe Wowzers. The lakefront market on Geneva Lake is as heated as it has been since the summer of 2007. I was a player in the market then, but I wasn’t a large player in the lakefront market like I am today, so my view of that prior frenzy wasn’t from the front row. Today, with this front row seat underneath me, I find the market to be breathless. How I pine for the darker days when buyers had a few moments to gather themselves before making a lakefront decision. For those buyers who had lakefront opportunities during 2011-2015 and failed to act, this post should be sung slowly as a dirge.
Today there are 21 lakefront homes available in our MLS. There are an additional four pending sale. At least two others have offers in negotiations. At first blush, you won’t find this all that rare. In fact, our inventory has actually risen over the past three months, as for one period there were just 16 lakefronts available. There are two primary points of interest that have presented in this new market cycle. Yes, it’s no surprise that buyers still want 100′ of frontage and they want it now. Yes, buyers still love Viking ranges and Sub-Zero refrigerators. Yes, Calcutta marble remains in high demand. The things you know are still correct, but there are two new drivers of interest that have never, ever fared particularly well in the history of our market.
Buyers have shown that they love being near downtown Lake Geneva. They don’t just sort of like it, they love it. I sold 700 S Lakeshore earlier this year in large part because of its estate qualities and its proximity to downtown Lake Geneva. The two lakefront homes on Main Street just West of Library Park are both pending sale as of this week (mid $2s), and that’s significant as both of these homes have endured some lengthy market times over recent years. Buyers found motivation to snap up these two homes, and I’m betting large amounts of your money that the interest was driven primarily by the proximity to downtown. In prior years, such proximity would have often been viewed as a negative feature. The noise and commotion, the tourists, the higher taxes. Yet of late, buyers love downtown and so buyers are buying downtown. It’s super interesting to me.
The other curious aspect of this new market cycle is the liquidity at the top end of our lakefront. Homes over $5MM have never sold with particular ease. During the last bull run here, from 2000-2010, just three lakefront homes sold in our MLS for a price that exceeded five million dollars. Since 2010, eleven lakefront homes (and a vacant lot, making it twelve) have sold over that benchmark. Of those eleven, I’ve sold seven of them, including three of four to close over $7MM, but that’s not the point (actually, it’s always the point). This increased liquidity is being viewed by the owners as some new stable trait of our market. Something that has finally manifest, and should stay in place forever. I’d question that theory, and would encourage any owner in this range who might be considering a sale to hurry up and sell. This liquidity is beautiful, but cycles are cycles.
And that brings us the concept of a lakefront market cycle. How long will this cycle last, and where are we in the cycle? Obviously it’s impossible to know this, but we do have the benefit of history to look at as a guide. The last cycle began in the late 1990s and ran up through 2008. The cycle lasted around 10 years, with gradual price increases occurring each year during that cycle, including in the years immediate following the 2000 dot com bust. If we look at our down cycle as occurring from 2009 through 2012, we’ve been building towards a new bull market since 2012. Yes, extreme value existed up through 2015, but for the most part our market was in full recovery mode (increased liquidity and increasing demand) by mid 2012. With that in mind, it’s easy to say we’re about five years into our current bull run.
How much is left in the tank? Well, judging by the market conditions today, I’d say plenty. Does it last two more years? Does it go five more? That’s impossible to guess. Keep an eye on the stock market and on our inventory if you’d like a clue as to where the market is going. If the indices stay high and our inventory stays low, you have the makings for a continued bull run. If markets melt to any extreme level and our inventory swells, that would likely mark the end of these conditions that favor our sellers. For now, look at the market. Watch it. And don’t do as many buyers are doing right now and make a mistake. Let me be your guide. Not only will we have a lot of fun with your house hunt, you also won’t end up buying the wrong house in the wrong location.
As an agent, there are certain streets around this lake that I revere. The streets that don’t encourage visitors. The streets that don’t offer up their homes with any version of regularity. The streets that are better than the others. Some of these streets you already know, but others you don’t. You don’t know them because they’re not like Snake or Basswood or one of the streets we know we should respect. These are the other streets, the short ones, the curvy ones, the ones that you don’t even know because why would you? Welcome to Jerseyhurst Lane. The street so polished that you should always call it a Lane.
When the original caretakers cottage for the Crane Estate was built in 1885, it was long on charm and low on space. It wasn’t meant to be a lake house, a mini-estate, it was just intended to serve as a resting place for the family charged with overseeing the day to day at the large Crane estate. A place to eat dinner and a place to sleep. Each room with a view of the lake, but, alas, there was no time for contemplation in this cottage. There was work to be done.
This original cottage was restored some in the late 1990s, and then in 1999 it sold to the current owner. This new owner had designs for this special location, and so a meticulous renovation with sizable addition was undertaken. Chris Hummel would be the contractor to oversee this work, and when the last wide-planked oak board was polished, the new owners had found themselves extra bedrooms, a large kitchen and attached garage, a large office, and an ample great room with lakeside screened porch. The renovation was complete, the home perfect, or so the new owners thought.
More than a decade later, another idea, another plan to fix something that the house lacked: A first floor master bedroom. Sparing no expense, a spacious master suite was added, blending perfectly with the prior addition, which blended seamlessly with the original cottage. The landscape here is Midwestern perennial perfection, fully irrigated and wonderfully large (nearly one acre). The lakeside porch has those incredible views and a steady breeze, while the brick patio is tucked privately into the lush backyard. A two car attached garage is augmented by a two car detached garage, leaving plenty of room for any car or toy you’d like to store.
The first floor master bedroom is luxurious, with separate tiled shower and soaking tub, double vanities and his & her closets. The are four other bedrooms here, each large and all but one possessing an en suite bath. The first floor den has it’s own bath, too, and while the current owner uses this as a study, you’d be forgiven if you turned it into a TV room or an extra bedroom. There are four fireplaces here, those wide planked oak floors, and character that you rarely find in such a unique location.
The house sits up away from the lake a ways, allowing rare privacy and continual quiet. The 50′ of lake frontage and private pier is shared with just one neighbor, though this home has exclusive rights to the canopied slip. There’s a 26′ Chris Craft Continental that calls that slip home, and though you’re allowed to put a new Cobalt into that slip, there’s something about the Chris Craft that perfectly matches the laid back style of this large lake house.
Today, this home has found its way to the open market, with an asking price of $2.895MM. It will be sold quickly, I do believe, so you’d do well to consider a tour of this home if you have any interest at all. Streets like Jerseyhurst have been lining this lake for over a century, but rarely does a street like this extend to the public an invitation to ownership.
If you’re showing a house on Folly Lane, it’s best to show it in late October. That’s because the skinny road that makes an abrupt turn towards the lake off of Snake Road is lined with Maples. No, not merely lined, it’s choked with Maples. These aren’t your run of the mill Maples with orange and red and all sorts of silly extra colors, these are the yellow Maples. That’s a man’s Maple, the yellow one. And Folly Lane has all of the yellow ones, and as such, you’d be best served to show a house on Folly Lane in late October when these green Maples are brilliantly yellow.
But if you can’t show Folly Lane in October, it’s still a good enough drive any other time of year. I drove down that road last Friday with a cherished client in tow, and later that day we closed on the large lakefront at Folly Lane for $7.4MM. This price, by the way, is the same price the property sold for in 2012 (the furnished number was $300k higher than the recorded print). I didn’t love that sale back then, as the market was in pretty rough shape in the summer of 2012, but today the market is robust and vibrant, especially in our upper reaches. Today, that sale at $7.4MM makes sense to the market, and I was supremely pleased to represent the buyer.
For the market, that’s the sixth sale over $5MM in the last 12 months. Of those six, I’ve closed five of them. That reminds me of something that happened over the weekend. On Saturday morning I was out early delivering magazines with my son. We were walking up to the Lake Geneva Starbucks to peddle our pile of propaganda. A woman was walking out with her husband, a copy of Summer Homes For City People in her hand. She was talking in low, hushed tones to her husband. In a terse whisper she said, “I’m not sure why I’d want to read Dave Curry talking about himself”. I was disheartened to hear this, but I quickly decided that it would be better for me to write 84 pages about myself than about someone else. The waters could get slightly litigious if I wrote 84 pages about someone else. And in the same way, I really don’t like having to tell everyone how I’ve sold five of the last six mega-sales on Geneva Lake, but if I don’t tell you, do you think the other 500 some Realtors here will?
As of this morning, there are six homes for sale on Geneva priced in excess of $5MM. Of those, perhaps four of them are actually worth more than $5MM. Be sure to ask me which ones those are. Of the remaining homes, there’s a rumored offer on one of them, and some interest in another. The properties in this strata are generally large, but of the remaining inventory there’s nothing particularly turn key on estate type parcels of land. That’s an issue for the market, especially as there are many upper bracket buyers in the market today.
The story of 2016/2017 is less about the primary market momentum and more about the incredible liquidity in the upper reaches of our lakefront market. Remember, from 2000 through 2009 there were just three MLS sales on Geneva that printed in excess of $5MM. In the past 12 months we’ve closed six. It’s all really quite remarkable until you remember that Geneva Lake is the best lake in the Midwest. Then it all makes a whole lot of sense.
What is a healthy real estate market? Is it a market with plenty of inventory so that every buyer has an opportunity to buy whatever it is that they want? This would be the generally accepted position of most. Yes, we should have inventory for all, available at all times, with low interest rates and sunny skies. Also, hopping, happy white bunnies.
The problem is that it is impossible for a market to exist that pleases buyers and sellers equally. Even if you’re a seller and then an immediate buyer, you don’t have things exactly the way you’d like them. Unless you’re selling something into a hot segment and buying something in a slow segment, you’re likely selling high and buying high. When the markets were bad, sellers were selling low and then buying low. As I was advising then, this felt terrible but was, in fact, really quite smart. The trick then was simply to sell low and buy lower, just as the trick today is to sell high and buy less high. I admit the clunky phrasing will never catch on.
Today the market is active in all segments. Unlike the initial improvement we saw from 2012 through 2015, where certain segments were left out in the cold even as others advanced, today the entire market is humming. There are 19 lake access homes priced under $400k at the moment. Of those, 8 are under contract. There are homes with slips priced between $400k and $900k pending sale, and even our off-lake $1MM-$1.5MM range is churning out volume. There are two pending sales in that category, one in Lake Geneva priced in the $1.3MM range and one in Fontana priced near $1.5MM. This is the range, in case you forgot, that has been struggling over the past 18 months. Today it is fluid and potentially as liquid as any other individual market surrounding the lake.
The entry level market on Geneva is still giving up some inventory, with two lakefronts priced under $1.5MM. Beyond that there is a pending lakefront in Lake Geneva priced at $2.195MM (my listing), and a recent sale in that same category of a house in Williams Bay on the north shore of Fontana Bay. That property closed for $2.125MM. I had that home for sale a couple of years ago and failed to sell it. The house didn’t bow to the market, the market came up to that house. Around the other side of Fontana, a house that had been for sale off and on for years has gone under contract with an asking price of $4.65MM. That’s a nice property in a nice location. It makes sense that it sold quickly this time around.
In our upper bracket ranges, I have a new deal on a lakefront priced at $7.95MM. That’s the biggest story of the last 24 months- the improved liquidity at our market’s very top end. We used to sell a lakefront over $5MM every other year. Now we can sell five or more per year. When this sale closes that will make six sales over $5MM between June 2016 and June 2017. Of those six, I’ll have closed five of them, leaving little doubt as to which agent best understands the highly nuanced upper bracket here. This increased liquidity is good for the lake, but it will have a cap. Over $8MM the numbers get a bit more sticky, and we still haven’t ever printed a transfer at $10MM or over. Expect this to be tested this year, both with some of the current inventory and with new inventory that’ll likely leak to market over the coming months.
So is this a buyer’s market or a seller’s market? Is the market healthy? Well yes, it’s healthy. It’s active and it’s dynamic. But as for who’s in control of this whole thing, that depends on specific properties. You can sell into a hot segment right now and buy into a cooler segment. That is still possible, and that’s the best possible outcome for those seeking to upgrade or downgrade without leaving these shores. The trick now is for buyers to remain patient (and seek out the proper guidance, from me), and for sellers to resist the urge to indulge in overconfidence. Either way, if inventory remains low we might have a slower summer than any of us want.
Buyers are not generally pleased with the way this market is performing. Buyers want to know when the market will shift in their favor. When the inventory will increase. When the skies will clear and the sun will shine on them, not on the seller. To be a buyer today is to assume the seller has the upper hand.
Last November a small house in the Highlands came to market for $1.2MM. The house was about what the market expected for this price. 45 feet of frontage, some basic things like a sort-of kitchen and some bedroom-ish spaces. It was fine, this house. And the market was hot, especially on the heels of my closing of the lakefront down the road on Lakeview right around that same time.
But the house didn’t sell, because it didn’t have any sort of sizzle. Buyers looked at it, often, because it was, at the end of every day from then until now, cheap. But was it cheap enough? After all, the house down the road closed at $1.26MM and had a bit more frontage, a boathouse, better finishes and it was clean and easy. This house wasn’t clean nor was it easy, and so, in spite of this dynamic seller’s market, the house sat.
I was working with a young couple last summer and fall, a couple who, in spite of their newness to our market, felt compelled to pull something off. They didn’t want to spend a lot, though in Lake Geneva even our little is a lot, so we targeted the entry level lakefront market, looking for value even as sales printed all around us. Patience, even in an escalating market, would prove to be the right practice.
We bid low in March, or maybe it was April. Pretty low. Quite low. The seller responded. We negotiated some more. A bit more. Just a tiny bit more. We closed that purchase on Monday for $925k. The new buyers are into a lakefront home for the lowest amount that anyone has paid for 45 or more front feet on Geneva since January of 2013, and that, no matter how terrible the kitchen, is a value.
There’s something especially rewarding about placing a new Lake Geneva owner into a lake house. This sale was not the largest, nor was the house the fanciest. But the house allows a young couple an opportunity to experience the lake for the first time, in a way that will be completely and utterly new to them. To this new buyer, a big congratulations and many thanks for letting me help with this lakefront purchase.
To the buyers who claim this is a seller’s market, what of the sale here on Lakeview? If you liked your down market in 2010-2013, that’s fine. I liked it quite a bit, too. But the market today is robust and healthy and yet still discerning buyers with enough vision can still secure lasting and permanent value. Don’t let the headlines get you down. Every seller has their own circumstance, and every home its own unique set of challenges. Our job is to discover those homes and those sellers and do our best to print value.
So much excitement, so early on. New pictures, new mulch, new signs. This is going to be it, this is going to be the year. The month. No, the day. Will it be today? It might be tomorrow. Certainly by Saturday. Sunday, well that’s a day off for many. Monday? Could it be? No, it’s not. A few days later nothing. Weeks, nothing. Months, nothing. A showing next Friday! That’ll be the one. What took so long? The showing is a bust. The buyer’s daughter had the sniffles and so they decided against the arduous trip up paved roads from so far away as Barrington. There was once so much optimism, so much hope. So much blind faith. And now, nothing. Days to months and months to years.
To be a seller today is to be confident. The markets are hot, mostly hot anyway, or so the newspaper says. Certain markets are slowing, the Hamptons, Manhattan, Beverly Hills. But are they slowing because they were recently too active? Are they only slowing now relative to the torrid pace of the last half decade? Are they slow, or just less magma than we’ve recently been accustomed? Even so, those are those markets and this is this market. Sellers at Lake Geneva are, for the most part, bursting with enthusiasm.
And that’s fine, for a while. Initial enthusiasm is life affirming, and it’s important. Sellers should be proud of their house, proud of their mulch, proud of the photos. Proud of that real estate description (see my prior post). Lake Geneva is a market filled with nuance and irregularity, and for those reasons alone, every seller has hope. That house sold for that much, so my house HAS to be worth at least this much. Oh how much fun it would be to sell in a market that makes complete sense. A ranch on a street is worth the same as the ranch on the same street. Here, the ranch can be worth more or less depending on so many factors, all of which are not entirely clear.
This is the new seller situation, but what of the aged seller? What of the property that hit the market with speed and has since, over time, dulled to a fruitless crawl? How does that seller feel bout so many mentions of a “hot” market? The initial emotion is anger, not at the market or at the house, but at the broker. This is the problem during times of these active markets. If a house isn’t selling while everything else is, then the blame must lie solely on the shoulders of the guy or gal whose name is on the sign. It’s their fault. And often it might be, but let’s assume you didn’t hire a bad agent, because you’re smarter than that. Then whose fault is this delay?
It’s the price, silly. Hot markets can only overcome so much. An active market might allow a seller a 10% premium over a calculated value, but 20%? 30%? Where does it end? The low inventory condition at the lake is one reason lakefront sellers are so confident. If I have a 1960 Corvette fuelie and I live in BumbleTown, Wisconsin, population 184, do I get to ask $150k for a car that’s only worth $90k? But I’m the only 1960 Corvette in town! The absurdity here is the same as a seller who thinks any price is attainable simply because the competition is nonexistent, or slight at best.
That brings us to the market today, and the confident seller of last year. Last year’s confident seller is this year’s weary seller, and those weary sellers are just who aggressive buyers should be targeting. New sellers are too optimistic. Old sellers are growing tired, and an ambivalent seller who has let their hope diminish is the best sort of seller for a value minded buyer. Let’s get out soon and find a few of these sellers. Let’s find properties that have been overpriced for so long the seller has no choice but to accept the reality of our lower offer. Sure the market is hot. Sure new inventory won’t be easy to buy without paying a market rate. But in spite of this, there is opportunity if only you’ll throw your attention towards the sellers that the market has forgotten.
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.
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.
I hate Luke Bryan. First of all, he has two first names. A better name would have been Luke Bryant. Like Kris Bryant, without the ring and with the T. I hate him because he sings ridiculous songs, songs that I cannot name and songs that I cannot hum. Bro-Country songs. I don’t know any of his songs. He throws his voice when he sings, like he’s trying to be someone else, like he’s trying to sing anonymously. He’s a country Elvis, which is not to take any shots at the real Elvis who also sang a bit of country. I hate him because of his name and because of his voice but mostly because I don’t like the way his album cover looks whenever when of his songs cycles into my Pandora. I can’t Thumbs Down fast enough. So there, I hate Luke Bryan for no real reason, but for all of the other ones. Ceasing pettiness was not one of my 2016 resolutions.
But Luke Bryan has a song on the radio where he tells us that 60 seconds felt more like 30, and that is something I can agree with. 2016 is over and it flew by. This year, the year that was so hated by the media, so hated by Memes, so difficult for so many reasons, was a pretty good year to be Dave Curry in Lake Geneva. It wasn’t without difficulty and stress, and there’s a headache that I now get that doesn’t let go for a few days at a time, but on balance the year was a terrific year. For all of the celebrity deaths in 2016, every member of my immediate or extended family made it from the first day to this, nearly the last day. Perhaps this was because the year passed so quickly, in record time, and because of that no one really found the time to die.
On the business side of 2016, it could not have been better. A good year in real estate is wonderful, but it’s so fleeting it’s hard not to find some discouragement in the face of all the delight. I started selling real estate in 1996 when I was just a kid. While my friends went off to college, I just drove a half mile from home to a real estate office and sat there wondering what I should do. I was intimidated by the sound of a ringing phone. Once I decided that on fall Sundays there would be women shopping at the store next to my office, and the men must be sitting in their cars impatiently waiting for their wives to buy something with Lake Geneva written on it or carved into it. I thought the men would be bored and might want to watch the Bear’s game. This was back when people wanted to watch the Bears play. So I found a half sheet of plywood and scratched “BEARS GAME ON INSIDE” onto it and faced it towards the road. I turned on the tube television and adjusted the rabbit ears to get the least snowy signal I could. No one ever came inside, and that was a terrible, awful idea.
From those days in 1996 until the end of 2009, I sold around $50MM in real estate. All the while I had a family and houses and mortgages and insurance payments and bills for ads in local newspapers that never worked. That tally matters, because those were the years where I learned what to do and how to act. I learned what to say. I learned how to fail. I learned the market and the roads and the associations and the way the water looks in the morning as it laps against the rocky point where Fontana meets Williams Bay. Those were the years that mattered more than these years. I’m humbled to write it, and uncertain as to why it happened and sheepishly proud that it did: My 2016 sales volume was in excess of $62MM. Over the last 12 months I sold more real estate than I did in my first 14 years.
I became so accustomed to working from behind, to thriving as underdog, to wishing for some success that I had no business expecting, that now I feel a bit awkward here. I hear the praise from people I know and from others I don’t, and I don’t know exactly what to make of it. $62MM, after all, is a Walworth County all-time record, and a number that leaves my nearest single agent competitor with less than half of that volume. I was thrilled to represent either the buyer or seller in 10 of the 26 lakefront closings during 2016, and sold 5 of the 6 lakefronts that closed over $3.9MM. Per MLS (1/1/16-12/30/16 Walworth County sales), my personal volume was more than the 37 agent @Properties office in Lake Geneva, nearly double the production of the entire Rauland office, roughly quadruple the production of the entire D’Aprile Fontana office, and more than any individual office in Walworth County excepting one. I kind of hate writing all that, but I spent fourteen years being told that the small office can’t be as effective as the large office, so I can’t really waste this opportunity.
Does this mean I’m somehow at the top of this game? Does this mean I have no where to go but down, to slowly fade away as someone who was once pretty good at something but no longer subscribed to the process that brought him there? It seems as though this could be the case, that I might indeed just stall here at this lofty height and realize I never learned to land. But the reality of it is I know this success has very little to do with me. I know I’ve been blessed. And I know that without clients and customers trusting me for their Lake Geneva decisions I would mean nothing to the Lake Geneva market.
So today I thank you for your loyalty. I thank you for reading this drivel. I thank you for recognizing that many days and weeks I have nothing really to write about, but I try to do it anyway. I thank you for trusting in a kid from Williams Bay, who never aspired to do very much but always wanted to matter. I thank you for helping my business grow. Where it goes from here I can’t say, but I know it’s a struggle to stay at the top of anything, no matter the profession and no matter the year. I’ll keep trying, I’ll keep working, and I’ll be here if you need anything. If I’m your agent already, a most sincere thank you. If I’m not your agent yet, this is me begging.
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.
Earlier this year, I wrote an email to an owner of vacant lot. I told him should be be interested in selling, there was a likely premium awaiting him. He hadn’t bought the property too long ago, but the market had been looking for what he owned, and it was obvious to me at that time that some pent up demand had to exist. He emailed me back and said he wasn’t interested. This was earlier this year. Recently, he emailed me asking for a price for his property. I told him a number that was indeed a premium, but not as significant of a premium as I had mentioned earlier this year. He was angered by my number, and suggested that I must have forgotten what I told him only a few short months prior. In fact, I hadn’t forgotten that lofty number at all, but in the time since that quote the market had added inventory in this specific segment, and that inventory had failed to sell. The market momentum that I sensed earlier this year had been squashed under the weight of competing inventory. The time to sell was last spring, the momentum was there, the market ripe, the window missed. This is not my fault.
Sellers have a hard time with this discovery. When it comes to real estate, you can either sell when the market wants you to sell, or sell when you want to sell. There’s no other choice. If you sell when the market wants you to sell, you behave like I do- you lock a gain when you see one, and you move on to the next project. When you sell when you want to sell, you assume the market will respond kindly, because after all, you’re a seller and your house has that sweet gold faucet in the master bathroom. But the market doesn’t care about you, it doesn’t care about your faucet, and if you decide to sell when the market isn’t primed for your specific offering, you’ll flutter in the wind as you await the whim of the market to turn your way. This concept isn’t that hard: Sell when the market is good, hold when it’s bad, but don’t sell into a bad market and expect to overcome it just because your house is special. Yes, I know that in that line of ranch homes your home has an outdoor kitchen that consists of some stacked concrete blocks with a grill precariously perched in the middle.
If you’re a long term holder of real estate, then you needn’t worry about the right time or the wrong time, you just live and you enjoy the seasons and you replace the roof when the time comes. This is how most of us tend to view real estate. We view it as though we’re there forever, or for long enough that market peaks and valleys matter little to us because after a long time of ownership we’ll have enjoyed some appreciation no matter the immediate mood of the market. But this self considering view is incorrect, because most of us move every 5-7 years and if we’re timing those moves at the peak of a cycle then we’re selling high and buying high, and if we miss the peak then we’re buying low and selling low, the net gains are the same. So if we’re going to buy and sell, shouldn’t we do so in an opportunistic manner?
The time is now to be an opportunistic seller if you’re an owner of a lakefront home with a market value in excess of $3MM. Never before has there been so much liquidity in the upper bracket of this market, and I do mean never. Sellers of homes in $3-4MM range have always enjoyed some level of active market, so their inclusion in this segment isn’t unexpected. What it unexpected is the demand over $4MM, and that demand continues with pace all the way through $8MM. Without exaggeration, several of the homes I’ve sold this year are homes that I could have sold twice. The market needn’t have one hundred buyers in this segment to thrive, it just needs a handful and that’s exactly what it has right now.
And that brings us back to the timing of it all. Yes, conventional wisdom says to list in the spring. But conventional wisdom is wrong in this case. If you’re a lakefront owner with a property in this discussed segment, now is the time to sell. You don’t need to sell now, obviously, instead you could wait until next year when you’re more ready. But next year has its own set of unknowns and the only thing known is what the market is doing today, and today it wants to buy your expensive lakefront home. This year, three lakefront properties have closed over $3.9MM. I’ve been involved in all three of those sales. Two more sales over $5MM are pending sale right now, and those are both my listings as well. It shouldn’t need to be repeated but if you’re a lakefront seller looking to capitalize on this market, I’m your guy.
The entry level lakefront market is a perplexing little market. On one hand, it’s obvious that a cheap lakefront on Geneva will always find an audience. This is unavoidable. On the other hand, the inventory is slight in this segment and yet there have been two entry level lakefront homes toiling under $1.4MM for much of this year and nearly for all of last. In the same segment, a new lakefront was listed last week and has since gone under contract (I’m not involved in the transaction). Not only is the new home in the same segment, it’s on the same street, and it sold without much ado even as the other two sit. This bothers me, but it proves the market absolutely loves new inventory and at the same time finds something distasteful about aged inventory, no matter what benefits the aged inventory can offer. New inventory good, old inventory bad, or so the market proves.
Last month the wide frontage on Basswood closed for $3.55MM. Lest you think this was some amazing, full depth Basswood lot, I assure you that it wasn’t as ideal as it first sounds. The property was wide at the lake, beautiful indeed, but the lot angled back to a sliver as it headed towards Basswood. Compare this to my listing on Basswood (more money, granted) that runs a complete rectangle from lake to Basswood, full of old deciduous growth. Still, the lot that sold is nice and the house could very well be renovated. I’ll be curious to see if there’s a sizable renovation there, or just a lipstick renovation, or if the structure follows the well worn path towards demolition. Time will tell.
That sale was the seventh lakefront this year to print at or over $2.75MM. Not coincidentally, of those seven sales, I represented either buyer or seller in five of them, including the three highest priced sales of 2016. Last year at this time we had closed just four lakefronts at or over $2.75MM, so there’s little doubt that the market at the higher end has much more strength now than it did before. As I wrote last week, what this upper bracket markets wants now is more inventory. We can’t sell what we don’t have available, and so there are buyers on the hunt and increasingly less game in the field. My large lakefront in Fontana is under contract, leaving just 11 lakefronts priced over $3MM for sale. Of those, two or three of them are in no danger of selling, perhaps ever. The highest priced listing to grace our lakefront this year has just been reduced from $16.45MM to $14.5MM.
And that brings us back to the entry level market and the lesson of the week. In this lower inventory environment, new inventory will always be met with excitement. Sellers who are thinking of waiting until next spring to list their lakefront home are doing themselves a disservice by not taking advantage of the market conditions that exist today. Why trade the relative certainty of today for the complete uncertainty of some time far into the future? The thing is, even with this low inventory environment, there are deals to be had. There are aged bits of inventory that look appealing to me, but that’s because I’m value driven and I know that just because the market hasn’t been excited by a property that doesn’t mean there isn’t value hidden under all those days on market. Below and above, my Basswood estate listing.
There’s a seller and a buyer and they get along and they’re both honorable and they complete a transaction. Sometimes, the house is perfect, the price is accurate, the deal pure. That’s what happened with W4449 North Lakeshore Drive in Linn Township this summer. I listed this home in July, and it closed yesterday for $9,950,000 (the fully furnished number, transfer will be less). The print is wonderful for the lake, wonderful for those of us who care about proving liquidity at the high range. If you offer perfection and you present it to the market in a way that proves the pedigree, good things will happen. In this case, I was honored to represent the seller who trusted me with this fantastic listing. I’m beyond grateful.
This sale puts me over $37,000,000 closed on the year. That’s a humbling total that’s nearly double my next closest “competitor”. If you’re a lakefront buyer or seller with a Geneva aim, I’m here to help.
It seems to me that what this lakefront market really wants is newer inventory in the $3-5MM range. There are buyers in that range seeking newer homes on reasonably nice lots, and this is what they haven’t been able to find. My sale on Lackey Lane ($4.375MM) fit that mold. The sale last year on the hill in Fontana for $5.1MM, too. Those sorts of homes are what the market wishes for, and yet that sort of home is what we haven’t been able to offer. Inventory concerns are real, and on Geneva right now the ideal inventory is what I’m describing today.
The curious part of this hole in the inventory is that the inventory has existed, but it hasn’t been built. It’s raw land, or it’s a tear down, but it does exist and it has existed for much of the past two years. There were two sales on Sidney Smith, then a sale on Lackey (of a tear down). Then, the vacant lot in Loramoor that I sold less than two years ago came back to market earlier this year. The key to building a new house and being all-in for less than $4.5MM is in buying the dirt for around $2MM. If the dirt is more, your budget is blown before you put a shovel in the ground. If the dirt is considerably less, you don’t have the sort of property that can support that elevated target price, no matter how shiny your Wolf oven is.
This is why when a buyer asks for an entry level tear down, I question the math of it all. Yes, it’s true that you can buy an entry level tear down somewhere around $1.1MM right now. But what have you bought? Likely the answer is around 50′ of frontage. That’s nice frontage, and if you wanted to buy a tear down for $1.1MM and build a new house for $700k, that might be a good idea. But what if you’re looking to buy $1.1MM dirt and then build a $1.4MM new house (5000 square feet x $300ish/ft)? Then you’ll be $2.5MM into a 50′ lakefront lot and again, I’m not concerned about how terrific your kitchen island is because that price doesn’t make much sense. The investment was a bad idea before it started.
That’s why the market has a sweet spot, that of a $2MM type lakefront lot possessing around 100′ of frontage, and on top of that it’s reasonable to build a $2MM or so new home. The market, with the sale on Lackey and the sale on the cliff in Fontana, has proven it can absorb new construction of a higher level in the $4-5MM range. With this known, if you’re a buying in the $4 range why wouldn’t you just build a new house? The answer is confounding, usually related to a distaste for the building process, or perhaps a lack of patience to wait the 10-16 months to have a build completed. The thing buyers forget is that the house they’ll end up with for $4something will be exactly and precisely the home they wanted all along. There’s a wait involved, sure, but the outcome is individualized perfection that the market also appreciates.
Last Friday I closed on the Loramoor lot that I brought to market earlier this year. The seller had great hopes for that property, but life changed and focus shifted. That shift allowed a new buyer, a young family with eyes set on the lakefront, to find their way to the parcel that will hopefully be their lake home for decades or generations to come. They paid $2.075MM for 110′ of frontage and 1.43 acres, and that’s something that will always make sense on this lake. The trick now will be to keep the all-in budget in that $4MM range, and once that happens the buyer will end up in a home that the market simply couldn’t offer. Want to find that $4MM new construction on Geneva? Then it’s time to get a bit dirty and build it.
August. It’s August now and it’s too late for you. If you’re at home and your vacation home dreams are there with you, then you’ve already blown it. This August will not be special for you. It might be special for you if you enter into a contract to buy a vacation home during this month, but otherwise it’ll be uneventful and horrible. You went to Lollapalooza over the weekend? Terrific, that also sounds boring. The good news is that while this August is a complete and utter waste, next August can be spectacular. And next July, too. June, sure. May, and its Memorial Day, delightful. And so it goes, a summer still underway but an August already wasted. That’s your upbeat Monday morning message. Enjoy your week!
The market is remarkably active today. The lakefront in particular. A few weeks ago I sold my large lakefront listing on the North Shore near Pebble Point. A buyer paid $3.93MM for 181′ of dead level frontage and four acres of fabulous depth. This lot is likely the best vacant lot to sell on this lake in quite some time. I prefer it over the lot that sold near Alta Vista a few years back for $6MM. That lot is sold, and with it I’m back to where I belong in the MLS rankings for Walworth County- Number One. Another large lakefront on Basswood is under contract with an asking price just under $4MM. That home had been for sale for quite a while, and finally found a spurt of activity this summer before finalizing a contract last month. Two hundred feet of frontage with an old house will always find a buyer, assuming the price slowly succumbs to the market’s expectations.
The South Shore Club has had a nice injection of activity, as I listed and then almost immediately went under contract on a large home just to the lakeside and west of the pool. At $2.99MM this was the first home in this sort of location to come to market since I sold a foreclosure two years ago on the east side of the pool. The home sold quickly because it’s a large home, with elevated finishes, and a most beautiful lake view. The other listing in the South Shore Club is farther towards the back, with less of a view, but I expect that home to benefit from my soon-to-print-comp, and that home will sell this year as well. If you’re looking at the SSC and don’t want to swing the $2.7MM+ price to be on the circle, I have my lot on Forest Hill Court available for just $598k, including home plans.
Just last week a home on the Abbey Harbor came to market, and then this last weekend that home went under contract. Do buyers love harbor front? Of course not, but buyers do love new and fancy and if you’re a buyer who loves large boats and new and fancy well then you’ve met your ideal situation. At $2.8MM the seller was rewarded in large part because of the lack of quality lakefront inventory in that price range. The SSC home is a similar beneficiary. If the lakefront had more inventory in the $2-5MM segment, buyers would absorb much of it with little delay. If you’re a seller sitting on a home in that segment and you’ve thought of selling, now is the time to call me. Actually, email me, since my return phone call habits are terrible at best.
Entry level lakefronts continue to be shown regularly, but are failing to attract contracts. I just reduced my lakefront on Lakeview to $1.419MM, and that’s likely the best entry level property on the market. With just 27 lakefront homes available, and two more vacation lots (my Loramoor lakefront being the best option there), buyers have few options to choose from. The good news for buyers is that aged inventory is already starting the reduction process. Sellers know that while this market is a 365 day market now, buyer traffic will slow by November, meaning there’s just 90 days of solid market time left for 2016. Smart sellers are evaluating their position in the market and reducing. It’s not a desperate move by any means, it’s just smart business. Watch for the savvy sellers who have experienced significant market time to reduce soon. Of course the smart buyers are the ones working with me to both strangle deals out of this aged inventory and pounce on the new inventory.
Above, the boathouse at my W4160 Lakeview listing. Yours for $1.419MM.
Freshly under contract, here’s a tour of this magnificent property on Geneva’s north shore.
The real estate market in 2006 was not yet aware of the trouble that awaited it. I, too, was not aware. The lakefront market on Geneva was firing on all cylinders, performing well on a high octane mix of low inventory and high enthusiasm. The market was on fire. That year, we sold 19 true lakefront homes on Geneva Lake. That was a nice year, though I admit at the time I was less involved in the lakefront market than I was in the whatever-I-could-sell-market. That’s because I was paying my dues, which gave me the education that I appreciate today. Experience is not gained in times of excess, it’s gained when you’re hungry. 2006, 19 lakefront homes.
In 2015, we sold 33 lakefront homes on Geneva Lake. I say we, because the market did that, though I had a less than starring role in those sales. I wrote lots of offers, fielded many more, but when the dust settled I had only sold four lakefront homes. Only a few select agents can boast that sort of tally for 2015, and I am pleased to be one of them, though I felt better in 2014 when I was the top agent by so many millions that the next closest agent wasn’t close at all. Anyway, the sales. What a year it was.
It was an unrivaled, record year for sales, sure, but it was also a year where the lakefront market changed. It changed because of new players in the market, players that have told us they’re experts, but haven’t proven it. A rhetorical question this morning: If you take a beat up 1991 Chevy Impala and put it in the shiny showroom of a Porsche dealer, what does the car become? In real life, we know that Chevy is still a Chevy, but in real estate, a Chevy that is pushed into a Porsche dealer is, inexplicably, advertised as a Porsche. But it wasn’t only new players who told us of their expertise, it was a year of a new model.
Auctions reared their MUST SELL NOW heads in 2015, and Lake Geneva featured at least three auctions on our hallowed waterfront. The first was an auction on Geneva Oaks Trail, one of a house worth somewhere under $5MM. The house sold for a number that, once fees were paid, exceeded $5.5MM. On that momentum, two more auctions were scheduled. One auction would be at Stone Manor, the other of a home immediately to the North with a shared pier. The home sold, the Stone Manor residence did not. Auctions, if you just started paying attention, batted 2 for 3, which, if you batted that over your career, would give you three more votes for the Hall than Ken Griffey Junior received.
But 2 for 3 is deceiving, because sometimes you can dribble the ball off the end of the bat and reach first. Other times, you can squeak one past the third baseman, and I know this because of my handful of career little league hits I count both in my repertoire. The two auction homes sold, sure, but to whom? Where did these elusive lakefront buyers come from? Were they dredged up through the slick ads and drone photography? Were they tempted by the shiny signs that pointed the way? Of course not. Both buyers were buyers who were already in the market. They were already interested in a lakefront home. They were buyers who likely would have bought no matter the vehicle used to complete the sale. Auctions in 2015 looked exciting, but they were boring, providing more seller risk than is worth the market reward.
One lakefront (pier 511) sold as a For Sale By Owner. This was an interesting decision by this seller, as most sellers of lakefront homes have no interest in fielding phone calls from gawkers and buyers and agents, like, all wishing for some sort of angle. The property ultimately sold, as it should have because it was pretty interesting in the mid $4s, but it sold via an agent who brought in the buyer. The seller paid nearly a full commission on this deal, and handled the annoyances of the transaction personally. Did the buyer show up at the property because the buyer found out about the listing in some rare way, through some shiny ad in some large glossy? Don’t be silly. The buyer was another lakefront owner who was playing musical homes, which is, as a point of fact, the favorite game of local Realtors. The buyer of that home sold his lakefront home to a neighbor.
Of the other 30 homes that sold, most sales made sense, but not all. There was a heavy sale of a house on a cliff in Fontana, north of $5MM. A few other sales here and there were excessive, but most did make sense. A nice price for around 100′ of frontage and a reasonably fair house hovered between $1.95 and $2.65MM all year, and that’s a fine range to win lakefront ownership. 2014 ended with an average price per foot of lakefront nestled at $21,144. 2015 ended at $25,161. Those here who love to explain how data works would tell you that lakefront prices rose 20%. They’d tell you that it was such a hot year that if you didn’t buy you made a huge mistake! But they’d be wrong on all fronts.
The lakefront market did appreciate in 2015, as it’s likely to do some in 2016, but it didn’t move 20%. It might have moved 5%. Might have. But it didn’t move 20% just because we sold some expensive lakefront homes that skewed our averages higher. Want to know what raw lakefront is worth right now? Somewhere around $22,00 per foot. How can I tell you that, when the average shows a much higher number? Because data only makes sense when you understand the context.
2016 should be more of the same, with moderate price increases but no where near the amount of volume. Prior years had us closer to 20 lakefront homes sold, and I expect we’ll fall somewhere around 22-24 total lakefront sales in 2016. The South Shore Club won’t be there providing loads of liquidity, and the entry level lakefront likely won’t have the heavy inventory that it had last year. We enter the year now with a few lakefronts under contract, including my buyer on the Lackey Lane property listed in the mid $4s, and a buyers on a two small lakefronts in Williams Bay. There’s a deal on the large tear down in Williams Bay listed in the high $3s (another buyer that would likely have done better to explore the built inventory in the $6-8 range rather than build new). There will be inventory coming, some of it rare and exciting (better call me if you want to know about them before everyone else does). There will be plenty of sales this year, but sellers should glance again at the market indexes before thinking it’s going to be a repeat of 2015.
I’m really bad at selling homes I don’t like. I show homes I don’t like, and then I think, I don’t like this house. I have to play along as though I think it’s fine, but generally I don’t play along all that well and my personal opinion is obvious. This is also the reason I’m not that good at advertising. I can’t speak to the lowest common denominator by utilizing font sizes and words that are statistically proven to motivate buyers. Words like DATA.
A few weeks ago, I read a real estate description that said something about “this breathtaking house will take your breath away”. It’s uncertain if the house takes your breath, then gives it back before taking it again, but the consuming masses might like that sort of thing. Then last week I read a description that promised the most dazzling house you, or I, have ever seen. In fact, we wouldn’t believe this house if we did see it. The house that generated this superlative narrative? A super crappy farm house on a highway.
My write up would have been, “That highway isn’t really a big deal. It’s not. In fact, I stood out there once and barely a dozen semis drove past, and most were coasting and all were recently washed.” I just can’t fake my way through this real estate game very well, which is a serious flaw in any Realtor’s character and will, ultimately, lead to a complete absence of business and a starting position at the Lake Geneva Starbucks, assuming I can work my way up from coffee bean bag stacker guy.
Last week, another lakefront sale on Geneva. That makes eight lakefronts closed since September 1st, which is rather astounding. That means the summer activity was strong, which we already knew. This sale was on Basswood, that of the large ranchy home with 201′ of frontage. That home originally hit the market at $5.875MM in the summer of 2014, and just sold for $4.835MM. That sale is a nice sale for the market, and it’s a nice sale for the agent who handled both sides of the successful closing (it wasn’t me).
It wasn’t me because that seller wasn’t my client, which is good, because my write up would have struggled to avoid the mention of drywalled arches and so much carpet. The home that sold was on nice dirt. Absolutely nice dirt. But the house was a Baywood Heights ranch on steroids, and so it either found the right buyer who loves the aforementioned features, or it found the right buyer who loves the dirt and figured they could make the drywalled arches go away through some creative trim work.
Two other lakefront sales that I hadn’t previously mentioned include one on Harvard in Glenwood Springs. It’s an old house up on the hill without private frontage, but at a $1.72MM closing price it’s a fine property. The other was an odd home in Geneva Manor that lacked a garage, a yard, and any outward facing style, but it sold because it had ample space and a young family wished to be in that association. That home, as an aside, was one that I had a shot at listing but I blew it because I didn’t love the house enough. I should have gone on and on about all the Oak, and I should have feigned knee weakness at each baluster and stair tread, but I didn’t, and I said it was nice and fine but that it was worth around $1.6MM. The house was listed at $1.75MM by a more Oak-Enthusiastic Realtor, and then it sold for $1.65MM.
My take aways from these sales have little to do with the market. They have to do with me, and how I’m pretty sure now that if I’m going to continue to be successful, I’m going to have to get better at faking it.
A long time ago, I decided to write a real estate blog. Along the way, there have been some really bad posts. There have been a scant handful of good ones. There have been irrelevant ones, poignant ones, others. There have been times when I wished for nothing than to stop this writing and there have been other times when I wished for more time, to work harder at this, to effort on a different level. The blog was always intended to be somehow different than a typical real estate blog. For instance, I’ve eschewed the use of multiple exclamation points. I’ve also never pretended that posting a picture of a pretty pier was something that an insightful blog would ever do. I’ve made some people happy, and I’ve hurt some tender feelings. Let’s talk about those.
Every day, all day, stock market pundits talk about stocks. They talk about this company and that company, about this CEO and that CEO. They talk about the things that make a company great, and they talk fearlessly about the things that makes the company bad. They’ll tell you to sell, or to buy, and when enough of them tell the audience to do one of those things in unison, the subject stock may rise. Often, when enough of the talkers tell their audience that a company is heading in the wrong direction, the stock falls. Billions are made and lost on these whims, yet the pundits talk and tell us what they know, hoping that what they know is more than what we already knew. I’d like to be able to do this for real estate.
And I have, to some tempered extent. Increasingly, however, if I say a sale is bad, or a house is bad, or a house is bad and the land is good, I hear the complaints. I hear of angry sellers, or angry buyers, or angry agents and their lemmings. I hear about the tender, easily hurt feelings of people who may have sold a house that I didn’t like. I hear from others who bought a house that the market didn’t like. I’m growing weary of the constant struggle to make everyone happy, and so I think I might stop commenting on the state of the market, on the state of a sale, on the state of this business.
There was a sale last week on the lake, and I liked it. It wasn’t my listing, nor was it my buyer. I’m shamed by my absence from this sale, and from too many others this year, but not every buyer makes the proper representation decision and I must respect their mistake. The sale last week was of a shingle sided house in Cedar Point that first came to market in 2013 for $3.5MM. It may have been for sale before that, but I can’t recall the price or the year. That price was never right, but when the home finally sold last week for $2.185MM, I liked the sale. 103′ for that price in that location? I’m a big fan, and I always will be.
That sale was the 19th MLS lakefront sale of 2015. There have been two other auction sales, both achieving prices greater that my opinion of their actual value. Three of those sales have been in excess of $5MM. The 21 sales represent a huge swell of activity for the lake, and there are at least six more lakefronts pending sale right now. I’m expecting we’ll print those six, as well as three or four more before the end of 2015, making this year a most epic volume year. Last year at this date we had closed 15 lakefront sales, with nothing priced over $4MM.
For value minded buyers, consider this. November and early December offer some world class bargain hunting. Aged inventory generally feels like selling, and cool dreary days of November, the sort where fall slowly loses the fight against winter, those are the days we can make friends with rare value. While the year has been outstanding and lakefront buyers are milling about in record numbers, there is still value to be had if only you’ll look at those things that you’ve already passed over. Let me help you by pointing out the winners.
I’m not going to say what I want to say. I’m not going to say that a house with a modest 110′ worth of cliff frontage shouldn’t sell for five million dollars. I’m not going to talk about the work required to take a basic parcel and turn it into an estate-type parcel; the landscaping, the tennis court, maybe a pool. I’m not going to talk about fit and finish, about what constitutes high end construction and what does not. I’m not going to do any of those things, because a sale is a sale, and the market tells me what it expects and doesn’t really concern itself with what I expect.
The house sold last week for $5.1MM (I wasn’t involved in the sale). That blue house, the one high on the hill just north of Gordy’s. It sold. It was first listed in 2014 for $6.25MM. Was the home worth $6.25MM? No. And the market proved it, allowing the house to sit and stir on the market for the majority of that year and into this one. Throughout that time, buyers presumably came and went, opting for other things, or for nothing at all, over this house on the hill. But the house had some style, and it had some polish, and it was new and of a contractor pedigree that means something here, and so the house attracted interest but failed to achieve the only measure of interest that matters: A sale.
What happens next is some intrigue, some subterfuge, and disappointment. The listing expired and was removed from the market, but the market knew the home was still for sale. And so it went, a house off the market, an aged asking price that never fell below $6.25MM. If you were simply computer screen watching, as 90% of agents do, you might have been surprised to see this property print in the MLS this week with a $5.1MM closed price. We do not computer screen watch.
The sale now closed was handled by an agent other than the agent that brought the property to market at that lofty price in 2014. The agent who closed the transaction was not the agent who toiled at the high price. This was not the agent that knew the market would react differently to the property if it were listed in the middle to upper fives, rather than the low sixes. The agent who did the fine job of selling this home last week was not the agent who introduced the property to the market, who broadcast it to the agents, who made known the quality and the importance of the home (even if I didn’t agree with the level of importance). The property sold via another agent, and the market, those uninitiated who follow from afar by watching Instagram screens and Facebook posts, will assume that some heroic event was made possible by the introduction of a new face.
When I took over the South Shore Club marketing in 2012, and promptly began selling both homes and lots with a regularity that the market there had never experienced, was it because of me? Was I so much better than the prior representation that I somehow convinced the public that this South Shore Club was worth their time and money? Was I a star who brought with my power of personality and made this development matter again? Or was I just the guy who came on the scene, with messy hair and pointy shoes, and convinced the sellers that the price structure was wrong, and that if they would oblige my suggestion they would find success? It’s the latter, which is why I didn’t take out full page ads telling you how tremendously effective I was. I was merely the person at the helm when the market heated to such a level that success was the only possible outcome.
The same likely applies to the blue house on the hill in Fontana. Was this some feat? Was this a sale that wouldn’t have happened if not for a change in agent or broker? Of course not. This was a sale, like most sales, that had everything to do with price, and had the price of that $6.25MM home been dropped to $5.3MM (the ultimate list price when the property sold) I would suggest that anyone of a 100 different agents in this town could have played the star role. And all of that goes back to this. On television, red carpets and Burning Man parties sell houses. In Lake Geneva, just hack off your price a bit and make your agent a star.
As a market aside, this sale was high. There were multiple parties interested in it, but it was still high. The premium was paid because Fontana is a desirable locale, and new construction in the $5MM range generally doesn’t exist. Buyers can convince themselves to spend $5 something much easier than they can convince themselves to spend $7+. No matter that $7+ gets you a product like 1014 South Lakeshore, a property so vastly superior to the blue house on the hill in every possible measure. Compression is the high end buyer’s friend here, and if you can swing $5 something, better reach a bit and spend $7 something, because that two bucks you left in the market is now worth $1.6 bucks, and a house is so much more fun.
I watch the million dollar shows on television. I used to think I liked those shows, because they portrayed Realtors as being cool and hip, and Realtors have, since the advent of the Realtor, been sufficiently anything but cool or hip. I liked the new Realtor, and I liked that the industry found a way to reshape their image. I don’t really feel that way anymore.
I like the fancy cars and pointy shoes as much as the next guy, and I appreciate snarky comments and faux conflicts, but there’s some damage being done to the industry if you look beyond the pocket squares and excessively gelled hair. While we’ve become accustomed to watching these television agents dance through negotiations and coyly bluff each other over drinks at a fancy bar (the deals always come together), the bragging about setting new records and beating the market has convinced much of middle America that this new game isn’t about facilitating market transactions efficiently and competently, but rather it’s about the gimmickry that can, or in the case of the show, always, leads to beating the market.
My market beating experience this year just played out last week at the South Shore Club. I saw there the last two sellers, those owners of lot 8 (unbuilt), and lot 7 (built). When I took over the South Shore Club marketing in 2012, these two parcels were for sale. When 2014 faded to 2015, both of these parcels were still for sale. Both properties held the lofty expectations of their owners, and if both parcels had been in Beverly Hills I likely would have sold them both to foreign investors and then tap-danced my way to a champagne lunch. But this is Lake Geneva, which is, if you’ve been dawdling, a small resort town in Wisconsin that caters almost exclusively to the Chicago affluent. It is a beautiful area, but it is to Beverly Hills what I am to an olympic decathlete.
These two properties weren’t catastrophically flawed. They were South Shore Club properties, owning all of the luxurious amenities that every other club property owns. They were on a dead end cul-de-sac, on a street that hosts a total of 8 parcels. In the time since these two properties were listed, nearly every other property on the street sold, and every buyer that bought on the street looked at these two parcels and said no thanks.
It wasn’t that these owners weren’t trying to sell. The vacant lot #8 switched representation a handful of times in an attempt to rouse a buyer through a different narrative, a different set of pictures, a different approach. That failed. The lot 7 owner, whom I was pleased to represent, chopped the price consistently. He re-painted. He removed the furniture. He had a pre-inspection performed (some agents love those now). He took the property off the market and then put it back on. He chopped the price some more. New pictures were taken. A new narrative written. After several years of efforting the properties had several serious looks, several seriously interested, and dozens upon dozens of showings, yet both sat unsold.
When both parcels sold last week, they sold for the reason that Lake Geneva properties ultimately sell. They sold because the prices were cut to a level that the market accepted. They didn’t sell because of pointy shoes or gelled hair. They didn’t sell because the Realtors drove shiny cars. They sold because the market had rendered judgement on them, and in order to find a buyer they both had to sell cheap. I sold lot 8 last week to a buyer of mine for $420k. I sold lot 7 for $1.45MM. These prices were discounted, tremendously, even as the remainder of the market appreciated. Importantly, these two parcels represented the last two available pieces of aged inventory in the South Shore Club. From here on out, any sale in the SSC will be something new to market, and that’s exciting for everyone that has played a role in this development over the past 14 years.
Did these parcels fail to sell years ago because the Realtors were somehow bad? Is it because the Realtors couldn’t manipulate the market to suit the individual needs of their clients? Well, no. Of course not. The properties didn’t sell because beating the market isn’t just something that supposes one side is extremely naive and gullible, it’s also very difficult to do, unless of course we were in Beverly Hills right now.
Crain’s Chicago Business has a fun little column that appears on Thursdays. It’s called Ten Things To Do This Weekend. It is a nice list. And it’s good for Chicago area events and businesses, because it supposes that everything there is to do on a weekend should happen in the city or the suburbs. The events are wildly varied but somehow all the same. Come visit a three piece cello band while they play you their greatest hits at some outdoor place in some suburb. That strangely sounds the same to me as a painting class at some university under some tutelage of some artist, who painted some piece that no one has heard of. See, the things are very different but somehow both the same.
The list fails most, because anyone with any sort of sense knows that if you live in the city the weekends are for anything but the city. If you live in the suburbs, and you’re not tethered to your child’s soccer or baseball schedule, you also know that the suburbs are lame and that you should leave them whenever possible. This list is, at the very heart of it, what’s wrong with the thinking of most city and suburban dwelling affluents. Tuesdays you have little choice where you’ll be, but Saturdays? Well, Saturdays you could either make the hour drive from Naperville to Millennium park to witness the first ever Basketweaving While Blindfolded competition, or you could point your car north and drive as fast as possible. I choose North.
And why wouldn’t you? This weekend, like all weekends, there are things to do at Lake Geneva. But this weekend, unlike all of the other weekends, there’s a wood boat show. That’s not really fair, to call this a wood boat show. Because it’s not a show, it’s the show, and if you’re anyone who appreciates fine things, you’ll be here. Note I didn’t say you had to appreciate wood boats. That’s the same reason I don’t think you have to love golf to live on a golf course. It’s nice to look at something that’s beautifully maintained, no matter if it’s a sprawling green golf course or a highly polished wooden watercraft. Nice is nice, and if it’s at Lake Geneva it’s usually nice made nicer.
The show takes place Friday, Saturday, and Sunday at the Abbey Harbor in Fontana. The forecast, as you may have noticed, calls for 75 and sunny on both Saturday and Sunday. The real highlight of the show is the boat tour that happens today, Friday. This tour is mostly missed by the casual boat show attendee, as those patrons visit on Saturday and Sunday, oblivious to the fact that they missed the most important event of the weekend. Then again, if you’re reading this right now you’ve likely already missed the Friday portion and you’re completely and utterly out of luck. But still, come Saturday or Sunday and you’ll enjoy the finest wooden boats in the country as they ply the finest lake in the Midwest.