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.