Blog : Upper Bracket

Lake Geneva Liquidity

Lake Geneva Liquidity

Increasingly, I’m a fan of all things Wisconsin. This has been difficult on one of my sporting allegiances. I’ve been a Bears fan since birth, but how can I actively root against the team that means so much to the economy of the state I call home? In this, I find myself pulling for a team I used to aggressively hate, for the benefit of my state.  This state has been winning lately, in case you haven’t noticed. Our budget crisis was circumvented by a willingness to tackle the problem head on. Our job numbers continue to increase as our Governor lobbies for, and on behalf of the working people of Wisconsin. Business is growing, the state is thriving and the leaves are turning. In Wisconsin, life is pretty, pretty, pretty, good.

While I root for Wisconsin at all times, unless the Brewers are playing, I find it obvious that the real estate market in this great state is not at all uniform. There are hot markets here, to be sure. Milwaukee’s Third Ward is growing. The collar communities of Brookfield, New Berlin, Elm Grove, etc, are bustling.  Things are good here, but things being good in the state have very little to do with things being good in the lofty segments of the Wisconsin vacation home market. The upper bracket real estate market in Lake Geneva is on fire, so I decided this morning to do a quick check of how that particular segment is faring in the rest of our wonderful state.

I only have access to the MetroMLS, which is not necessarily the MLS that the entire state uses, so my statistics here are more representative than they are bulletproof.  Today in the MLS, excluding Walworth County, there are 27 homes for sale in Wisconsin priced in excess of $3,000,000.  The only home in that segment under contract is on Crooked Lake, listed just over $3MM. To be fair, that is a very nice looking house that someone is buying. Good for them, and good for Crooked Lake, wherever it may be. Over the past 12 months, there are two MLS sales over $3MM in the entirety of the state, again excluding Walworth County. Of those two, one was an off-market direct sale that was entered into the MLS after the fact. If we’re going to be super basic here, 26 available homes and two sales over the past year means we have 13 years worth of upper bracket inventory in the state.

Now consider Walworth County, home to the reigning king of luxury real estate, Geneva Lake.  On Geneva Lake, we currently have 15 available lakefront homes priced over $3MM. Of those, nine are under contract this morning. Looking back over the past 12 months, we’ve closed nine lakefront sales over $3MM. That means while the rest of the state has 13 years worth of upper bracket inventory on the books, Geneva has just 12 months worth. Geneva Lake, take a bow.

Other markets in Wisconsin (and Michigan, for that matter), will gladly sell you a house in excess of $3MM.  That’s really not that difficult. The trick is, can you ever sell that house you just bought? Geneva will sell you that upper bracket house, and then when you’re ready to upgrade or simplify, Geneva will sell it for you again. It’s called liquidity, and while our water clarity and our lakeside scene is what we like to think sets us apart, it’s actually upper bracket liquidity that is our best, and most unique attribute. We like to seek out liquidity in most of our investments. Shouldn’t our vacation home investments demand the same?

Above, my lakefront sale from last fall. $9,950,000, closed.
700 South Lakeshore Sells

700 South Lakeshore Sells

When I listed this property last August, I knew exactly what it was. It wasn’t the most perfect house on the lake. The kitchen wasn’t exactly the current style. But it was 4 acres and 162 of frontage with so much square footage and so many resort-style amenities. The house had been listed off and on for what felt like ages, as if anyone really knows exactly what an “age” feels like. Still, the property was repositioned with the help of a fresh perspective and some fresh marketing efforts and I was pleased to work for that seller to get that property sold.

Last Friday, I sold 700 South Lakeshore in the city of Lake Geneva for $5,900,000. The sale is the fifth over $5,000,000 since the start of last year. Of those five sales, I’ve represented the seller in four of them. I’m not really sure now what else I can do to help convince the upper bracket market that I’m the man to handle these luxury listings. Perhaps the secret will be unlocked after I sell five out of the last six…

While I’m happy for the seller who now gets to move on to the next chapter of her life, I’m exceptionally pleased for the buyer. This is a new lake owner, with a new reason to look forward to the weekend. There’s something extra rewarding about selling a lake house to a first time Lake Geneva owner.  They don’t yet know what they’re in for, but I do. We do.  A very special thank you to this seller and buyer who allowed me to help bring this sale together.

Inventory Alert

Inventory Alert

What we need now is something to sell. We’ve sold it all. We had a basketful of things, some with deplorable structures, others with superlative structures, and then we’ve spent our summer working and we’ve sold them all. There’s nothing left in our basket. We wobbled for a bit in the spring, then we steadied ourselves, and now we’re standing here and it’s September and our basket is empty. The cycle is complete, the inventory spent, the basket nearly or fully empty. It’s September and it’s summer but we know it’s fall and we’re out of inventory and so we’re out of luck.

The lakefront market wants inventory. It wants it really, really bad. It wants nice 100′ lots around $2MM and it wants built homes on those lots around $4MM, and then it also wants estate type lots in the high $3s. This is what the market has wanted for quite some time, so these bits are not new nor are they exciting, even if they aren’t currently nestled inside of our basket.  But what’s rare now is that the market wants big inventory. It wants perfection and it’s ready and willing to pay for it. There was a time when if your $7MM house was beautiful and stunning, no one particularly cared. Oh, sure, your friends would comment about how terrific your house was, and your family would fawn and your neighbors would look towards your house with a jealous sneer, but when you came to market the buyers yawned. Sure, it’s a nice house, they’d say, but it doesn’t have a private elevator to the lower level craft room so what difference does it make? 

Buyers in that range have been, prior to this year, seeking perfection. On Geneva, we can offer you that perfection, but every piece of it will have some nuance that can be interpreted as a lack thereof. A beautiful home near a condominium complex. A huge lot with elevated frontage. Too many steps. Too level, too moist. The house, too white or too dark or too blue or not blue enough. Buyers will come to me with requests and a one million dollar budget, and then I’ll set their expectations towards compromise. Sadly, with a $7MM budget the same is true. Compromise has been necessary, and buyers have found reason to pause based on the slightest bit of compromise.  David, the powder room is painted green! 

Right now things are different. Perfection isn’t necessarily required. The market wants beautiful, newer homes in the $5-9MM range, and it has multiple buyers on the hunt. If you’re a seller of such a home, you’ve never found a particular abundance of liquidity. Today, you have it. I can’t say how long this bump in activity will last, but it’s likely not forever and ever. If you’re an owner of a pricey home and you’ve been thinking about selling, I can unequivocally say that now is the time. The market is ready to absorb some pricey inventory. This week, my estate listed at $9,950,000 will sell. That will give the market a print that it’s been looking for, and that should help give buyers the confidence to know that they’re not alone in their pursuit for pricey lakefront perfection.  If you’re a seller,  we’re well past the point where I need to tell you who to call for representation. It’s cute that other agents want to compete in this segment, but there’s only one guy whose worthy of your time.

That’s me. I’m that guy.