Blog : Year End Reviews

Geneva National 2018 Market Year In Review

Geneva National 2018 Market Year In Review

There are few market segments that I find as curious as Geneva National. Under no other particular context does one association make up its own market segment, but here we are, knocking at these gates. The fact that this large association functions as its own market is something that vexes those who live and play there. Why can’t a buyer just be on the hunt for a Lake Geneva area condominium priced under $500k?  Why must a buyer seek out Geneva National specifically if they wish to buy one of those condominiums? Why does a homebuyer who purchases a vinyl corn-field tudor for $500k neglect to first consider his options inside Geneva National? Does that buyer know that Geneva National is nicer, and objectively better?

For the year just ended there were 81 total MLS sales. Those sales ranged from small condominiums priced under $100k, to beautiful newer homes priced over $1MM (two sold over $1MM last year). As we sit just inside the parameters of 2019, there are only 36 available homes and condominiums (ten more properties are under contract),    including two properties listed incorrectly in the MLS as single family homes (these are technically all condominiums). The fact that an agent listed two homes as single family might be a sloppy mistake, or it might just drive home the point I made in the opening paragraph. If you want to sell Geneva National’s single family homes, are you better off pretending they’re not inside Geneva National?

I think the answer is no. Or at least it should be no. Geneva National is back, and it really is better than ever. Sure, there are still homeowners residing inside these brick and cedar behemoths that were built prior to 2006, those with dated finishes that the owners don’t think are dated. Sure, there are still lots that can be bought for the price of a high mileage used Corolla. But the market has mended, and the volume from 2018 is a sure sign that things are back to stable. While I enjoy seeing lots of sub-$200k volume, the true measure of Geneva National is in how it deals with its expensive inventory. Continued high volume years would be nice, but that’s not necessary to continue the momentum that GN has successfully built over recent years.

Over the last six years, Geneva National has averaged 2 sales over $700k each year. 2017 printed just one sale at that level. 2018 closed four sales over $700k, and that might be as good of a sign as any for this embattled association. Sell the higher end inventory and you’ll give buyers confidence to move up in price. You’ll give vacant land buyers confidence that their new build makes some market sense. And you’ll give current owners confidence to update those awful 2003 bathrooms. Broad market activity is terrific, but the real positive out of Geneva National in 2018 was an increase in upper bracket liquidity.

To understand how far Geneva National has come, you need only look back to 2012. That year was likely the bottom of the last market cycle, and during that dark year Geneva National closed just 35 single family and condominium properties.  For each of the last two years, GN has closed over 80 such properties. Current inventory is low, but there are several high dollar properties on the market today that will test the continued momentum of this large association.  Will buyers at the high end appreciate the country club atmosphere, complete with new pools and tennis, to such a degree that they’ll provide liquidity over $1MM? Or will those higher value buyers continue to opt for the lakeside lifestyle that the Lake Geneva lakefront and lake access market provides?  Only time will tell, but if I was a betting man, I wouldn’t bet against Geneva National in 2019.

2017 Geneva Lakefront Market Review

2017 Geneva Lakefront Market Review

Several of our vacation home segments finished 2017 without a particular narrative. They were nice markets that had a nice year. Nothing more, nothing less. No major breakthroughs, no particular oddities. The other markets have been on a roll, and we have no choice but to pat them on the back and tell them they did well. The lakefront market, too, had a nice year. It built on volume and built on price as inventory disappeared. But this is where the lakefront market says goodbye to the other markets and wishes them well. The lakefront market is on to bigger and better things. The lakefront market has a different story to tell.

That story, in case you’re new to this blog or new to the Lake Geneva media mentions, is a dramatic increase in upper bracket sales activity.  This is the story that needs to be told. This is the difference between Lake Geneva and all other Midwestern vacation home markets.  If this sounds like a common refrain coming from this site, that’s because the refrain is historically rare and is worthy of this praise. Consider the prior market peak. That peak was between January of 2007 and January of 2009. During those months the lakefront market on Geneva printed three sales in excess of $4MM. The top sale for that period closed for $4.95MM. Now consider the current market cycle and the sales that have occurred between January 2016 and January 2018. For those 24 months, the lakefront market printed 10 sales in excess of $4MM and three sales over $7MM. The top sale was $9.95MM.  For my part, I represented either the buyer or seller in seven of those ten sales, and each of the top three sales.

Currently we have five more properties pending sale over $4MM and one pending sale over $12MM. This is no longer a market that struggles to provide one or two sales over $4MM annually. That’s the old Lake Geneva, and this is the new Lake Geneva. Increased upper bracket activity, a stronger overall buyer, and a top end that has been completely and thoroughly redefined. While there are questions about the long term strength of this particular segment, I think there is one nagging question that has been answered. Can Lake Geneva provide liquidity to owners who have homes justifiably valued in the $10-15MM range? Yes. A follow up question with more devastating results: Are buyers buying lakefront houses for too much money, in part because they don’t seek qualified counsel in the decision? Also yes.

For the year just ended the lakefront market closed 26 single family properties (MLS). These sales registered $27,578 per front foot, up a bit from the $27, 193 from 2016. In total we sold 2455 front feet on Geneva, down from the 2882 front feet sold in 2016.  I’m finding the traditional price per front foot metric to be increasingly antiquated, even though the market still likes to point to that number as the best and easiest way to identify value.  I’ve started to add in a price per square foot of structure ($560.96) and price per square foot of land ($58.09) so that buyers have additional means by which to understand the value of a particular property.  There is no particular means to measure value, but these three metrics combined with nuanced understanding of desirable locations and attributes can help narrow down the valuation range.

Entry level lakefront traded with some vigor in 2017, and I did find it curious that this segment offered strong value even as the broad market accelerated. Five lakefronts traded under $1.325MM last year, including two under $926k. Those sales represented a nice entry point into this lakefront scene, and I continue to believe that we will find ourselves in a position where the market runs out of sub $1MM homes. These sort of basic cottages only exist on the lake is certain areas, and with each sale these are properties that are typically transformed via renovation or reconstruction. If you’re an entry level lakefront buyer, you’d be wise to move on properties and not miss out on  purchases over small negotiation points and percentages.

The story for 2018 will be inventory. Today, there are just ten Geneva lakefront homes available (private frontage, without offer). If the stock market maintains this incredible level (note, it doesn’t need to keep moving higher, just not correct significantly), Geneva will see another terrific year. Heck, the way buyers are buying in January, maybe we don’t even care about the stock market anymore.  New construction is rampant at the moment, and while the upper end values currently support these builds, it’ll be interesting to see if this upper bracket market hits resistance in the coming years.

For now, expect inventory to remain low, and cary-over sales from 2017 to close during the first quarter 2018.  The market is clamoring for inventory in each segment, including that lofty $6MM+ range. New construction in any price segment will be of interest to current buyers, so long as the parcels match up with the price. That’s a key.  I’m expecting inventory to build over the coming months, as opportunistic sellers see a market rife with activity. Some brokers are telling sellers to name their price, but that’s ridiculous. The market is hot, but buyers and sellers still need to understand basic fundamentals of market valuations.   If you want an agent to tell you every house is the right house, then I’m not your guy. If you want an agent to help guide you through this increasingly active and competitive market, I’m here to help. 

Above, the lakefront at my Loramoor listing. Pending sale at $5,950,000
2017 Entry Level Lake Access Market Review

2017 Entry Level Lake Access Market Review

That’s a mouthful. I’m sure there’s a better way to say it for search engine optimization, but the market is best defined in that way.  The market isn’t particularly flashy. It won’t make any headlines. It won’t be in Crain’s or in Architectural Digest. But the entry level lake access market is the market that’s as important as any other here. These are the homes available to people who have enough fiscal power to make a vacation home a reality, but don’t have lakefront budgets.  For the purposes of this post, this segment remains at $500,000 and under.

All of these 2017 market reviews are going to tell similar stories. It’s all about inventory. About volume. And about how the inventory is either going to build and feed the market or shrivel and starve it. Today, there are just 12 homes priced under $500k with access to Geneva Lake. Remember, these are not municipal access homes- these are private, club style access points.  These are the associations you know, the associations that can offer a path to the lake, a park, a pier, a diving board, maybe some summertime geraniums in pots.

Those 12 homes vary wildly, just as this market varies. A $200k cottage in Country Club Estates is not at all like a $500k home in Country Club Estates. A small cottage in Oak Shores with a slip for $450k isn’t much dissimilar to a small cottage without a slip in Cedar Point Park, except that the Cedar Point cottage will be 50% cheaper. This is a market that I’ve gladly served for two decades, and it’s a market that hinges on a very important question: Do you want a nice house or do you want to be close to the lake?  You cannot choose both.

For the year just ended, we sold 61 lake access homes of all makes and models, priced under $500k.  The 2016 total was 56, so we’re heading in the right direction.  Just three of those homes had transferable boat slips, proving how hard it is to find a slip in this segment. Perhaps best of all, I personally sold all three of those homes. Why did I sell those homes? Well, because I know how valuable a boat slip is. I know owning a home here is wonderful, but if all you really want is to hang out on a pier and boat, then you’re going to be miserable in your off-water slip-less home, even if it has some stone counters and a master bathroom.

The key to understanding this segment comes back to that bold question about proximity. That drives this particular market more than anything. You can buy a nice house in Country Club Estates for $500k. It won’t be remarkably close to the lake. Or you could buy a small cottage in Knollwood for $500k that might be 900′ from the water. Which do you value? Do you want to walk down to the pier in the morning to cast your line a few times, motivated by the hope that something might bight? Or would you rather sit on your screened porch, reading a book thinking about where fish fry will be on Friday night? Answer those questions, and you’ll have a clear direction for your pursuit.

2018 should be just like 2017. Inventory is terrible now, yes, but it won’t be that way forever. This market might be more sensitive to the new tax law, but if inventory builds there’s nothing stopping 2018 from falling in the 2016/2017 volume range. Prices are increasing, albeit modestly. Value still exists here, and I’ll be here to help you find it.