Upper Bracket Update

Upper Bracket Update

Ideal Impressions Photography

The lakefront home market on Geneva consists of property priced from the middle $1MM’s to over $10MM (thanks Pritzkers!). As of today, we have 33 true lakefront homes on the market priced from just under $1.5MM to nearly $8MM. Remember, true lakefront is defined as a residential property with actual privately owned property abutting the shoreline of Geneva Lake. Homes that appear to be lakefront but possess association frontage need not apply. The market has been behaving oddly this year with just four lakefront sales closed year to date, though there are at least two more lakefront homes under contract scheduled to close in the near future. Entry level in this market has been near $1.4MM for the past several years, with an occasional sale of uniquely odd property selling for less than that mark. When I started selling real estate in 1996, entry level was around $600k. In fact, the first lakefront home I ever sold on Geneva was priced around $600k. Within 4 years of that sale entry level lakefront rose to the low $1MM’s and hasn’t looked back. Don’t worry if you didn’t buy that $600k lakefront in 1996, my dad was showing entry level lakefront for $180k in 1977 and plenty of buyers were too “smart” to buy at those prices as well. Enough of the entry level for now, it’s the upper end of the market is what I find interesting right now.

I define upper end as lakefront priced over $4MM. We have a steady and solid sales history involving lakefront homes priced in the heart of our market, which is the $2MM to $3.5MM price range. The upper end, dominated by properties priced in excess of $4MM has seen a dramatic increase in inventory over the past two months. Keep in mind, since the South Shore Club homes are not technically private frontage, those beautiful properties are not included in this study. No big deal right? Wrong.

We have 11 lakefront homes available priced over $4MM as of my writing. This statistic does not include one off market home that for some reason doesn’t make it’s way into the MLS, even though the owner was a charter member of the MLS, so really there are at least 12 lakefront homes priced over $4MM. Mr. Ricketts, if you’re wanting to buy a high end home on Geneva, now is a great time. The problem with all that inventory is that it’s bogging down our market to some degree. Inventory does create plenty of options, and I love a beautiful expensive lake home even more than the next guy, but the elevated inventory isn’t exactly a good sign.

Absorption rates. Real estate people like that term. They like to use that statistic to tell you how bad your chances of selling really are. If you love bold absorption rate stats, consider that we’ve had a grand total of 6 lakefront sales since the January 2006 that have closed at prices above $4MM. That’s roughly one sale every 7 months. One sale… every 7 months. In other words, although Geneva Lake is surrounded by literally hundreds of lakefront homes that may have value in excess of $4MM, there isn’t exactly a massive buyer pool just salivating at the thought of dropping $4MM+. At the current absorption rate, which takes into account market conditions at a time when things were going gang busters, we have 7 years of inventory currently on the market. Try finding that stat out from another Realtor.

So that’s the stat, but what does it all mean, Basil? It means that it’s probably a pretty good time to be shopping in the upper bracket on Geneva. It means that you ought to be able to find yourself a pretty decent deal, and moreover, it means that you ought to be able to find yourself a pretty impressive property. The inflated inventory will largely stay at these levels,primarily because home sales at the upper end of this market usually involve an affluent stubborn seller pitted against an equally affluent, aggressively stubborn buyer. That’s why the volume dries up but price still don’t drop. That’s why the upper end of this market has largely been a solid investment for anyone looking to play a stacked real estate hand in Lake Geneva.

For now, if you’re an upper bracket buyer, I’d get out and look at a few of these beauties. There are some solid values, and some silly over priced homes as well. If only you knew someone to help point out which was which…

(MLS information deemed reliable but not guaranteed)

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