A Wednesday reminder that my listing at W4396 Basswood Drive is still available. I just reduced the price of this home to $8,495,000, and it’s now offered at an extreme discount to replacement value. Consider the pending sale of a home in Lake Geneva listed at $14,500,000. Now consider buying this home, renovating it, and being all in for far less than the sale price of that nine year old home. It doesn’t take a genius to make the right moves in this market, it just takes a bit of effort. Contact me for a private tour of this most lovely estate.
It might seem strange to even mention the term Price Reduction during this remarkable summer run. With sales popping and records breaking and everyone in the Midwest clamoring for a vacation home in Lake Geneva, why would we even bring up such a thing as a price reduction? It’s a wet blanket, really. It’ll throw off our momentum, ruin the buzz from this Kool-Aid fest. The agents who vie for your attention don’t want you to think about price reductions, they want you to think about how you can buy that home NOW! Need help figuring out how to win a bid on a Lake Geneva area home? You’re in luck, some agents are holding seminars to teach you (YES YOU) how to win the bid.
But this is all ridiculous, really. The truth of our market is that it’s hot, yes. All price segments are hot. All categories and sub-categories. Except vacant land in Geneva National, of course. A lot just sold there last week for $4000. That’s the price I paid for a 1986 Saab 900 with a questionably service history and 130,000 miles, which, in Saab miles, is at least 1,000,000. Every other market is hot, every home in demand. So why talk about Price Reductions? Well, silly, because ’tis the season.
See, smart sellers know that while our market is active for each of our 12 months, there will be a dip in overall activity once school starts. Knowing this, sellers with relatively aged listings are faced with a decision. Reduce now or reduce later? If they’re smart, they’ll reduce now, while there are a few extra buyers in the market. Something I’ve heard often this summer is a buyer’s plan to wait until the off-season to buy. Prices will be lower then. This is the position of the uninformed, as Lake Geneva doesn’t cycle based on seasonality it lives and dies on inventory. If inventory presents in August and it’s right for you, then buy it. If it presents in January and it’s right for you, then buy it. Don’t base decisions on the color of our leaves.
Still, sellers recognize the market will ebb and flow, and if a reduction is in the cards, now’s the time to make that move. Recently, I’ve been applying this to some of my listings, because I’m smart, and my sellers are smart, too. I dropped the price of my W4396 Basswood listing $500k to $8.495MM. That home, by the way, offers value far and away better than the pending listing in Lake Geneva priced at $14.5MM. Far. And. Away. Like with Tom Cruise, but different. I just reduced my incredible Bay Colony offering to $879k, even after we came close with several different interested buyers over the past few weeks. Why reduce in the face of activity? Because activity only counts when the result is sold.
Around the lake, there have been reductions. A new home on the north side of Fontana dropped its price not so long ago, as did a newer home on the south side of Fontana. I dropped my Clear Sky Lodge listing $120k. A home in Cedar Point Park that came to market earlier this year has been reduced several hundred thousand dollars, as that seller searches for a buyer. Off water, a home in Academy Estates has endured a series of micro-reductions this year, and a listing in Shore Haven just dropped in price last week. For all of the buyers claiming this is purely a seller’s market, have you considered any of these properties that are bleeding from self-inflicted chops?
It’s August, and it’s still summer. In fact, this past weekend was one of the more active, glorious weekends of the entire year. In spite of this, sellers are making moves, and if they’re serious about selling this year they’re going to be adjusting their prices a bit. Consider the market this month, consider the aged inventory, and be on the look out for price reductions. And as always, let me know if I can help.
Above, my Bay Colony Condo, just reduced to $879k.
Woodstone, prior to last week, was a nice subdivision in Linn Township with mostly architecturally pleasing homes and a delightful little wildflower corridor. Prior to last week, the development was in decent shape, though it’s taken more than a decade to fill in the few existing homes that you see. Prior to last week, the top sale in the association was around $670k. Then, last week, things changed.
I listed a home in Woodstone in June, and then I sold it last week. The price was $900,000, including an adjacent vacant lot that wasn’t included in my initial list price of $845k. For the sake of discussion, we’ll assume that lot was thrown in for consideration of $60k or so, leaving the home sale at $840k. This was fine for my seller, fine for the buyer, and fine for me. Who won here? The market at Woodstone.
With construction prices ratcheting higher and higher, neighborhoods are having a hard time justifying the new built values. If you buy a lot for $50k in a neighborhood that traditionally sells for $325k, that’s fine. But if the new build costs you $400k, then you’re a fish out of water. Neighborhoods need new comps to prove that the increased building costs still allow a buyer margin. That’s exactly what Woodstone just did, and it did it in a big way.
Now consider the new math of Woodstone. Buy a lot for $80k or so. Build a 2500 square foot house for $500k or so. Be all in sub-$600k. Prior to last week, that still made sense. There was a tiny margin. But now? There’s proof that the market has some room to run, and if you build the right house and add a swimming pool, you, too might be able to sell north of $800k.
Speaking of swimming pools, the market loves them now. Craves them. Can’t live without them. If you’re building a new house on the lake or in the country and the market supports the extra investment, add a pool. You’ll thank me when it comes time to sell. Unless you don’t sell until such a time when the culture hates pools, then you can blame me.
Congratulations to the seller who was kind enough to let me represent their lovely property. And congratulations to everyone who lives in Woodstone, or who might one day live in Woodstone. The market just got a whole lot better. Address Thank You Cards to me, at my office address.
It would be disingenuous for me to pretend that we’re in the middle of another Lake Geneva summer. August is the peak of summer, sure, but it’s not exactly the middle. You could argue that it’s the end. School starts soon. The sun sets earlier and earlier each night. We’re no longer building toward summer, we’re doing our best to hang on to a summer that’s rapidly fading. In spite of our dwindling summer, the real estate market at the lake has given us something to talk about.
June and July were fantastic months for our lakefront and lake access markets. That late June through early July heat and the supporting sun pushed this market into hyperdrive, with contracts piling up like so many rock bass in my Uncle Joe’s five gallon pail. June and July saw five lakefront closings, and ten more lake access sales. The lakefronts that closed included a few bits of aged inventory as well as some new to market listings.
At the top end, the old Born Free Estate closed for $5.35MM. The new owner then promptly sold off a 100′ lot on the East side for $2.75MM. I’d expect to see a significant renovation of the existing home in the near future. Another high priced sale occurred on Basswood, that of the Woodhill Estate, which printed at $3.9MM. That’s a reasonable price for that property. The market had a hard time figuring out if that home was a tear down, but the rumor is the new owner plans to renovate the existing structure.
On the lower end of the lakefront, a home in the Elgin Club closed for $1.245MM, likely a tear down or significant remodel candidate. In Williams Bay, another home closed on Walworth Avenue where those thin 50′ lots rule the day. That street featured two sales this year, both in the $1.2MM range, both side by side. I sold those homes back in the very early 2000s. This time around, both homes have sold to the same owner, leaving speculation that both homes might be torn down to make way for one new home. While that buyer is not my client, I’d offer up this unsolicited advice: Don’t do that.
Pending contracts on the lakefront as of this morning include a listing for $2.4MM in the Geneva Manor, a piece of aged inventory in the South Shore Club ($2.795MM) and my listing in Buena Vista on Sylvan ($2.875MM). I’m guessing the Geneva Manor property will print at a meaningful discount to that lofty ask. With buyer activity at all time highs (far exceeding the activity during the 2005-2008 run), I’d expect to see many more contracts this month on the 17 active lakefront homes.
While these are nice sales and nice new activity, the property that’s on track to shock the market is the lakefront home at 590 S. Lakeshore Drive in Lake Geneva. This listing came to market earlier this summer for $14.5MM, with 210′ of frontage and above grade square footage of 9862 according to the assessor’s office. The property, as of yesterday, is pending sale. I’ll repeat, that property, listed at $14,500,000, is under contract.
I’m betting the property is going to close somewhat close to its asking price. That’ll make it the highest sale in Lake Geneva history, which will be the third time in the past 24 months that this benchmark has been raised. This magnificent upper bracket run started in the fall of 2016 with my $9,950,000 print of this fabulous Pebble Point home. The home at 590 has a current assessed value in the $5.75MM range, with a $117k tax bill. Assuming a print in range of the asking price, it won’t be a surprise to see the new owner receive a tax bill in the $250k range. So that’ll be something.
At first blush, this sale is terrific for our market. It further proves that this market has no rival in the Midwest. Other resort markets will gladly take your millions of dollars in exchange for a second rate vacation home experience. Geneva will take your millions and then, when you’re ready for another chapter, give you those millions back. Likely with interest. Clean water and beautiful homes might be the obvious allure of this area, but liquidity is our greatest asset here, and this sale proves it once again.
But this sale also showcases the premium that our market places on newer construction. This home was not new, but with a completion date of 2009, at least one buyer figured it was new enough. Older homes on the lake that have not had recent updates are punished here, as buyers prefer to either buy new, or build new. That preference opens up a value play for buyers looking to make their mark on these shores, if only they’d be willing to undertake a remodel of an outdated home.
The market is in the middle of a most epic run, but I still see value out there. It’s not found in spiffy fixtures and Wolf ranges. It’s found in the land, in those piers, under that ugly carpet and behind that stupid basement powder room. It’s not obvious to the uninitiated. That’s why I’m here. To help guide the discerning. Consider the text message that I received last Saturday night (I posted this on my Instagram genevalakefrontrealty, which you should be following):
Tonya and I just said… Thank God Dave Curry talked us out of buying all those other stupid homes. Love this place. Hope summer is going well for you and your family.
If you’re in the market, you’ll know it isn’t hard to find a Realtor to talk you into something. That’s what everyone does. The real value that an experienced agent brings to the transaction is not in his or her ability to walk you through a house. My 12 year old daughter could do that, and she’d be terrific at it. The value is in finding an agent who cares enough about your purchase to talk you out of a property. If you need some better advice, let’s talk.
At this point, we should have all learned a few things. If we were paying attention during the last market cycle, from slow rise to raging boom to crushing collapse, then we should have taken some things away from that decade long episode. In the same way, from that collapse to the nascent recovery to this now active and vibrant seller’s market, this should be teaching us something as well. I suppose in that there is a difference. Have we learned anything or have we just observed it all from afar?
What I’ve learned, mostly, is that housing markets do not rise and fall based on the math of it all. Sure, low interest rates and stable stock markets might kick off a resurgence of housing haste, but that isn’t what propels a market. What pushes a market from Tidy Recovery to Raging Bull is confidence. Confidence is what makes a family of 4 making $90k annually purchase a new vinyl box in a cornfield for $410k. This is the same thing that makes the same family drive to the car dealer and sign for a 0% loan on a $70k Tahoe. Interest rates and unemployment figures are sweet, but what pushes a market into hyperdrive is nothing more than individual consumer confidence.
Most of the things that happened during the last cycle are happening in this one as well. FHA loans are way up. Like sky-high, as a percentage of new loans. These are US Taxpayer backed mortgages that are given out with very little money down. When a market is appreciating, these mortgages are fine. But when the market stalls and reverses, these homeowners who were given those house keys with as little as 3.5% down will be the first ones to run for the hills. But if we continue our learning from the last cycle, then we shouldn’t panic sell our house unless circumstances (job loss, illness, etc), mandate it. If you bought a house in 2008, then 2012 was a difficult time to consider your negative equity. But if you’ve hung on into 2018 you’ve more than likely made a full and complete equity recovery. That, and you’ve had a place to live for the past decade.
But these are not market specific lessons. For those, let’s turn to the Lake Geneva condotel market. Condotel is a silly way of describing the sort of housing unit that is sold as a condominium, but operates like a hotel room. You buy the unit, you pay taxes and dues and extraordinary fees to the hotel, and they give you a percentage of the rental income generated. In theory, it’s a tidy idea. In practice, it can be either great, reasonably acceptable, or downright horrible.
The Lake Geneva market has a handful of these so-called condotels. Notably at the Grand Geneva (Timber Ridge), The Cove, The Bella Vista, The Abbey Resort, and a few others. Understanding the context that our broad market is hotter than a pistol, let’s consider the current market for these sorts of properties. I won’t delve into each development, but I’ll sample a few to give you an idea as to how I feel about them as an “investment”. Crud, those quotes likely gave me away already.
Timber Ridge is at the Grand Geneva. It’s a waterpark. It’s nice enough. There used to be a rib joint inside the waterpark hotel, but I haven’t been there since my kids were last invited to a birthday party there. Today there are nine units available at Timber Ridge priced from $99k to $189k. None are pending sale. Normally someone dissecting a condotel market would look at the net income and compare that with the purchase price. Not me. I don’t care if the units print 3% or 5% or 7% annual return on the most recent run of numbers. That’s because that’s not the issue with these sorts of units.
I care about the value of the real estate. Let’s look at the $99k unit. First sold by the developer in 2001 for $160,400. Nice. Then sold once or twice. Then sold in 2003 for $206k to the current owners. After 15 years, their investment has declined more than 50%. Another unit listed at $102k sold previously for $181k. Another unit listed at $189k previously sold for $305k. And the beat goes on. Rather than view these units as an opportunity that the market has beaten up, I prefer to view them as a painful lesson of what happens when consumer sentiment shifts. Take away the free steak dinner and boat cruise; would anyone ever buy a timeshare again?
Let’s check on the Cove in downtown Lake Geneva, the place with that absurd blue roof. A little unit for sale for $109k. Prior sale? A 2008 print at $170k. Here’s another unit listed at $134,900. Initial sale by the developer in 1996: $135,400. 22 years, negative equity. Let’s move to Fontana, and check on what is likely the best of this bunch, the Abbey Hotel. Here’s a unit listed at $150k. Prior sales price? 12 years ago for $254k.
It’s not that I enjoy beating up on a particular market segment, it’s just that I don’t know as though I’d be a buyer of something like this. Yes, they might turn a small profit on an annual basis. But what of the initial investment? What about that crushing loss? These properties are relatively illiquid, intensely sensitive to overall market conditions, and reliant on a consumer that just might have learned their lesson.
If you’re a buyer searching for an economical condo that you can rent out to generate some income, I’d opt for the lower priced condominium units in non condotel properties. I’d look at lower priced listings in Geneva National, Abbey Springs, and the Abbey Villas. I’d consider those options 99 times before I’d consider anything else. If you’re in the market for this sort of thing, email me and I’ll set you up with my assistant Vicki who can help guide you through this particular market segment.
Most of the players in this game are endless and unflappable cheerleaders. I did this! They say. I’m amazing! Others chime. Such is the business of self promotion. Without this promotion, no one would know anything about any of these players. Aside from a news article once in a while, no one will spend much time considering your success. In the real business world, this is fine. To quietly go about mining dollars is the preferred way, but alas, the rules of this game do not allow quiet success.
I engage in this self congratulation often. I write this blog to educate and entertain, but also to make sure the reader knows which player in this game is indeed the most meaningful. Heck, I write a whole magazine dedicated to this market, and as a fortunate aside, this player. Some pose with their real estate signs as though they’re prom dates, others plaster their names on their cars, while others still want to watch you while you grocery shop. No matter the platform, we’re just playing by the rules.
But sometimes, there’s no praise to be given, no praise to be asked for. There’s just a sale and a seller and a buyer, and that’s that. This is what happened last week when I finally closed on my aged listing off of South Lakeshore Drive. I first listed this home two years ago, and throughout that time I asked for listing extensions and price reductions more than I’d like to admit. I worked to sell this house, and ultimately I did sell this house, but I did a miserable job at it.
The market is, by all accounts, back to the prior market peak. In many instances, prices have pushed above that peak. Now consider this house that I just sold. It previously sold during the prior market escalation for $1.5MM and change. I just closed on it last week for $925k. That’s a terrible thing, and while I feel relieved that the property is no longer on the market, I know I was rather unsuccessful in selling this home.
The issue with the home was a complicated one. It wasn’t one issue at all, really. It was the perfect storm of trouble. First, a high prior print to chase. Second, an initial and subsequent list price (with another broker, by the way) that was sky high. After that initial list, the market was lost and the owner spent the next several years chasing buyers in the only way that actually makes a material difference: price reductions. By the time I took over the market had written the property off, and while I thought I might be able to put some shine on the listing I ultimately failed at doing so. The price of $925k was a reasonable market price, but in this case, the buyer won.
I closed on another property last week, also somewhat of an aged piece of inventory. This was my vacant land listing in Loramoor. The lot was quite lovely, just one home from the water with slight views and proper lake rights through the East Loramoor Association. That lot was on the market for a year or two before closing last week for $625k. In this market, that sale makes perfect sense. It was a nice market rate, with seller and buyer both doing well for themselves. Why would a buyer buy a home in a cottage neighborhood only to significantly renovate or rebuild it, when they could buy this lot in a high end neighborhood and be surrounded by high priced homes? Expect a new home to be built there soon, one that will likely make proper market sense.
These sales prove one important thing about the state of our market. As the lakefront inventory dries up (the lowest priced true lakefront home available today is my listing on Bluff for $2.145MM), buyers will look off water for reasonable values. If the cheapest lakefront is $2.1MM, it only makes sense that buyers in the low buck range will seek alternatives to sparse lakefront inventory. Expect this trend to continue for the foreseeable future, as off-water homes in the $900-$1.7MM range find favor with inventory hungry buyers.
If you’ve noticed that I haven’t written as much about individual market segments of late, you’re perceptive. I haven’t. It isn’t that I haven’t had thoughts, or that the market isn’t doing things I’m noticing and feel like sharing with you, it’s just that the market isn’t really all that fun right now. To be a buyer with some level of contemplative thought isn’t fun. To be a seller who sees the market ripping and roaring excepting your individual house, that isn’t fun. And to be an agent who has to deal with all of this, well, that isn’t fun either. It’s summer and we’re supposed to be having fun. But I’m not, and if you’re a buyer then you’re not. And some sellers aren’t either. This is the summer of our discontent.
The issue is that the inventory is limited. This we know. We knew this last year and we knew it was going to be an issue this year. And it is. Showings on lakefront homes are at all-time-high levels, and it’s not uncommon this summer to see four or five different lakefront showings a week on a lakefront listing. Offers are plentiful, and just this past week there’s a new contract on an aged bit of South Shore Club inventory listed in the $2.8MM range, and a new contract on an entry level cottage in the Elgin Club in the $1.2MMs. The other pending lakefront is of the Woodhill property on Basswood listed at $4.5MM. That’s a home that the market perceived to be a tear down, but rumor has it the soon-to-be-owner has chosen to renovate it.
For all of this new activity, there has been just one lakefront closing in the past six weeks. That closing occurred last week when the old Born Free estate on the north shore of Geneva closed for $5.35MM. That property last sold in 2011 for $3.5MM. There were no significant changes made to the property between 2011 and 2018. That’s real appreciation. To further that story, the new owner of that parcel tried in vain to cut the piece into three lots. Thankfully, the township struck that concept down, and the new owner was only able to get 2 lakefront lots out of the 200′ parcel. When the piece sold last week, the new owner turned around and sold off the vacant 100′ of that lot to a new buyer for a rumored price in the high $2s.
There were six other lake access sales over the past six weeks, including the large stable home in Loramoor. That large property closed for $1.37MM. On a price per square foot measure, which our market doesn’t typically have interest in, that property sold for an unbelievable bargain. But in real life the price was about right for an off-water home (with slip) in need of some final finishing touches. As with any aged piece of inventory, it’s terrific to see that property no longer on market. I have several properties pending sale, including my modern off-water home on the south shore, a vacant lot in East Loramoor, and my Woodstone listing that I brought to market just a few weeks ago.
I’ve personally had several lakefront listing appointments in the past month, but all have ended with sellers either choosing to hang on to their homes, or other delays for unknown reasons. The last several weeks of hot and sunny have provided powerful momentum for buyers who were possibly ambivalent about their purchase before. It’s one thing to be hot and bothered at the lake. At least refreshment is close. It’s another thing entirely to be hot and bothered in the city or suburbs, and that’s brought buyers to the lake in tremendous numbers. Oh, and there’s a new listing on the lake for $14.5MM. It isn’t my listing, which is unfortunate and terrible. That will test the high end up here, which last printed an $11MM+ sale for 415′ of frontage and 19 acres on Snake Road.
If you’re a buyer in this market, I sympathize with your plight. Low inventory is making for a difficult process, but in spite of this there are still deals to be had. Some sellers are motivated, even while most of the others are not. Find aged inventory and pick at it. Needle it. Consider it. If you’re jumping around from agent to agent you need to stop doing this. Email me. Let me help you understand this market. Let me help you discover patience. The market won’t stay this tight forever. At least that’s what I keep telling myself.
(No Fish Fry Review today. I went to the Lake Geneva Yacht Club on Friday night and the fish was overcooked and the potato pancakes blah. This reflects my recent disappointment during my return visit to the Abbey’s Waterfront.)
A fresh video for my rare listing in Fontana’s bucolic Buena Vista. This home offers a large private pier, beautifully updated finishes, immaculate gardens, and loads of lakeside patio space. You’ll also have full access to Buena Vista’s large park and pier system and private tennis court. It’s a winner. Contact me for a private showing.
A lack of inventory is a curious thing. On one hand, lack of inventory typically leads to pricing increases. This is obvious. If I have one of something and three people would like to buy it from me, I get to raise my price. Simple. But lack of inventory has an uglier, less talked about side. Like your uncle who isn’t allowed to attend family gatherings. Sure, you see him once in a while and pretend everything is fine. The weather fine, your job, fine. But you know. You know.
That other side of low inventory is that it has a nasty tendency to choke out market momentum. Imagine a particular market segment is like a fire. A nice, tidy, fire. Sometimes it’s crackling and blazing and other times it’s just smoldering, but it’s always burning so long as you add a bit of wood to it now and again. The key isn’t the strength of the fire, it’s your supply of wood. Keep feeding that market some inventory and it’ll keep burning. But limit the inventory for long enough and that fire is going to go out. Lack of inventory is all fun and games until your market decides to quit.
It’s not exactly like that, but it’s sort of like that. And in my world, sort of still matters. We know our issue for 2018 has been a thorough lack of lakefront and lake access inventory, but without checking the actual statistics it’s just chatter. The year is now old enough that we can measure it against another year. It’s time for 2018 to be judged.
From the first of January through yesterday, the MLS shows 28 sales of lakefront and lake access properties (Geneva Lake). Of those 28, 11 have been lakefront. That feels like a low tally, to be sure. And low it is, when compared to the 45 homes and sold during the same period of 2017. Of those, 11 were lakefronts. Looking farther back, 2016 printed 38 sales, eight of which were private frontage. 2015, the last year that could be considered some reasonable semblance of a buyer’s market, we closed 34 sales, nine of which were lakefront.
With those numbers in mind, it’s obvious that our broader lake access market is short of supply and therefore short of closings. But what of the lakefront, what of that king of all markets, that mighty ruler by which all other things are rendered unimportant? Well, the lakefront market, with 11 YTD sales, is obviously doing just fine. It has matched the 2017 production and exceeded both of 2016 and 2015. Maybe our inventory problem is one of perception?
There are a few things that are going to happen this summer on the lakefront. There will be more inventory. I’m certain of it. There will be more to choose from and there will be buyers intent on changing their boring weekend lives who make the right choice. The key isn’t to flood the market with inventory, rather to keep introducing pieces of it, slowly but surely. We don’t need to light the whole forest on fire, we just need to toss a log on every once in a while. And I’m fixin’ to throw some oak in the coming weeks (let me know if you’d like to know when I do).
As recently as last year, it wouldn’t have been easy, perhaps not even possible, to fetch $2.1MM for a vacant lot in the South Shore Club. That’s not because the broad market wouldn’t have appreciated an offering of a rare, lakefront lot in the Club. Nor is it because the market hadn’t yet appreciated to such a wonderful extend that the sale price would have been possible. That price wouldn’t have been possible one year ago because the supporting sales that prove that particular value hadn’t yet printed.
There’s something interesting about what’s happened in the South Shore Club over these past several months. First, a lakefront listing, last August. I closed that listing for $4.175MM, making it the first sale in the SSC to exceed $4MM. Plenty of owners have investments in their homes that exceed $4MM, but never before had the market validated those outlays. Following that sale, another owner sensed the timing might be right for his family to make a move and he listed, also with me. We closed that sale this spring for $4.6MM (plus $100k for personal property). With those sales cemented, it was this vacant lots turn.
I listed this lakefront lot last month for $2,195,000. I didn’t feature it on this website, in large part because the buyer presented quickly and was ready to roll. The lot closed last Friday for $2,100,000, making it the highest vacant land sale in the SSC, ever. But was it some unique marketing spin that I employed to sell this property? Other agents might have you semi-convinced that they have some proprietary blend of marketing wiz-bang, but they don’t. And neither do I. It’s not hard to place an ad in a newspaper and have no one call you from it. But it is hard to print two sales within 10 months that successfully prove a segment’s market value and then introduce a piece of inventory that falls nicely in line with that newly affirmed market.
And that’s the real secret to this recent SSC success. It’s not in the marketing, though if I’m involved that’s pretty nice stuff, indeed. It’s in the timing of it all. It’s in understanding how a certain piece fits into the greater SSC puzzle. Yes, an owner can list his property whenever he or she feels like it. But is this approach smart? Or is it better to understand the process, to understand the inventory and the competition, and apply a rare dose of sensible timing to the process? This seems simple, but timing an offering within the greater context of an association market is anything but common. Thankfully, these past three properties sold because the sellers listened to me, and the result was perfect.
To the seller of this most recent property, I thank you. To future buyers and sellers of properties within the South Shore Club, work with me. Since 2012, when I was hired by the developers of the SSC to represent several of the homes and remaining lots there, I’ve closed on 8 of the 13 single family home sales (including the top two sales), and 11 of the 13 vacant lot sales. If your aim is the South Shore Club, you’re in luck. The market couldn’t be healthier, the future more secure, and your choice in agent more clear.
The curious thing about Lake Geneva is that the market would potentially be fine even if another new customer never followed his roads to our roads and purchased a lakefront house. No new buyers, no problem. Never, ever, a new buyer who needs figure out our scene in order to buy it. If no one ever came here again, we’d still have a market.
That’s obviously not entirely true, but at times it sure does seem like we needn’t another new buyer. We have enough, and they’re the people who are already here. One of my favorite transactions to assist in is the buyer who is new to Geneva Lake looking to capture something ideal. That buyer, someone with no prior experience here, hasn’t yet been confined to his developed tastes. He’s a blank slate, a clean canvas, and that buyer can look at this market without geographic bias. That’s a terrific sort of buyer, one that I highly value.
But that’s not the traditional buyer here. That buyer exists, of course, but that buyer isn’t what keeps this market humming. What keeps this market on the move is the lakefront ownership group. Those 600 or so discerning lakefront owners; that’s our market. One year they might wish for a big estate, with 800 hydrangeas and no fewer than 375 rose bushes. But three years later they may long for the simplicity of a lakeside cottage, still with a slate roof, of course, but a cottage nonetheless. A pure lake experience, tidy and controlled. Who could tend to 800 hydrangeas?
Yesterday, a new sale on this Great Lake. The last time Clear Sky Lodge sold it was my listing as I represented Bank of America in the liquidation of that valuable asset that they came to own by way of court proceedings. That sale in 2012 was for $3,700,000. Clear Sky sold again yesterday, this time without my involvement, which has put me in a sullen mood for such a lovely Friday. The price? $5,715,000.
That’s a lot of money for this old log house, but I won’t say it wasn’t worth it. The house is rare and intensely magnificent. The location desirable, the views sublime, the logs super loggy. I like this sale for the market, but it’s a bit of a loss leader. The appreciation from 2012 of more than 50% isn’t reflective in the broad market. Some homes have appreciated this much, others have not. This is why it’s difficult to take individual sales and suppose that they are meaningful to the broader market segment.
If you’re sad that you missed out on this house, I have the next best thing available at Clear Sky Lodge, with tennis court, swimming pool, canopied slip, and beautiful privacy listed at $2.99MM…
The trend of lakefront owners swapping homes is nothing new. It’s a common theme here, but it appears to be on the rise. When the markets were bad I encouraged would-be-sellers to sell low and buyer lower. I argued it was, in fact, a better situation than it would be to sell high and buyer higher. Very few people listened, but those that did have found the new market to be rewarding.
The key for the lakefront market now remains inventory. We need more of it. Ready made inventory, easy houses with large lots. Others with small lots. We need all of it. If you’re a buyer on the hunt, let’s hunt together. If you’re a seller considering a move, you know who to call. (It’s me. Call me. Or Email, that’ll be easier. Text is fine, too.)
When shopping for a car, most shoppers narrow the search at some point. What started out as a search for a mid-size SUV with all-wheel-drive, has turned into a search for a BMW X5, the one with the 5.0 engine, black on black, with the 21 inch wheels, because the stock 19 inch wheels look like they belong on a rental car at the Akron Airport. This is the way a search evolves. Initially it’s just about accomplishing some general goal, like transportation, but it ultimately turns into a fine-tuned search for personal perfection. Housing searches are like this, too.
I spent the past two years with a buyer in search of something unique. Well, it’s unique now, but it wasn’t always unique. A general lakefront house, in a general location, nothing too fancy, with budget aplenty. The search had ups and it had downs, far more downs than ups, really. After so much time searching for something specific, the search arrived at a crossroads. Should this buyer continue searching for what they really wanted, or should they acquiesce to this tight market and buy something that, at least, gets them here? They wanted to be in this place in a certain variety of home, but maybe just being in this place would suffice, for now.
This week I closed on a three bedroom condo at Abbey Ridge. It was a homecoming of sorts for me, as I used to spend considerable time in this condominium development listing and selling these two, three, and four bedroom condominium units. The condo was a nice enough three bedroom with a bit of a harbor view and a generally pleasant disposition. $560,000 was the ransom for this space, and we secured it in turn key fashion, down to the bottle openers and fake bird statues near the fireplace.
Abbey Ridge, for those who haven’t been paying attention, is hot again. Hotter than hot. Infrared. I sold a unit there last December (off-market), and didn’t bother to write about it. That unit sold for $555,000. A four bedroom unit overlooking the pool sold last October for $485,500. A three bedroom unit listed at $635,000 is pending sale. The only available unit at Abbey Ridge today is a two bedroom first floor unit listed at $360,000. Abbey Ridge is bucking the soft condo trend and printing peak numbers, and for this, we should stand and applaud.
But what of these buyers, what of this particular condominium bent, of this desire to find a condo in Fontana without any particular form of lake access? Are these buyers that have only aspired to this form of vacation home ownership? I’d say yes, some are, and a nice condominium in a nice lakeside village in this nice place is a very nice thing. But I have a feeling that several of the other recent buyers aren’t here because they desperately want to be. They’re here because there’s nothing available that truly fits their eye. Abbey Ridge might be benefiting from the tight housing market on the lake and just off, and as a result, sales are printing and prices are escalating.
I wrote a piece a few weeks ago about buyers making hot-market-mistakes. This was a bit about the buyers who find the bread and butter vacation home segment to be too hot, too scarce, too expensive, so they retreat to areas where prices are lower and value seems evident. They’re often making mistakes by buying vacation homes in non-vacation home settings, which sets them up for crushing price declines should the market one-day adjust downward. A safer play for these sorts of buyers is to do what my buyer just did. Find a place in Abbey Ridge. In the Villas. In Willabay or Bayside Pointe. Find a condo that might not be what you really want, but it’ll help you live your best life this summer.
It isn’t easy being a large condo association. In fact, a seat on a board at such an association is the worse sort of punishment, the sort for which you volunteer. Geneva National knows this pain, and it knows it well. Large associations have different problems than do the small associations, owing mostly to the scale of it all. Lots of land, lots of amenities, lots of structures, and unfortunately, lots of owners. Vista Del Lago, the largest condominium association on the lake, knows these problems all too well.
There’s been a learning curve of sorts at Vista. New ownership flooded in during the 2000s condo boom, and unlike the average of the previous ownership, these owners were more affluent and as a result, more demanding. Expectations soared, and along with it, the request for improvements. This should be better and so should that. New retaining walls here, new roofs there, new landscaping around the corner. The property was old enough by then to need some serious attention, and as a new group of owners settled in, the attention was paid.
There were some management concerns, so management changed. There was some maintenance concerns, so maintenance changed. There were reasons to improve Vista, so the improvements were made. But that makes it sound like there wasn’t a struggle, because there was. Whenever a large group needs to make decisions in unison, there is a struggle. But today, the smoke is clearing and Vista, with those improvements made, has once again found favor in the market. It’s a good time to be at Vista Del Lago.
The market hasn’t fully recovered, mind you, but it’s finally gaining some ground. This week I closed on a sale of a four bedroom condo for $520,000. Currently, there are two other units at Vista pending sale, with just two others active on the market. There was a time not too many years ago when it wasn’t uncommon to have six or more units available at the same time. These recent sales and this lack of inventory is just what the doctor ordered, assuming the doctor was ordering Vista Del Lago to return to form.
Today, there are only eight available lakefront condominiums on Geneva Lake. That’s a low total, to be certain. The most amazing of them all? Obviously my Bay Colony unit in Williams Bay. First floor unit, boat slip, perfect lake views and a stunning interior. For real, stunning. You’ll be stunned. Actually. I wouldn’t ever use that word out of context. For now, let’s celebrate the Vista sale. It means a lot to the market, and I expect the lakefront condo market to continue its long recovery throughout the coming summer. If you’re looking for a ready-made lakefront experience and your budget doesn’t allow for single family, there’s no better way to indulge in the lakefront scene. If you’re wondering who to work with towards this end, email him here.
It’s been a while since I’ve written a broad market update. It had also been a while since I felt the warmth of a bright sun on my skin. But yesterday fixed that latter absence, and today I’m sporting a proper spring sunburn. Sunburns are generally understood as being bad. Bad for your health, bad for sleeping. But an early spring burn, with just a slight sensation of sting, well, that’s something that everyone of our winter condition needs. It’s an event. A ceremony. A wonderful happening that signals the passing of winter with the emergence of spring. I don’t like sunburns, not one bit. Except in April.
The Lake Geneva vacation home market has endured quite a winter. Winter was fine, I suppose. It snowed a bit and it was cold a bit, but it didn’t snow a ton and it wasn’t cold all that often. That was winter. But March and April, the two months to which we generally assign some spring tendencies, they didn’t cooperate. The weather was awful. It was. Terrible, really. Rainy and windy or snowing and windy. Early ice out means nothing if the ice is replaced with snow. And so we endured. Showings were made and showings were canceled. Who could drive in this snow and that rain? The market faced obstacles, mostly from the clouds above, and yet here we are. The market triumphed over so-called-spring, and is, today, poised to do some serious selling.
Because we’d be remiss to fail to recognize that the weather has indeed had an impact on our market. The market has performed valiantly, don’t be confused, but I can only imagine how much stronger the market might be today if not for the desperate grip of a belligerent winter. We’ve had sales, closings, showings, galore. If I’m a buyer today, I’m worried. The market performed well in spite of the weather. Can you guess how much better it might do if it were able to excel because of it?
Current vacation segment activity knows no limit. The entry level lake access market is active, with pending deals in Country Club Estates and Cedar Point Park. Country Club has had the hot hand of late, with buyers greedily gobbling up any bits of inventory, with few exceptions. Further up the price scale, there are three off-water homes pending sale between $800k and $1.5MM. Those homes include one in Wooddale ($899k), one on Hunt Club Lane ($1.3MM), and the long-listed, renovated Loramoor home ($1.499MM). These homes are all fine in their own right, and each sale will ultimately make plenty of sense to me, and to the market.
There was a time back during the prior market cycle when the least expensive listing on Geneva Lake was right at $2MM. If you liked that market, you’re in luck, because today there are just two true lakefront homes available priced under $2MM. The bulk of the lakefront inventory today is priced between $2-3MM, with several fine offerings in that mix. Some of those properties have been listed for quite some time, others are fresh to market this season. My predictive qualities are quite refined, and as of now I’m going on a limb and guessing we’ll see two or three new accepted offers out of those nine lakefronts in that particular price range by Memorial Day Weekend.
There are two lakefront spec homes being built in Cedar Point Park. Both of those homes are listed at $3.85MM and both have been under contract since last summer. The first one is now finished, and just closed for full price. I’m not going to elaborate on these sales publicly (you should be working with me if you want to know what I think about them), but I’ll just state the obvious: this market craves new construction. It loves it. It needs it. It cannot live without it. $3.85MM x 2 proves it.
The top end of the market has been quiet in terms of new inventory, and just two long-contracted deals remain to be closed. Those are of the Born Free property on the North Shore of Geneva ($5.75MM) and Clear Sky Lodge ($6.5MM) on the South Shore. Sometimes I randomly capitalize the shores to make them feel more important. Both of those sales will be fine, though both feel somewhat pricey given their prior, recent sales prices. That’s $3.5MM for Born Free in 2011 and $3.7MM for Clear Sky in 2012 (I represented the seller in that sale). Still, the market is hot and these two properties prove that appreciation over recent years has been, in some cases, quite impressive. The best remaining upper bracket offering is my Basswood listing. Watch the video here to remember what summer looks and feels like.
Inventory remains the biggest concern as we transition into the summer market. This concern isn’t limited to the lakefront market, as there are lots of buyers in search of a reasonably priced ($500k-$1.3MM) off-water home with either a lake view or a boat slip. But the lakefront is the market that generates the headlines, and the lakefront could also use an injection of new inventory. What segment has buyers waiting? Um, all of them? There are active buyers right now in every price range, from $200k cottages in Country Club to $10MM lakefronts. If I’m a seller today I consider the market and wonder if I should sell (maybe). If I’m a buyer I consider the market and wonder if I should jump (probably). But if I’m me, I’m just concerned about hanging on to this new spring-time tan (unlikely).
Above, sunrise from my 274 Sylvan listing in Fontana’s Buena Vista.
There’s an interesting bit of information available this morning courtesy a recent lakefront sale. The sale was of an older house on a 90′ lakefront lot in the Birches. The property was fine. The MLS description made no mention of it, but I believe the house may have been a Zook. Zook homes are a lot like Frank Lloyd Wright homes, in that the sellers care about the pedigree of the architect, but the market doesn’t. This property was initially listed for $3.5MM back in 2008, and after a series of price reductions and listing pauses, the property mercifully sold this week for $2.3MM. I didn’t have the listing or the buy side, which is pretty awful for me but worse for the buyer and seller.
The parcel of land was reasonably decent, though I don’t count Maple Lane to be among the best streets on the lake. It’s a fine street with fine homes, but it’s not necessarily a street that has a history of selling for elevated prices. Today isn’t about that parcel, it’s about the market context of this sale. Brokers are clamoring over potential listings to such an extent that prices are being driven up less by market conditions and more by the breathlessness of agents who are new enough to the business that they have no way to be sure of valuations. It’s not their fault, they’re just chasing dollars. To understand what this sale means to the market we must first look back at some very recent history.
In 2016 I sold three lakefront homes on Lackey Lane. Of those three, two were modest homes, one of which has since been torn down while the other was renovated. Those two properties that sold at land value printed at $1.9MM and change, for 100′ lots on a really desirable street. Geographically, Lackey and Maple are close, so we’ll consider them to be likely comparables for each other, even though I find Lackey to be far more appealing. Those two sales printed at around $19,000 per front foot. This isn’t some long ago number, this is 24 months ago. Market conditions today have improved, but market conditions in 2016 were still quite good.
The recent sale on Maple printed at $25,555 per front foot. The overall land mass at Maple was larger than Lackey by two fold, but the market pays little attention to overall mass and focuses instead, perhaps at times incorrectly, on frontage. The Maple sale closed 34% higher than the 2016 sales on Lackey. Does this mean the lakefront market has appreciated 34% in the past 24 months? Of course not. Does it mean that some properties have appreciated that much in such a short period of time? Absolutely yes.
In 2016, those Lackey sales were not easy sales. Both properties endured some time on market. Both properties were overlooked, even by smart buyers who were working with me. Today, the Maple property proves out what I knew then: 100′ vacant lots that are selling at land value are becoming increasingly rare. Just as we’ll someday run out of dumpy lakefront cottages that you might be able to buy for $1.2MM, we’re also running out of 100′ lakefront lots with older, modest homes on them. This scarcity is driving up prices in both categories, though the entry level market remains rather stagnant compared to the 100′ market. Expect this trend to continue as buyers seek out properties that offer them some upward mobility should they one day decide to build new, or undertake a serious renovation.
It’s fun to see the media make a fuss about a sale on Geneva Lake. First up, please know that the media itself doesn’t pay such close attention to these lakefront sales. Once a sale is completed, the brokerage involved has a representative reach out to numerous media outlets to generate some buzz. This happens at large firms that need to hang on to their market share. This is why, on the fresh heels of the Hillcroft sale, you’ve read so much about it and from so many different sources. Local news sources fawn all over Lake Geneva, largely because our market is so much different than that of the rest of this great state. Lots of places in Wisconsin have large homes. Lots of places have high valuations. But at Lake Geneva, we not only have high valuations we also have high prints. You can own your expensive home anywhere in Wisconsin and that’ll be nice for you. The difference at Lake Geneva is that we can actually sell that house when you’re done with it. It’s good to be king.
In spite of the media attention and the well known nature of this story, there is still work to be done. There is analysis that must be considered. The Hillcroft property was immensely large for this lake. 415′ of rare, mostly level frontage, situated on a small point. The frontage was spectacular. The location on the lake, just West of downtown and off of Snake Road, pretty much ideal. The overall property is 20 acres. That’s an obscene amount of property on this lake. Don’t forget, for the purposes of our local definition, 200′ of frontage and 3 acres constitutes a reasonable estate. Hillcroft is off the charts in terms of land mass, and it should be applauded for simply being. Consider the 2017 average for price per square foot of overall lakefront land mass was $58.09. Applied to Hillcroft, that would place the valuation over $50,000,000. (Compression doesn’t allow for this, of course).
There has been much fawning over the home itself. Over the size of it, the bedrooms, the baths. The dining room and library. I always loved this home from the lakeside. The way the structure follows the curve of the lakefront is rather divine. But as an agent who showed this home when it was available I can say this: The house, while beautiful on the exterior, was average. The layout compromised, the finishes mostly dated. Any praise this property receives should be dedicated to the property, to the old Wrigley buildings that still exist, and to the history of it all.
The average price per front foot of lakefront settled at $27,193 for 2017. Typically, larger properties are unable to achieve that average, as compression once again rears its ugly, insistent head. But in the case of the Hillcroft property, the price held up. At 415 feet of frontage, the average would have yielded a print at $11,285,095, which is nearly identical to the actual print of $11,250,000. That’s a surprise of sorts, given the structure was so meh, but when you factor in that overall value of land mass, the lakefront average makes perfect sense.
Is this the highest priced sale in Lake Geneva history? Yes. Was the sale a surprise? Not at all. It makes perfect sense, and the only issue in our marketplace now is that we won’t likely have another Hillcroft to sell for a while. But that brings us to an important concept regarding this lakefront market. Is Hillcroft a rare property? Obviously. Will it remain as the top dollar sale for a long time? Not likely. Consider the previous high sale was the property that I represented at W4449 North Lakeshore in Linn. I closed that property for $9,950,000 in late 2016. Hillcroft surpassed that sale by only 13%. The North Lakeshore sale was of a gorgeous house on reasonably nice dirt. The Hillcroft sale was of legacy dirt with a reasonably blah house. What the market has yet to see is the ultra rare combination of a gorgeous, newer house built on top of rare, meaningful dirt. Yes, 200′ lots with beautiful homes on them exist, and they exist plenty. Yes, those prices could easily be in the $7-10MM range. But those prices won’t dethrone Hillcroft. What will dethrone Hillcroft, and likely soon, will be the combination of that perfect house on that perfect dirt.
Don’t blink, it’s coming.
(I wasn’t the listing or sale agent for Hillcroft, which is a terrible and embarrassing shame. If you’re a buyer or seller of such a property, you should be working with me. This sort of top sale without my involvement can never, ever happen again).
There are several unavoidable truths involving the Geneva lakefront market of 2018. The market is frustrating for buyers. It’s awful, really. Limited inventory, quick sales, more buyers than sellers to the tune of five or more to one. This is an unfair fight, and the sellers are winning. In the end we know it’s the buyers who win, the buyers who pay the ransom to receive a lifetime of change. But for now it doesn’t feel that way. The market is tilted heavily towards sellers, and we know this. We understand this. It wasn’t always like this, but from 2010 through 2015 you were too timid to buy. This is what happens, this is what happened, and this is the overriding truth of the market.
A lesser known and seldom understood truth is that the aged inventory on Geneva Lake isn’t just aged because no one wants to buy it. As a buyer, this is the easiest conclusion to make. That house has been for sale for a long time, no one wants it, I’ll be able to steal it. This was the conclusion that I came to and lived in from 2010 through 2015, and that conclusion helped me close the most volume of any agent in the county over the last eight years. That conclusion also helped those buyers smart enough to work with me score tremendous value on lakefront properties. Today, that conclusion is still made, but it’s no longer accurate.
Lakefront buyer activity is at insane levels. It’s not insane that so many families and individuals wish to spend their time on our shores, actually, it’s insane that so many people choose to spend time on other, inferior, faulty, embarrassing shores. The sheer numbers of buyer traffic is somewhat overwhelming. Last Sunday I showed lakefronts, which I tend to do every weekend. But last Sunday I showed three different lakefronts to three different buyers. Back in 2007 I used to work with three different lakefront buyers, too. It was called an entire summer. This market is buzzing, but what exactly does that mean for a buyer, and does that mean value still exists?
What it means for a buyer is painfully simple. If you like that house and you like the number enough, then you’re going to have to move swiftly to buy it. The number isn’t going to initially feel all that good. There are deals to be had, in spite of this activity, but for every deal there are five sucker deals, those homes that will sell to buyers who either don’t have skilled lakefront representation, or those buyers who are working with agents who lack discernment in this marketplace. If you think selling real estate is easy, you’re right. If you think selling the real estate at the right price is easy, you’re wrong. But I’m getting ahead of myself, and this isn’t about me it’s about buyers and that faulty conclusion regarding aged inventory.
When a buyer keeps seeing a lakefront for sale, the buyer might be tempted to think the seller is getting desperate. You can’t hold out forever, seller! Buyers sense a seller’s wariness and assume that a screaming deal is going to be possible. That the aged inventory has fallen out of favor with the market? That there is a deal just waiting to be made! That the buyer will win. An asking price of $5MM and a couple of years on market? That sounds like a $4MM print to me! This was how I thought a few years ago, but this is no longer the typical outcome. The painful thing that buyers must realize in this market is that sellers are receiving offers. Sellers are generating showings. Sellers are seeing activity. And those sellers who are on the receiving end of activity and offers are simply holding firm. The market hasn’t forgotten these properties, it’s just that the sellers aren’t playing ball.
I see several pieces of aged inventory on the market today, and if I look through my old lenses I see opportunity. But I know those aged bits of inventory have had offers that exceed the price I’d be willing to help a buyer pay. These properties that look idle on your computer screen, with Days On Market piling up and dust collecting in the corners of the photos, those are properties that are only still for sale because sellers are too confident. The properties aren’t sitting because no one wants them. They’re sitting because of sellers who are negotiating from a position of strength, and confident sellers are poison for a buyer looking to score value on aged inventory. I see that old inventory, and I’d love for you to steal it. You see that aged inventory and you know you’d like to steal it. The problem is the seller sees his aged inventory and has a hunch that someone is going to pay him his number, even if it takes another year.
It feels like it wasn’t so long ago that I wished for more snow. For more cold. For more winter. Shortly after wishing, all of that came true. Briefly. Since then the weather has been a mix of spring and sort of winter, the dreaded in between that will come to define the next six weeks of our existence. But fret not, for February is nearly over. With it we leave behind the Olympics, and with that, we leave behind the nightly disappointment of a country with so many participants, but so few medals. It’ll be March soon, and then we can lament the weather in March and wish for it to be April. Once April starts, we have just one more month of wishing for May. Soon, it’ll be nice out.
Even though the weather is haphazard, the real estate market doesn’t really care. New inventory has been introduced to market, much of it by yours truly. Pending sales have printed, and new contracts have been written. Some have been accepted. My lakefront in Loramoor closed late last month for $4,950,000, placing that property in what will be a short-lived position of first. Like when a US skater is in the gold medal position before anyone else has laced up their skates. Another lakefront in the city of Lake Geneva closed recently, that of a small hillside home listed and closed at $1.799MM. I’ll be expecting to see that home torn down or significantly remodeled. A home in the Birches on 105′ of elevated frontage closed for $3MM.
A new lakefront came to market with 150′ of frontage and a $3.975MM asking price. I sent it around but didn’t think too much of it, and then it sold. The market doesn’t always care what I think, which is probably good, since I tend to be conservative in my valuations. A small lakefront in Williams Bay listed just over a buck is pending sale, but there’s nothing more I feel like adding to that one. A level lakefront in the Narrows is under contract recently, listed in the $2.3s. Rounding out the lakefront activity, there are three remaining 2017 contracts left out there waiting to close, those of lakefronts listed at $3.85MM, $6.5MM, and $12.5MM. It’s going to be a terrific 2018, and we’ve only just begun. For a full list of available lake access and lakefront homes, CLICK HERE. Feel free to share this post with anyone you know who also might appreciate an accurate list of inventory.
I’ve added some new lake access inventory this month, including a large home in Indian Hills. Listed at $675k, it will give the new owner an opportunity to engage in the Fontana scene, with very little effort. The home is spacious, with two story foyer, main floor master bedroom, and five total bedrooms. There’s also a two car garage, along with those private Indian Hills lake rights. I added another home in the lower price ranges this month as well, that of an off-water home in Geneva West. This is about a mile north of the lake in Williams Bay. That home, pictured above, offers a charming spread for a buyer looking for a primary residence in the Williams Bay School District, or perhaps a vacation home owner looking to find privacy at an affordable price.
A particular sale of note involves a large condo in Fontana at the Fontana Club. I sold this unit to the original owner, when I represented the developer back in 2001. The first sale was of a single unit, then the buyer bought an adjacent unit and remodeled the space into one large residence. I sold that combined unit for him in 2006 for $1.125MM, at the time that would represent the obvious peak in the lakefront condo market. That new owner has offered the unit for sale off and on over recent years, while the price steadily eroded. That double unit closed this month for $685k. That’s a terrible thing. The good news for the Fontana Club is that with this sale, and that of my single unit that closed last fall for $390k, the aged inventory has finally and mercifully been cleared from the market. The best situation for the Fontana Club would now be to withhold any inventory from the market so that demand can slowly build.
Overall, I like the way the market is behaving so far this year, but I’m increasingly wary of over confident sellers. I’ve often told you how I personally behave when I’m a seller of my own home. I recognize the fact that I need that buyer more than that buyer needs me. My particular home is the only home I need to sell, whereas that buyer has several different homes he can choose. Sellers so far in 2018 are negotiating from a position of strength, which they have understandably earned. There are some buyers, as evidenced in the market today, that will pay a seller’s price, no matter if it’s 15% too high or not. But most of the buyers are still smart, even if they choose to work with an agent they found on Zillow, because Premier Agent’s must be amazing! (or willing to pay huge sums of money to buy leads) But these buyers are still reasonably concerned about their investment, and they’re not pushing prices quite as high as sellers would like. I’ve heard of and been part of several negotiations over the last six months that featured buyers and sellers in odd standoffs over insignificant amounts of money. Should buyers come up? Maybe. Should sellers come down? Maybe. Should you stop working with any agent who isn’t David Curry? Duh.
Above, my listing in Geneva West. $499k.
Just sold. $4,950,000. I was pleased to represent the seller of this fine lakefront home.
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
Do people still golf? It seems to me that they do, even though I don’t. Previously, I enjoyed golf. I enjoyed getting to the course a bit early and hitting some range balls. I enjoyed a sandwich on the patio. I enjoyed the scramble for par, the thrill of a birdie. I once almost had a hole-in-one and that was almost super fun. But the game of golf no longer fits into my ideal day. I enjoy it still, if the course is green and the company prime, it’s a nice way to spend a morning, or an afternoon, or an entire day. But increasingly, my schedule doesn’t allow for a long round on the links, and when time does allow my distractions have taken other forms. Still, I used to like golf and I understand why other people still do. Geneva National has some incredible golf courses, but you needn’t love golf to consider ownership there.
This has come up often in my long history of Geneva National sales. New buyer asks for nice vacation condo at the lake. New buyer doesn’t want to spend lakefront money, and new buyer doesn’t want to buy one of our standard issue two or three bedroom, 1200-1500 square foot off-water condo units. I suggest Geneva National, knowing that there’s tremendous bang for the buck inside those gates. Buyer says she doesn’t golf. This is the Geneva National flaw, the common refrain, the reason some people dismiss this place without ever considering it. News Flash: You needn’t have a desire to golf in order to live in Geneva National. If you hate manicured lawns and rolling, forested terrain, then you should hate Geneva National. But if you like those things and you hate golf, then you should like GN. It’s really that simple.
Geneva National is huge. It’s a monstrosity in our small overall market. That size is what makes it so susceptible to momentum swings. Those market swings have occurred with some frequency since GN first bulldozed their first roadway sometime around 1990. The good news is that the last several years have featured a solid combination of strong sales and diminishing inventory, and that recent trend continued throughout 2017. For the year just ended, GN closed 84 single family and condominium units. More likely sold- private sales, direct from builder sales, and new construction. But the MLS number is 84. There were 71 sales in 2016 and 82 in 2015. The market strength today is obvious, and the trend supportive of a strong market. But GN isn’t without an issue.
The top end in Geneva National is remarkably weak. Consider in 2017 just two homes sold for more than $560k, and the top sale registered $750k. In 2016, there were four sales over $560k, and the top end printed $795k. 2015 closed six over $560k, with the top at $1.050MM. Now that you understand the pricing history, look to the active inventory. While there are just 43 active homes and condominiums (four more pending), there are five properties priced over $1MM. Given the last three years of history produced just one sale over the million dollar mark, Geneva National currently has 15 years of upper bracket inventory on its books. If I’m a seller in GN and I’m looking for a number north of one million dollars, I’m not pleased.
The issues that plague the housing stock in GN are varied, but all come down to dollars and cents. GN still has ample vacant parcel inventory. Currently, 44 vacant parcels are listed for sale. Many more exist off-market. Last year, 10 vacant lots sold. Of those 10, six sold for $13k or less. For all of 2016, the MLS registered two vacant lot sales in GN. Geneva National has lots of vacant inventory, and a housing stock that is aging. It might come as a surprise to some owners, but a house built 15 years ago needs to be remodeled already. A 20 year old house definitely needs to be remodeled. And sadly, your eight year old house likely needs some refreshing. The problem with existing inventory in GN is that it cannot compete with the availability of easily sourced vacant parcels. If you’re a buyer in GN seeking single family and you like a vacant lot listed at $50k, are you going to hire a builder to construct a $650k home for you (one where you get to pick the colors and materials and design), or are you going to go shopping for a 15 year old house that looks like it needs a new roof?
That’s why the single family market in GN is difficult and may remain difficult for a while. The association should do everything in its power to eliminate vacant inventory, and the easiest, most simple way to encourage that absorption is by allowing existing homes to buy vacant, neighboring parcels and be allowed to own those without incurring another monthly association fee. If the association enacted this policy, perhaps more vacant inventory would be removed from the market, and that would be the start of price appreciation for the single family homes. Until then, or until the market slowly absorbs this inventory, expect stagnation.
The condominium market in GN is much healthier at the moment, and I’d expect the low inventory to benefit this segment especially. If you’re a buyer looking to spend $150-350k on a vacation home in the Lake Geneva market, I cannot see a better option for large square footage at a discounted price. While the property feels like a country club, you can either enjoy it as such or just enjoy it for the natural beauty it so easily displays. Just remember, if you hate golf, Geneva National might be perfect for you.
It’s well known and generally accepted that anyone with a lakefront budget will wish for lakefront. There were some people who lived up the road from my parents’ lakefront house in Williams Bay. Those people would tell me how they were glad they didn’t live on the lake. Too much noise from the boats, the waves, the sound of all that enjoyment. They preferred, they said, to live away from the lake, where it’s quiet. Where the lapping or crashing of the waves cannot find them. I remember that even as a young child I knew those people were lying. No one would prefer to be off the lake, and if a budget allows and the aim is true, then lakefront is the result. Or is it?
The upper end of our lake access market is unique in the flexibility such a budget might afford. A lakefront buyer with a budget up to $2MM might very well, and usually will, choose lakefront. But what will that lakefront be? Will it usually be nice? Will it be large? Will it afford privacy? Well, no, not usually. The concept applies to those with lower lake home budgets as well. If you’re a $1.2MM buyer, I can typically find you lakefront. But will that lakefront be a beautiful house with two car garage and a pool? Of course it won’t. It’ll be a cottage, with some questionable structural supports and tight neighbors. But for $1.2MM an off-water buyer can find something quite unique. They can find a boatslip, maybe a view, maybe privacy, maybe a pool, maybe five bedrooms. This is why even when market segments overlap within the same price boundaries, many buyers will opt off water in order to gain something the on-water home cannot offer.
In 2017, the upper bracket lake access market experienced a strong influx of buyer traffic and closed the year with a significant volume total. 2017 closed 27 off-water homes priced over $500,000. That’s a huge number, but what’s most remarkable is the presence of liquidity in the $900k and above segment. This lofty segment closed nine homes, including two in the $1.5MM range. During 2016, the same segment closed 22 properties, with just five selling for more than $900k.
Thirteen of those 27 homes sold with transferable boat slips. Two of the sales were in our co-op communities, one in the Congress Club for $1.53MM and one in Belvedere Park for $564k. There were no public sales in the Harvard Club for 2017. Associations with volume in this segment included Geneva Oaks, Cedar Point Park, Country Club Estates, Indian Hills, Oakwood Estates, Black Point, The Lindens, Knollwood, The Loch Vista Club, Sybil Lane, Oak Shores, The Lake Geneva Club, Forest Rest, Maytag and Sylvan Trail Estates. That’s some widespread activity, and the market should be pleased for producing such strong volume. Oddly, there wasn’t a single residential MLS sale in this segment in Glenwood Springs last year.
Most of these sales made good sense to me. I was involved in six of these 27 sales, which means that at least six of the sales made perfect sense to me. Of the other sales, I was surprised at a few of them, including an off-water home with no slip that sold north of $1MM. Another shocker, at least to me, was the sale of a hilltop home in Fontana that closed over $1.5MM and was subsequently torn down. That property lacked a slip, but the lake view is, as a point of fact, one of the best off-water views I’ve ever seen.
I was asked this week what I thought would be the better buy with a $1MM budget: an on-water cottage or an off-water home. I admitted I’d always look lakefront first, but I would consider a larger lot off-water, so long as I had a boat slip and was located in a high quality neighborhood (think Black Point, Lindens, Glen Fern, Loramoor, 700 Club). In those settings, I would happily consider off-water to be a near equal trade off. This segment today is light on inventory, as is the rest of the vacation home market. Just 16 off-water homes are available priced in excess of $500k. Of these available properties, my favorite is the modern home (my listing) on South Lakeshore Drive that’s been reduced to $1.095MM. This is a lot of house in a rare location, and while it’s off-water it feels like a private lakefront home. It’s unique, but it’s a winner.
This particular segment is heavily influenced by overlapping lakefront inventory, which is, at the moment, similarly low in inventory. If entry level lakefront properties continue to be difficult to source, and the off-water market in the $900k-$1.8MM range provides some nice options, expect this market to benefit. If you’re a buyer in search of a lake house around the million dollar mark, I’m here to help.
Above, an idyllic cottage I sold this summer in the Lake Geneva Club.
I owe Abbey Springs something. Not money, I don’t think. It’s never paid me very much, so I shouldn’t feel obligated to pay it back. In the mid 1990s, I was a kid with a new, disastrous real estate career, and a desire to play tennis. I don’t know why I wanted to play tennis. I had never played when I was a kid. We’d sneak down to hit a few balls at Conference Point Camp, on their cracked and heaved courts, but that wasn’t really playing tennis. I couldn’t afford the Grand Geneva, with their shiny courts and wood lockers. So I played at Abbey Springs, under the tent they’d blow up over their outdoor courts in the winter. It was cold in there, dimly lit, and loud. The inability to properly relay the score, on account of the noisy blower fan, suited me just fine. Thanks, Abbey Springs.
But that’s the end of the thanking. Abbey Springs the real estate market is really quite a spectacle. It’s a machine, finely tuned, running without a miss, or a knock, or a sputter. The market is perhaps the most unique and widely varied here, with vacation condominiums starting in the high $100s and single family homes reaching or exceeding a million bucks. Remember that sentence.
For the year just ended, Abbey Springs closed 28 built properties including condominiums and single family homes. For all of 2016, there were 40 prints. Now, if I were were a headline writer for AP, I’d right this in a way that would appear negative: SALES DROP 30% AMID MARKET TURMOIL. But I’m not AP, I’m just a kid from Williams Bay, and even I know that shrinking sales totals are natural and normal in a market with shrinking inventory. We cannot sell what isn’t for sale. The sales total for 2017 is fine, the inventory today, at just 19 active properties (four of those under contract) is low. The market at Abbey Springs is in fantastic, healthy condition.
But that’s not really the whole story here, as much as Abbey Springs wishes it were. Consider the upper bracket sales from last year. There were four sales over $800k in Abbey Springs, with the highest sale reaching $885k. That’s nice. For the last five years, the two top sales in the market registered the same amount: $885k. Nothing higher, and over those five years just five sales over $800k. Seems fine, right?
The prior market top was mid 2007 to mid 2008. We know this. Abbey Springs, from 2005-2008 sold a lot of product, but where was the top end back then? For those years, Abbey Springs closed four sales over $900k, with the top sale at $1.3MM. If the markets today are as strong as they were then, why can’t Abbey Springs push over $900k anymore? Where did the $1.3MM sales go?
There’s no particular mystery in this. The market is strong today, yes. But the top end has obviously been redefined, and that new definition falls short of $900k. There has been some inventory over $900k to press that theory, but those homes have failed to sell. The prior market peak found buyers in this range with relative ease. It’s apparent to me that this higher level buyer is still in the market, but has found his or her way outside of Abbey Springs and instead wants a traditional lake home experience. That buyer wants a slip. Maybe some privacy. A smaller association where the beach isn’t so crowded. The buyer who once purchased $950k homes in Abbey Springs has proven elusive in this current cycle.
But maybe that doesn’t really matter. Abbey Springs might not be a million dollar market anymore. Or perhaps there just haven’t been any million dollar homes listed for sale. Either way, expect Abbey Springs to push forward yet again in 2018, and expect inventory to stay low. If you’re a buyer in search of a lake house experience with added country club style amenities, Abbey Springs is likely your best bet. Condominiums from the $200k range and single family from $500k. Beach, pool, golf, clubhouse, and tennis courts, though the bubble is no more.
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.
By now, everyone knows the Stone Manor story. Not the Otto Young story, mind you, because he’s old news. The new news is the news we like, because we’re Americans. The news is, as you know, that a buyer has bought up Stone Manor, that famed limestone manse on our eastern shore. The building has been lots of things since it was first built some 120 years ago, but most of us know it either as an old French restaurant or as the condominiums that it has most recently been. Today, it’s still a condominium, but not really. There are seven units in the building, and all but one are under the same ownership. The volume created by those 2017 condo sales is not something we’ll count in our year end figures, because the sales were direct, and the circumstance obviously unique. Stone Manor, we hardly knew you.
Now that the Stone Manor bit is out of the way, let’s consider the real lakefront condo market. That is, those two and three bedroom condominiums that measure between 1200 and 1500 square feet. Those are the meat and potatoes of this market, and really of every condo market everywhere. Vacation condos follow similar designs- two bedrooms, maybe three, a small kitchen and open living room. Maybe a balcony, or a deck, which are the same thing except one feels like it has to be made out of wood, the other out of stone, concrete or steel. Still, condominiums are similar here and they’re similar there, and in fact they’re similar everywhere.
Lake Geneva condominiums have, as you well know, been lagging the overall vacation home market. I’ve suggested many theories as to why this may be, but I admit I’m not particularly sold on any of them. The lakefront condo is simply not as prized as it once was. But that’s not to say it doesn’t matter. For 2017, we sold 12 lakefront condominiums ranging in price from $302,500 for a Geneva Towers two bedroom, to a four bedroom at Eastbank for $1,212,500. I should add that I blew that Eastbank sale by sending the prospective seller emails to the wrong email address. This is my shame. Of these 12 condominiums, I sold just one of them- the two bedroom at the Fontana Club that printed $390k.
The 12 sales are fine. There’s nothing fancy about these sales. But there’s nothing lacking, either. They’re just sales. The prices have stalled, this is undebatable. Consider the Fontana Club unit that I sold for $390k was originally sold (by this kid) for $393k back in 2001. I was so young then, so healthy, so full of optimism. So was the Fontana Club. Then, at the height of the condo market a mere five years later, this two bedroom unit was likely valued around $600k. Fast forward to December when the unit sold again for a price below that of its original sale in 2001. That’s awful, but it’s a sign of the times for the lakefront condo market.
In all, five units sold at Geneva Towers, one in the Old Boatyard Condominiums ($689k- behind Harbor Watch in Lake Geneva), one in Vista Del Lago ($350k), one in Fontana Shores ($510k), one in Fontana Club ($390k), and two in Bay Colony ($550k/$476k). That’s a fine sales tally, ahead of the eight sales of 2016, and ahead of the 2014 and 2015 totals as well, if only modestly so. And that brings us to the current state of the market, and what’s next.
Inventory is low in the lakefront condo complexes, and this is a good thing. While I worry that the single family market won’t have enough inventory to spur activity, I’d prefer to see limited inventory in the lakefront condo market. That’s because the prices have sagged, and the only way to pull those priced upward is to limit supply. The best possible scenario for the lakefront condo market is that 2018 features a handful of sales- no need to match or beat the 2017 sales total. Sell a few condos, keep inventory scarce, and see if demand increases. If the $500k-1.5MM single family vacation home market stays light on inventory, this will likely drive some buyer traffic to the condo market. And if that condo market is even lighter on inventory, this very well may help increase valuations. That’s exactly what I think will happen this year, and that’s exactly what the doctor ordered for our slowly improving lakefront condo market.
Above, my delightfully stylish lakefront condo at Bay Colony, listed for $899k.
One year ago, I wrote my year end market reviews and worried about 2017 inventory. 2016 had been a terrific year, but without inventory there was no way that 2017 could match that success. For the year 2016, we sold 103 lakefront and lake access homes on and near Geneva Lake. That was a solid tally. With the inventory concerns heading into 2017, I was uncertain we could come anywhere near that figure, but here we are. 2017 wrapped with 119 such sales, beating the prior year even though the outlook, at least based on inventory, was bleak. So what happened? Was there some rush of new inventory? Was there some development that came online and offered up a large chunk of ready-made sales? Neither event happened. Instead, Geneva was Geneva. We sold new inventory relatively quickly, and the market turned to the aged inventory and decided maybe it wasn’t so bad after all.
Today there are just 35 lakefront and lake access homes available on and near Geneva Lake. That number is a bit artificial as it doesn’t take into account properties that recently expired and have not yet been brought back to market, but the number is still startling. Making matters worse, there are only 11 lakefront homes available for sale. That number is just awful, but I suppose that depends on your perspective. If you’re an agent, like, say, me, then this is simply horrendous. If you’re a buyer, you feel the same. But if you’re a seller, especially a seller of a property that has experienced a length time on market, then this news couldn’t be better. Our market, like any market, lives and dies on inventory. Today, there isn’t any. It’s Ground Hog Day in January.
It’s safe to say that the Lake Geneva vacation home market has been on a solid bull-run since the end of 2013. The market recovered volume in 2011 and 2012, but prices didn’t stabilize and find some margin until that later date. That means we’re entering year five of a rather remarkable run. The market has made price gains, eliminated aged inventory, cleansed a few weak owners from the scene, and generally, completely, forged ahead. The lake is abuzz with new construction, leaving a market that finds a $4MM price tag to be somewhat median. The market is starved for inventory, each of decent land in the $2-3.5MM range, of entry level offerings sub $1.5MM, and of newer construction in the $4-10MM range. For the first time ever, I believe there’s a market for homes in the $10-15MM range, even though this market has never been properly tested.
While this run has featured buyers of every sort and wealth finding their way to the lakefront, it can most easily be recognized as being the run that delivered higher end buyers to these shores. $4MM is the new $3MM. $7MM is the new $5MM. The stakes have been raised, and Geneva continues to be set apart not only by the quality of our water and the vibrancy of our scene, but by our ability to produce upper bracket liquidity. I’ve said it often, and it continues to be more true each time I do, but Geneva is alone at the top of the Midwest vacation home segment. There is no market that comes close. Michigan, for all its effort, cannot hold a candle to our inland lake. Door County’s real estate market should be renamed Bore County. The Northwoods? Is that even a market? Geneva is the king, and with each passing year we become more worthy and the title becomes more and more permanent.
I’m looking forward to providing you with 2017 market reviews, and will do so on the typical breaks in our vacation home market. This year, each market has had plenty of success, leaving the recovery no longer spotty, no longer skewed in favor of one segment over another. As with last year, my primary concern for the new year has to do with inventory. If we feed the market, it will continue to grow. In spite of tax changes that take away some advantages of second home ownership and limit SALT deductions, I do not believe these will significantly or adversely affect our market. Why? Because there’s no other market like it, and there’s no better place to spend your weekends. Staying home on a Saturday just so you can have a few extra bucks in your robust bank account doesn’t make much sense to me. I don’t see the new legislation hurting our market, even if it likely will keep a buyer or two on the sidelines. If late December/early January activity is a harbinger of things to come, 2018 looks like it will be our fifth straight solid year.
Above, sunset at 700 South Lakeshore Drive, sold by this guy for $5,900,000 in May of 2017.
In the South Shore Club, there are 40 total lots. Most are built on, a few are not. At present, there is one new construction underway. To date, there had been one sale, that of an aged inventory home near the back of the lakeside circle. While there are 40 total, there are only four built homes that play as true lakefront homes. Those are the front homes, the homes you walk into and see the water, unavoidably. Those are the homes that function as their own market, and the home I sold this week is part of that elite group.
There is some confusion over the South Shore Club, and how to come to a valuation. Will the market pay lakefront prices for these lakefront homes? The answer is yes, and no. The yes part is obvious, because there’s a sales pattern now that didn’t exist prior to 2012. The no part is less obvious, and it might not be a negative in the way you’re suspecting. The market won’t pay true lakefront prices for these homes because the prices paid for them represent a discount to what those homes would trade for if they were on their own private lakefront parcels. So the market respects the South Shore Club, but buyers still expect a slight reduction over private frontage valuations. This is all good news.
Consider one way to look at this closing at $4,175,000. The last front house sold in 2014 for $3,591,000. For 2014, the average price paid per lakefront foot was $21,144. 2017 YTD through October 10th, 2017, the average price paid is $27,743. That represents a 31% increase in valuation. If we apply the same appreciation increase to the South Shore Club lakefront four, we’d see a valuation $4,704,210. Is this the only way to compute value? Of course not. A lakefront in Fontana sold in the high fours this fall, and that home, with a very small lot, sold for $713 per square foot. The South Shore Club home was 8736 square feet, which comes to a $477 per square foot.
A sincere thank you to the buyer and seller who let me help with this transaction. It was not the easiest deal I’ve ever worked on, and that comment may win Understatement Of The Year. That’ll put a wrap on my 2017 sales production, unless someone needs to close on a new house by the end of the year. Put a big red bow on it, like a Lexus. The year ends for me with $44MM in sales, which makes me the #1 individual Walworth County agent for 2017, and in that top slot for the third year in the past four. Combined with the 2016 volume that’s $106MM in the past 24 months. And that isn’t so bad. The address being written wrong on the property below that just sold, now that’s bad.
The month of November came in like a lion, or so I remember, and then it went out like a lamb. A tender, delicious lamb. Those early quitters found themselves baking in southern Florida, or dodging scorpions in Arizona. Others went on vacations to tropical locales, to avoid the dull of November. These people missed out. November wasn’t terrible. November wasn’t awful. November wasn’t even tolerable. November was incredible. A perfect blend of fall and winter, a bit of cold here and some cold there, followed by sunshine and sunsets that would make July blush. November was quite a month at the lake, and like every month, there were sales that we should review.
The most expensive closing last month wasn’t really so expensive. $1.7MM for the house in the Elgin Club. This was my listing, as you’ll recall, but a buyer from a prior listing came back and bought it, so even though it closed my children still need new shoes. The sale when viewed through a price per front foot prism is high ($34,000), but that’s because smaller properties always look high when judged by this blended average. The sale at $1.7MM was a terrific value. The seller decided it was time to move on, and the buyer took a flyer. The Elgin Club is an ideal spot on the water, and if you’re a buyer under $2MM and can find your way into the Elgin Club, you’re doing very well for yourself.
Next up is a dated modern house on a hill overlooking, at least from the top floor, Fontana Bay. The house on North Lakeshore Drive closed for $1.575MM, and the rumor around town is that this home will be torn down. If that’s the case, I will refrain from comment. No matter how hard it is for me to keep quiet, I won’t say a word. No, in spite of having so many things to say, so many cutting, terrible things to say, I won’t say a word. Not a peep from me, about this sale for $1.575MM. No boatslip here, by the way. But that’s all I’m going to say. Nothing more.
A home in Academy Estates closed for $950k, this one possessing a slip, and a pool, and some deferred maintenance. The price is okay, not great, not the worst thing I’ve ever seen. The house was one of those homes that couldn’t aspire to more than this price, so in that, I’d say the market provided a price that the seller felt acceptable, and that, is that. Academy Estates is a nice association to the East of the South Shore Club. If you’re an off-water buyer, there are far worse places you could end up.
The most interesting sale of the month was in the Lake Geneva Highlands. Earlier this year, I sold a small lakefront house for $925k. That was, at the time, the lowest price lakefront sale of the year. The house next door to that one just sold for $850k. That’s a nice price, no matter how difficult the house. I say it often, and I’m not wrong: the lake is running out of sub-million dollar homes. That’s because when one of these homes sells (perhaps one lakefront every other year sells below $1MM), the new owner rarely stands pat. Instead, they undertake some form of renovation. Perhaps a huge renovation, maybe an addition, maybe they tear it down. No matter the course, a $900k lakefront home is rarely the same home a year or two after that low print. When that home comes back to market improved, it now commands a $1.5MM asking price, which removes one more sub-million dollar home from our lakefront. That’s why these low priced lakefronts are almost always a good idea.
Rounding out the activity that matters, I sold two smaller properties last month. In October I listed a ranch with a boatslip and dynamite proximity to the water in Oak Shores. Last month I sold that home for $610k. The home needs a bit of cosmetic updating, but it was a nice house in a wonderful location, and it made complete market sense. Last week I sold a large townhouse in Abbey Ridge, near the Abbey Harbor, for $555k. That was a beautiful condominium, offering loads of square footage and upgraded finishes. Abbey Ridge is a unique creation in our market, as it offers two, three, and four bedroom condominiums in a resort setting for a reasonable price.
I was pleased that both of these sellers chose to list with me this fall. In doing so, they made the smart decision to not wait until Spring to list. That’s the common refrain at this time of year. Wait ’till spring. That refrain sounds nice only because it sounds familiar. Sell to your competition, not to the season. This isn’t Door County. This isn’t Harbor Country. Lake Geneva doesn’t close just because the temperatures drop. We just put on some sweet boots and play in the snow.
In the news this week, more of the continuing saga surrounding Stone Manor. I suppose most of this story is my fault, so I should take some time to explain myself. Several years ago I was hired to represent the marquee unit at Stone Manor. The first floor residence is as marquee as marquee gets, and since I’m the agent with the most success in that particular segment (no matter what the stapled letter you received in the mail from some other agent says), I was chosen to sell this space. After some market time, I sold it for just under $6MM to a strong buyer. As a point of fact, you won’t ever see me drop my client or customer names in this blog. That’s low-class and I’ll leave it for the online gossip pages to fill in the gaps that I intentionally leave empty.
After all, that’s what this story is all about. That’s why it has legs. The story has personalities involved, and media types love a personality. But again, here I am getting ahead of myself. The first floor unit sold in late 2016, and I was pleased to represent the seller. Stone Manor, for those who are unaware, features(d) several condominium units. There is a double unit and a single unit on the top floor, the same configuration on the second floor, and the large single floor unit that I sold on the first floor. Shortly after the first floor unit sold to this buyer, a double on the top floor sold. Then, some fancy deed work between two owners, and ultimately the second floor double unit sold. In November, the single unit on the second floor sold. That unit, by the way, was the unit owned by Tony Rezko, infamous associate of a prior president.
Even though the sales prices have been poorly or inaccurately reported, the transfer returns point to sales prices as follows: First Floor: $5,995,000. Top Floor Double: $1,899,667. Second Floor Double: $3,400,000. Second Floor Single: $2,250,000. The top floor double may have sold in a different manner to reflect that lower transfer price, but I’m not privy to any details, and those don’t matter. What matters now is that a singular owner now owns all of Stone Manor excepting one single top floor unit. The price paid so far? $13,544,667. This means every reported number you’ve read over recent weeks and months is wrong.
So now what? An owner who isn’t well known locally now owns nearly all of Stone Manor. The new owner has paid a handsome market rate for the property acquired. And because of this, everyone is going insane. Local news reports on the purchases as if they’re somehow unexplainable. Los Angeles based bloggers can’t figure out what’s going on here. Why would someone want to own so much of a building in rural Wisconsin? Has the world gone mad? We demand answers. We must know. We have to know. What’s going on at Stone Manor?
The answer, is nothing. Stone Manor is a monster limestone structure. It’s somewhere around 30,000 square feet. The property has 400′ of frontage and nearly 10 acres. It is, without question, the most important estate on this lake. No matter what other billionaire lakefront owners think, Stone Manor is actually the king. And if you’re a lakefront owner or a lover of this lake, you should be thrilled that the property is on the verge of returning to single family ownership. Why would we bemoan a purchaser investing so much in our market? Why would we wish to understand this beyond what it looks like on the surface? It’s an owner who loves a property that had previously never been given much attention on the market, and that owner now seeks to turn 400′ of frontage into a singular estate. This matters, and we should be appreciative.
Let’s say the top floor holdout owner sells. Maybe he does, maybe he doesn’t, it matters little to me. But if he does, and the price is in line with prior sales in the building (let’s not consider the alternatives for an owner who no longer has meaningful voting power in the condo structure), then the singular owner will have purchased the entirety of Stone Manor for around $16MM. Want to know what Stone Manor, in its entirely is worth? Probably around $16MM. Has the new owner overpaid for this property? No. Does it matter if she did? No. Does it matter that she might be from California and her husband might be from New York? No.
My advice to the community is to recognize a compliment when paid one. This owner could choose to spend millions of dollars in any vacation home market in the world. She chose Lake Geneva. I, for one, am flattered by her interest, and as a caretaker of this market and this lake, I welcome the consolidation of ownership. To that new owner, I say thank you. I say congratulations. I say welcome to the lake.
Tis the season for one of two things. Ambivalence is the most popular option for mid November. Why pay attention to the market when it’s just so easy to eat pie and pretend your weekends aren’t awful and boring? Sellers find and embrace ambivalence today as well, accepting that the market will slow to some degree from now through the earliest part of 2018. In spite of this holiday pause, there’s reason to doubt that several deals will come together over the next six weeks, as the market never actually sleeps. It just rests its eyes once in a while. Because of this, some sellers will remove their property from market (mistake), and others will just continue on as though everything is fine (it likely will be). But some sellers are November price cutters, and those are the sellers we’re looking for.
Last week I dropped the price of my large Basswood estate from $9.75MM to $8.995MM. This is a meaningful price drop, and it wasn’t easy to achieve. Buyers in this strata should take another look at this property, as it offers too much to be ignored. Large frontage, deep property, perfect location. The house itself is large, easy to understand, and ready to host an easy surface renovation. There are many estates on Geneva Lake. Many amazing estates. But there are very few that are complete. What do I mean by complete? I mean a property that’s large enough to feel important. A house that matches. A swimming pool. A guest house. A large pier. Combine all of those elements and you’ve got an estate. Basswood? It’s an estate, and I just put it on sale.
Another listing of mine that’s been struggling to attract a buyer is my modern home on South Lakeshore Drive now listed at $1,095,000. I don’t feel as though I’ve done a very good job explaining this property to the market. It seems as though, after so much market time, the property should make sense for someone. I know it makes sense in the market. I know it’s a screaming value. The house sold during the prior peak for $1.5MM and change. The house sold at that level because of what it offers. Immense and rare privacy. Loads of square footage over four finished levels of living space. Transferable boat slip. Situated on the lake between massive estates, with lake views and nothing but a few trees between the house and the water. This is a lakefront house without private frontage, and it’s downright cheap. If I’m a buyer around the million dollar mark, this is a house I’m looking at. A tiny smear of lipstick and it’ll be a fantastic lake house.
My new listing on Outing in Williams Bay ($1.699MM) is offered today at a reduced price after initially coming to market just under $2MM. These are the sorts of sellers you want to find. The motivated ones. It’s too convenient today for sellers to sit back and wait for the market to come to them. After all, there are several 2017 examples of this happening for aged lakefront inventory. But I’m writing today to buyers. I’m writing today to those you don’t want to throw caution to the wind. If you’re throwing caution to the wind, other agents specialize in that, not me. I’m assuming there are still buyers who want to find value, and if that’s you, then let’s chat. We can aggressively look for new inventory and pounce if it’s right, but I’d rather comb over aged inventory and see if we can find a seller who’s ready to play ball. The myth of this market is that every seller is overly confident and every seller is holding out. The reality of November at the lake (and December for that matter) is that there are still sellers who are ready to sell. They just need a value minded buyer (and that buyer’s dashing agent) to convince them that the time is right.