Here we are again. In February. The snow is still flying, but we know what we know. Summer is coming soon. With that in mind, buyers are looking forward to maybe, potentially, perhaps, spending this summer in a different place. In this place. Our place. Many are waiting. Hoping. But January is spent and February is aging and the wait continues.
Inventory was a concern heading into this new year, but I was more concerned about the stock market. Concerned about stability. The December market slide has reversed course, leaving my worries to the singular: Inventory. This wouldn’t necessarily be the case at this time of any given year, but this year, this morning, it’s all about the inventory.
Year to date we’ve technically added three lakefronts to the mix. But that’s just a technicality, as those three lakefronts were all available last year, and have only now come back to market after spending the holidays on pause. For all of the inventory concerns I had at the end of 2017, the first 42 days of 2018 brought eight new lakefronts to market, and several of those were indeed new offerings. 2019, you’re letting us down.
And what of the buyer activity this year? What’s the theme in our market at this very moment? Showings, by my eye, seem to be quite high given the difficult weather that we’ve experienced over the last several weeks. Contracts are relatively low, but that’s purely a function of limited inventory. Expect contracts to pick up in February and March as buyers either pounce on new inventory, or realize their options for 2019 are going to remain limited and turn to the existing inventory to scratch their summery itch.
For my part, I’m working on some new bits and pieces of inventory that you’ll know about soon. I’m also starting to work on the 10th issue of Summer Homes For City People, which will hopefully be available Memorial Day Weekend. If you’re in the mood to buy or sell Lake Geneva this year, I hope you’ll let me know.
It’s January. Time for snow storms that aren’t really actually snow storms, and lakefront price reductions. Inventory will build over the coming 30 days, and price reductions won’t be uncommon for existing inventory. That’s why I just reduced the price of 389 North Lakeshore Drive in Fontana $500,000. It’s $7.395MM now, and if you had been hemming and hawing over this place, it’s time to come take a look. The driveway is plowed.
There are few market segments that I find as curious as Geneva National. Under no other particular context does one association make up its own market segment, but here we are, knocking at these gates. The fact that this large association functions as its own market is something that vexes those who live and play there. Why can’t a buyer just be on the hunt for a Lake Geneva area condominium priced under $500k? Why must a buyer seek out Geneva National specifically if they wish to buy one of those condominiums? Why does a homebuyer who purchases a vinyl corn-field tudor for $500k neglect to first consider his options inside Geneva National? Does that buyer know that Geneva National is nicer, and objectively better?
For the year just ended there were 81 total MLS sales. Those sales ranged from small condominiums priced under $100k, to beautiful newer homes priced over $1MM (two sold over $1MM last year). As we sit just inside the parameters of 2019, there are only 36 available homes and condominiums (ten more properties are under contract), including two properties listed incorrectly in the MLS as single family homes (these are technically all condominiums). The fact that an agent listed two homes as single family might be a sloppy mistake, or it might just drive home the point I made in the opening paragraph. If you want to sell Geneva National’s single family homes, are you better off pretending they’re not inside Geneva National?
I think the answer is no. Or at least it should be no. Geneva National is back, and it really is better than ever. Sure, there are still homeowners residing inside these brick and cedar behemoths that were built prior to 2006, those with dated finishes that the owners don’t think are dated. Sure, there are still lots that can be bought for the price of a high mileage used Corolla. But the market has mended, and the volume from 2018 is a sure sign that things are back to stable. While I enjoy seeing lots of sub-$200k volume, the true measure of Geneva National is in how it deals with its expensive inventory. Continued high volume years would be nice, but that’s not necessary to continue the momentum that GN has successfully built over recent years.
Over the last six years, Geneva National has averaged 2 sales over $700k each year. 2017 printed just one sale at that level. 2018 closed four sales over $700k, and that might be as good of a sign as any for this embattled association. Sell the higher end inventory and you’ll give buyers confidence to move up in price. You’ll give vacant land buyers confidence that their new build makes some market sense. And you’ll give current owners confidence to update those awful 2003 bathrooms. Broad market activity is terrific, but the real positive out of Geneva National in 2018 was an increase in upper bracket liquidity.
To understand how far Geneva National has come, you need only look back to 2012. That year was likely the bottom of the last market cycle, and during that dark year Geneva National closed just 35 single family and condominium properties. For each of the last two years, GN has closed over 80 such properties. Current inventory is low, but there are several high dollar properties on the market today that will test the continued momentum of this large association. Will buyers at the high end appreciate the country club atmosphere, complete with new pools and tennis, to such a degree that they’ll provide liquidity over $1MM? Or will those higher value buyers continue to opt for the lakeside lifestyle that the Lake Geneva lakefront and lake access market provides? Only time will tell, but if I was a betting man, I wouldn’t bet against Geneva National in 2019.
When we entered 2018, we knew we had some inventory problems. This was widespread throughout the vacation home market, from entry level cottages to lakefront estates. What we also knew was that buyers rarely find the patience to stand back and wait for the perfect piece of inventory, instead they tend to wait for a bit, and then default to the next best thing. If you were looking for a lake access home with boat slip last year, you know how difficult the hunt was. The good news is that we can now test our theories: If there weren’t ample offerings with slips, then the market should have shifted towards condominiums as buyers looked for similar attributes and price points in a different ownership model.
The good thing for 2018 is that our model held up. Low inventory in the single family lake access market propelled sales of lakefront condominiums to a multi-year high. During 2018 we closed 15 total lakefront condominiums, up from 12 in 2017 and eight in 2016. If we look deeper into the trend, we know that buyers have shown an increased desire to be walking distance to downtown Lake Geneva. If they want a slip and want to be close to downtown and they have a typical condominium budget of less than $800k, then Vista Del Lago should have had a stellar year. Guess what? It did.
There were seven sales in Vista for 2018, priced from $355k to $580k. I personally sold two four bedroom units (the largest in the complex) for $520k and $515k, respectively. Those sales were off-market, as buyers looked for inventory that didn’t exist, and their smart agents contacted me to find out what might have been available privately (you should do the same). Vista has had some tumult over the past decade, but the best possible thing for any association that’s on the rebound is volume. Vista, congratulations on 2018.
Around the lake we had two sales at Geneva Towers, both lower priced sales sub-$400k. There were no sales at Somerset, Harbor Watch or East Bank, those three higher value condominiums on the eastern shore. Working around towards Williams Bay, Bay Colony closed two units at $565k and $530k, and there weren’t any sales at Bay Shore or Bay Colony South. Fontana Shores, that brick condo north of Gordy’s, closed two units. A two bedroom for $494k and a one bedroom for $405k. At the Fontana Club, over in Glenwood Springs, there were two sales, though the sales were of the same double unit. The combined unit (that I had sold previously) sold in early 2018 for $685k. Then the owners renovated it, and put it back for sale in the fall. It closed late in the year for $835k, likely representing a meaningful loss for the seller.
It’s fun when a market allows you to prove a theory, and in 2018, the mid-range vacation home market did just that. Some buyers, if faced with a lack of inventory in their target segment, will reach up. That’s common here. In fact, I can’t tell you how many buyers I’ve worked with started with a a target of $500k and ended up spending $900k. Lake Geneva can do that to a person. But what’s more likely, is for a buyer to look around at his desired price range, and in the absence of inventory, she’ll look away from single family homes and to the lakefront condominium. Prices have lagged in the lakefront condo market even as the single family homes have appreciated. That creates some value, and when you combine value with inventory, you have the makings of a terrific year.
The year just ended was, by most accounts, a good year. But that’s a silly way to describe something as diverse and unique as a year. That’s like booking a table at Alinea and after four hours and 20 courses you take to your social media account to describe the meal as “good”. That wouldn’t happen, and that’s just a meal. How much more deserving of proper critique and detail is an entire year of our lives? Now that I’ve built this thing up, let’s dumb it back down and talk about the lakefront market in 2018. The year? It was pretty good.
We started 2018 with light inventory, just ten lakefront homes were available at the onset of 2018, and that limited inventory forced me to worry about what the year was going to look like. I knew there were buyers, plenty. I knew we had pending sales to give us a nice start to the new year. And I knew the stock market looked stable on the heals of a Federal tax cut. But what I didn’t know was how much more inventory we’d add, and how firm the buyer’s resilience would be if we didn’t add enough inventory.
That’s what matters, after all. The buyers. See, a Lake Geneva lakefront buyer is generally only a Lake Geneva lakefront buyer. But that motivated dedication only lasts for so long. If you have a buyer and they can’t find what they’re looking for, they’ll wait, for a while. They’ll come up to look at a lame new listing, and then they’ll come up again to look at another lame new listing. They’ll stay engaged, because the lakefront life is the life they want to live. But after time, that passion erodes into frustration, and frustrated buyers have a tendency to wander. Why spend so much effort waiting for a perfect lakefront on Geneva when Michigan has a whole state full of average vacation homes?
I know, and you know, and that buyer used to know, that a Lake Geneva lakefront is not like any other lakefront. But desperate times call for desperate measures, and I worried that the desperation of 2018 would lead some buyers astray, and no doubt it did. But the year just ended with 23 lakefront sales (24 with the vacant lot included), including two in the South Shore Club and one in Buena Vista (technically not private frontage). That number is down from the 2017 total, but considering the limited inventory, that number is a terrific total.
In all, we printed 2536 feet of lakefront shoreline, up from the 2017 total, but less than the 2016 total of 2882. That includes one lakefront vacant lot on the North Shore. We sold just over two million square feet of lakefront land mass, and more than 115,000 square feet worth of living space. Prices ranged from $11,250,000 for a North Shore estate, to just over $1.1MM for a Walworth Avenue cottage. For my involvement, I ended 2018 as the number one individual agent in Walworth County yet again (per MLS), with more than $35,000,000 in closed transactions, so that’s nice.
The lakefront loves its price per foot (PPF) measurement, that is, the total value of lakefront sales divided by the total amount of lakefront feet sold, this we all know. You should also know that I don’t love this measurement, as it really only seems to apply to lakefront homes in the 100′ range. 200′ lakefront lots experience compression of the number, in the same way that lots under 100′ tend to overachieve. We ended 2016 with a PPF of $27,193. We ended 2017 at $27,578. And after the activity and bustle of 2018, we finished the year at $27,684. For the buyers who think this market has spiraled upward and out of control, consider those numbers. Does that seem like unsustainable, unwarranted price growth?
For 2018, we’re going to look a bit deeper at the numbers. We know our market was skewed by the $11,250,000 lakefront sale, that of 415 feet of frontage and almost 20 acres. We had an average number of entry level lakefront sales last year, closing four lakefronts under $1.7MM. The remainder of the lakefronts fell into somewhat familiar price categories. Let’s throw out our outliers at the high and low of the market, and pull our 2018 numbers from the remainder of the lakefront transactions.
With that in mind, our PPF figure for 2018 actually goes up, to $27,994. If you look at the purest way to measure the accuracy of that number, you needn’t look further than the 100′ vacant lot that sold on North Shore Drive last summer. That 100′ sold for $2,750,000. That’s easy justification of the average. But there’s more to the lakefront than a basic price per foot tally, there’s also the average price per square foot of the structures themselves, as well as the price per square foot of total land mass. For these two figures, we’re going to keep with our habit of throwing out the high and low 2018 outliers, as well as the South Shore Club sales and the Buena Vista sale, as these are not true lakefront sales (even though the market treats them as though they are).
2017 registered an average housing price per square foot of $560. 2018 pushed that average up to $625. For the overall land mass statistic, we had a 2017 average of $58.09, whereas 2018 just printed a $51.66 average. Does that mean the value of lakefront land actually decreased in 2018? Of course not. None of these metrics individually tell the story, which is why to judge the performance of our lakefront market you need to figure and consider all of them.
Today, there are just nine lakefront homes for sale on Geneva. If you remove the Fontana home that has shared frontage and a shared pier, and you remove the Trinke property that has a lagoon between the home and the lake, then you’re stuck with just seven true lakefront homes on the market. Of those, the least expensive is listed over three million dollars. Not cool if you’re a buyer. But if you’re a buyer, I have some good news for you in 2019.
The recent tumult of the stock market is a difficult situation for the lakefront market. Rising interest rates don’t bother us very much, but a decline in invested assets does. With this in mind, our stable of confident lakefront owners will find a few who dislike what they see, and those few might offer up some inventory that will appeal to the 2019 buyers. To be certain, there are plenty of buyers still. The low inventory of 2018 didn’t scare away everyone, though I’m sure there’s some guy sitting at his Michigan vacation home this morning what it is that he’s done. Pray for this man, and his family.
I’m anticipating inventory will increase in January, and you’ll see reduced prices in a few of the 2018 carry-overs. Most sellers don’t care if the market slows, but again, if you’re a buyer, you’re not concerned about most sellers. You’re concerned only about the position of the seller who owns the home you’d like to buy. 2019 is going to provide inventory, and for the buyers who have been waiting, the question will be how the seller prices line up with buyer expectations.
I think buyers will be a bit more shrewd in this new year than they were last year, but I have a bold prediction to make: 2019 is going to be just fine. We’re going to sell lakefront homes. The market is going to provide inventory. We’re going to end 2019 somewhat flat in terms of valuations and volume, but flat is just fine with me. Flat, in fact, is good.
The stock market is going to either go up or go down, but one thing will remain. People want something more. They want a place that means something to them, and to their families. They want to enjoy their wealth. We can’t buy more time, and while I’m also sad that my Apple stock has cratered, that isn’t going to keep me from wanting to enjoy my family and enjoy this place. And I’m betting I’m not alone, because what you see below isn’t something you can replicate in the city or the suburbs.
In real estate, you either win sometimes or you lose sometimes. There is no such thing as winning or losing. You’re winning, a bit. Losing, a bit. Both, often, at the same time. That’s because you don’t have one boss, or two, you have dozens. Or more. They come and they go, they’re not your boss forever, usually. This is why I can be both hero and villain on the same day. In successive phone calls. Winning and losing, in the same breath. The goal of the real estate agent is to win a couple more times than you lose. To chalk up a few on the good side, to offset all of the ones on the bad. In 2018, I won quite a few, and it’ll mark my ninth straight year of winning more than I’ve lost. But don’t be confused, I’ve definitely lost.
In my case, those losses look like the homes that I haven’t been able to sell-yet. They’re the inventory pieces that didn’t quite work out- yet. They’re the sellers who have likely grown tired of me, but not quite completely tired of me- yet. With that in mind, here’s a run down on the scant few pieces of personal inventory that I haven’t been able to sell-yet.
If you’re looking for a condo on the lake, there’s really no better idea than this Bay Colony unit. It’s on the ground floor, which matters, a lot. You have a private outside entrance, so you don’t need to schlep your groceries through a common entrance and down a common hallway that may or may not smell like re-heated brats and mustard. The unit is fabulous. Obviously, tremendously, unavoidably fabulous. It’s easy to own, easy to use, and as luxurious as any hotel suite, assuming you’re staying at the suite with two bedrooms, two baths, a boat slip, lake views. Reduced to $799k, far below replacement cost.
If you’re searching for a lake house, but need a bit more flexibility than the condo can offer, then this property in Glenwood Springs is for you. This isn’t just some cottage by the lake. It’s the nicest cottage by the lake you’ve ever seen. Fully and outstandingly dialed, this Fontana retreat is finished to the highest standard. Four bedrooms, four baths, private pier (with shore station), lake views, and appointments that you just can’t find in this market in this price range. $1.295MM and your weekends will never, ever, be the same.
You won’t be surprised to learn that horses aren’t really my thing. And equestrian properties West of Walworth aren’t usually my thing, either. But this property was too interesting for me to turn down. 250+ acres. Woods, prairie, pasture, crops, river and hills. Swimming pool, tennis court, two guest houses. Stables and indoor riding arena, offices and more. This is a world class equestrian facility, yes, but you needn’t be a horse lover to find interest in this property. It’s a sportsman’s paradise, and it offers a rare assortment of features that you’d be hard pressed to find anywhere else in this market. $2.499MM
My newest listing, 389 North Lakeshore Drive in Fontana, hasn’t sold yet, either. But it will sell. Why is that? Well, because it sits on a most lovely piece of lakefront right in the heart of Fontana, and the house itself is one that you’d be hard pressed to replicate for the sales price. The lake loves new construction. It craves new construction. And it also features a host of owners who have spent fortunes in the hunt of that new construction. Why would you entertain the aggravation and time-drain of a new build when you can buy this nearly-new home and move right in? That’s right, you wouldn’t. $7.895MM
Speaking of new construction, my magnificent estate on Basswood is still, as of this moment, unsold. That’s a shame, really. We’ve done the hard work of reducing this price to the point where it now makes sense for an upper bracket buyer. 214′ of level Basswood frontage. Swimming pool, guest house, immaculate grounds. This home was built in the early 1990s and could be used immediately by a new family, much in the way that the current family has used, and loved, this unique property. Or you could buy it and renovate and when the last window treatment has been hung you could be all in for far less than it would have cost to build new, and in far less time. $8.495MM.
Bluff Lane is a nice little dead end street on the south shore of the lake. In spite of its small nature, this street has been a near constant source of inventory for our market over the last several years. My listing at N1939 Bluff has been for sale since the middle of 2017, first with another broker and then with me. It was a nice house, offering the sorts of things that most similarly priced houses in the 2018 market just can’t offer. In that, the house was complete. Five bedrooms, three finished levels, 70+ feet of frontage, a huge pier, perfectly landscaped grounds and a two car garage. I closed this listing last Friday for $1,950,000, but like all sales, there’s a bit of a lesson here.
When the property was first introduced to the market in the spring of 2017, the price was $2,295,000. That seemed a fair target for a house that offers so much by way of living space and amenities. The market was interested, but after several months the property failed to sell. There was at least one offer during that listing, maybe more. Then, I took over for the prior broker and put my angle on the listing. Another offer, but no dice. The price was adjusted downward in small increments. Then, this fall, another offer. A contract. But that deal failed to close. Finally, a new offer from a new buyer who saw the value in this property, but only at a price that made sense to him.
After 16 months of marketing effort, the property sold for $1.95MM. That’s no unique surprise, since several of the other offers that were received settled in a similar range. Try as we did, we weren’t able to get that sales price to $2MM. That was the goal, after all, to make or beat that benchmark. In spite of this goal, the property just wasn’t able to push a sales price to that $2MM level. Was it the house? Was it the interest rates? Was it the stock market? Was it the street?
Nope. It wasn’t any of those things. It was simply the reality of a property seeking to sell for $2.195MM. To understand why this property struggled, you must understand the typical buyer and the different price levels that separate groups of buyers. There are buyers that will pay $1.9MM for a house. Lots of those sorts of buyers, actually, each one successful enough in their regular life to pursue this vacation life. But a $1.9MM buyer is often a buyer who would love to spend $1.7MM or less. A $1.9MM buyer is often a $1.5MM buyer who found a bit more motivation to take on a bit more risk.
On the north side of $2MM, there are very few $2.1MM buyers. There are upper $2s buyers, those who might feel comfortable at $2.4MM but would reach to $2.9MM for the right house at the right time in the right location. But there are very rarely buyers who place a hard cap on their search at $2.1MM. In understanding the demographics and the price categories that most buyers align within, we can make more sense of the Bluff Lane sale.
Was it worth $2.2MM? Sure it was. But a $2.2MM buyer is often a $2.5MM buyer, and if they spend a little more they often find a property that more closely resembles their weekend dream. When the dust settled and the property closed, it closed as it likely should have. For $1.95MM, to a buyer who found his way to the lakefront at a price that made market sense for both buyer and seller. To the seller who allowed me to represent this fine lakefront home, I’m grateful.
The lake access market at Lake Geneva is not difficult to understand. In order to find this understanding, one simply needs to be open to the facts. In the instance of real estate, the facts are limited to sold comps. This is the only fact that exists in this business. Current value? Opinion. Future value? Opinion. Sold listings? Fact. If you’re open to the facts, then you must embrace the sold comps. If we’re looking at lake access markets, then the first comps to look at are inside of the association itself. If the immediate association cannot provide us those comps, then we’ll have to look at the broad market. In that there is an issue, because comparing associations? Opinion.
Last week, there were two lake access sales that caught my attention. One was important because I represented the buyer. The other was important because it just so happened to close for the same price, on the same side of the lake, during the same week. If there were ever two comps to be examined, these are those. The sale that I closed was in Shore Haven, this of a home that I have sold in the past. In fact, I sold it just last year for $675k when that seller was in the process of upgrading to lakefront. The home is nice, with some meaningful upgrades, a very desirable, large transferable boat slip, and terrific proximity to the water. This time around, I brought in the buyer, and the home was listed on a Friday and by Sunday we had it under contract. Did I enjoy negotiating only $5k off of a $720k list? No I did not. But the market, man. The market.
The other sale was in The Highlands, or the Lake Geneva Highlands, that association just to the East of Black Point. The Highlands has been gentrifying quickly over the past decade, and more so over the past few years. It’s a nice enough association and one of the few remaining on the lakefront where a lakefront home can reasonably be expected to trade under $1.5MM. The home in the Highlands was a cottage style home with limited parking, a scattered tree lake view, and a transferable boat slip. It was updated, quite cute, and in that desirable location just one home from the lake. In this description, you can tell that the Highlands home was closer to the lake than the Shore Haven home, and the view was much better. The homes were both of average size, though Shore Haven had a garage and parking while the Highlands home was more challenged on this front.
That’s the background, and here is how the market works in each association. In the Highlands, there have been five MLS sales per MLS of off-water, non-lakefront homes that have closed over $470k and under $587,500. Per the MLS, the highest sale for a home not located on the lake or on the lakefront parkway, was $587,500. The fact that five homes have all sold in this tight window proves the primary market range for a Highlands home located off-water. The home that just sold closed for $715k, and now that it’s sold we can all agree that it was worth exactly what someone paid for it. But in the context of the market, that sale price set a new upper end in the Highlands.
Looking back to Shore Haven, we see in the MLS has printed 10 off-water sales priced over $500k. Of those, all but one was over $624k, with the most expensive sale being at $1MM, and five over $800k. The sale that I just closed for $715k, looks to fit right into the middle of the Shore Haven range, especially when considering proximity to the lake and size/location of the boat slip. Was I deeply in love with $715k for this Shore Haven home? Not really. But did it make a load of market sense, particularly during this period of tight inventory and high buyer demand? You bet it did.
Both sales were fine for our market, but now you have a slightly opened window into the way that I view these lake access associations. Every association is unique, every association is nuanced. Some are capable of printing high numbers that make little sense, and others are range bound, now and perhaps forever. These two sales showcase the fall 2018 lake access market, and I think they both prove something important. Our market loves boat slips. It loves proximity. It loves a view. And sometimes it looks at historical sales patterns and determines they don’t matter very much. To the buyer who just allowed me to represent his family in their Shore Haven purchase, a sincere thank you.
Over the past few years, there have been some Bonnie Brae sales. Priced between $1.6MM and $3.8MM, these sales have all made market sense. The street is nice, the North Shore location desirable, the approach along idyllic Snake Road hard to beat. Of these sales, three in total, each property that sold has since been transformed by the new owner. One of the homes that sold was torn down to make way for a splendid new lakefront retreat. Another was significantly renovated and expanded, so much so that you’d be forgiven if you thought the current structure was built recently from scratch. The other home that sold has been improved, updated, cleaned and polished. Lakefront owners like to improve their homes, this much we know.
This week I closed my newest lakefront sale on Bonnie Brae, for $3,800,000. This one of wide frontage and delicious, dark, deciduous depth. The home was the renovated and remade Ryerson boathouse, one of the last few remaining on this lake, and likely the only one that stands on a large estate sized parcel of land. You can read about it here, and watch the video below. It was a great house, and it was no wonder that it sold shortly after coming to market in late September. Certain sales befuddle and certain sales confirm what it is that we already understand. This sale was obvious. Beautiful dirt with a charming, historical home, all at the end of Bonnie Brae, which finds its way along Snake Road. What’s not to like?
For me, I remain appreciative and grateful to those clients and customers who choose me to represent their fine vacation homes. This market is loaded with competition. Every agent is the best, the newest, the most amazing. I’m just here in Williams Bay, sitting at this desk that’s really just a few long oak boards bound together by glue and screws. I’m thankful for the chance to assist all of my clients, and this seller was no exception. To the seller, a sincere and lasting thank you. To the buyer, who now gets to experience this place from the front row, congratulations.
There’s a thing about my dad that you wouldn’t otherwise know. He’s a quitter. Sure, he’s been married for a long time to my mother, and yes, he taught school in the same building for several decades, but don’t let that deceive you into thinking there’s some steadfastness here. He quits. He starts something and then when it’s started he’s worried about the ending. He leaves for vacation thinking about the drive home. He naps on a Tuesday because he’s worried about having to stay up until 8:30 pm four days later. He starts things and then he stops them. He’s worried, alright.
But none of these worries, and none of this quitting are quite as pronounced in July as they are in October. He will enjoy certain things, for certain periods of time. He’ll enjoy a swim now and then, though this is less than it once was and less than it should be. He’ll enjoy a boat ride, every great once in a while, which is also less than it once was and less than it should be. But mostly, he’ll enjoy July just fine. It’s Labor Day when things change, or the week before that holiday weekend starts. September, the month we know to be one the finest months ever included in a calendar, this is not a month for him. Anticipation builds to a crushing weight, and while the rest of us are frolicking in the midst of a late summer glow, my dad is worried.
September fades to October, and the colors dim before they force out one last dying display. We like it when this happens. But my dad doesn’t. This display is a head fake, and he knows it. He’s in this for the long haul, and he’s been here before. It’ll be winter soon. He can smell it in the air and feel it on his old skin. October is nothing but warm, colorful winter. While others think of a trip to the lake or a trip to the cabin, he thinks only of that pier and those boats and why hasn’t the pier guy come yet? It’s October 10th, it’s 70 degrees, and winter is coming soon. There’s nothing else to worry about. Nothing else to think about. Winter. Soon. Repeat. Gaze at the fall colors all you want, youngsters.
When October ends, things get serious. Real serious. The boats the pier, the buoys and the ramp. The things that he worried about in July and thought about in August, and stressed over in September and nearly died over in October, some of them are still there. Still in view. Still in the water. That water that somehow hasn’t turned to ice yet. But it will, soon. Water always turns to ice here, and he knows it. He can sense it. You know what happens when you don’t get your pier out in time? The ice comes and takes your pier away to the depths. He saw it happen once. Never again. Not on his watch. Winter is coming and he needs to get ready.
But he can control the boats, and so they’re already out. Tucked away in their barns where they spend most of their days. The pier, that’s still there. Still bothering his view and interrupting his winter thoughts with a stubborn summery holdover. But the one thing that really drives him to insanity is my little jetski. Yamaha’s Superjet, to be precise. It’s his white whale. The thorn in his side. His nemesis. And I know this. Which is why I leave it in the water as long as humanly possible. Long after he thinks it should have been out. Long after everyone else thinks it should have been out. Long after the water has chilled to a level that humans should never experience against their skin. That’s why I wait, and that’s why this week I was left with no choice. I pulled the superjet.
I don’t pull it like you pull yours. I don’t call the company and have then deliver it to a heated storage unit. I wait until it’s November and my dad has nearly lost what’s left of his mind, and then I put on my swim shorts and I strap on the life vest and I coax that cold little engine to life. Then I drive it, near the piers and close to shore, inside the summertime buoys that have no control over my November path. And to the launch. The ride is cold. The ride is wet. To fall is to die, because this isn’t some sit down waverunner with seating for four. This is a water jet, built for those of us who were kids in the 1980s. My feet lost feeling, allowing me to only notice the cuts left by the mussels and the rocks once I returned to the heated indoors. The ride is difficult, but I wouldn’t have it any other way. It’s the last piece of summer, and I hang onto it as long as anyone ever has. Sure, it’s only to bother my dad, but it’s worth it.
After some good old fashioned pot stirring on Monday, it’s time to get back to the business at hand. Specifically, the business of the lakefront market. A few weeks ago I listed a home on Cedar Point, right up next to the tippy top. Like all listings, the work to secure and bring that property to market had been done over the prior six or more months. Now, at this date in late September or early October, the work would show its result. A new listing, $2,595,000 on the outward facing corner of Cedar Point. Photos were scheduled for this property, but the weather was dark and dour and I am not one to impose a false blue sky above one of my listings. Nor am I the sort that would paint our Midwestern water with a Caribbean brush. Because of the weather and my photographer’s schedule, the listing would be held back for a couple of days. Just a couple.
When you’re dealing with lakefront homes, a couple days is often the difference between an available home and a sold home. In the case of 254 Circle Parkway, I ended up selling the home on the very day I brought it to market. A showing, an offer, a contract. A closing at full price less than a month later. That’s how this business works every once in a while, and in the case of this Cedar Point home, the right buyer was made aware of the property and that buyer didn’t hesitate. Many buyers view this market as one homogenous mass. A home over here is the same as a home over there. A view to the South is just like a view to the North. These buyers have it easy, because geographic preference is meaningless. If you can choose to be a sort of buyer, choose to be this sort of buyer.
But for others, location is everything. It’s the neighborhood they grew up in. It’s the neighborhood they admired, always from afar. It’s the street where grandpa had his cottage, the basic one without fancy that meant everything to that family so many years ago. When you’re a buyer in this market and you are face to face with a buyer who has geographic bias, you should admit your defeat and move towards the next listing. The one that might be here or it might be over there, but it doesn’t matter to you, remember?
With my recent lakefront sale, I’m happy for the seller whom I represented and the buyer I assisted in accomplishing what I believe was a lifelong goal. In the end, a Cedar Point home with five bedrooms and a dynamite boathouse sold to a family with Cedar Point ambitions. In the world of real estate, where much of it is cutthroat, this was a sale that should have happened, and I’m appreciative to the buyer and seller for letting me connect the dots.
When you’re part of an industry that puts significant focus on calendar year performance, you tend to look up in late October and realize you’ve run out of time. In the same way, I have a theory that I gladly share with dinner guests and random acquaintances, but this theory has to do with life and not real estate. The two, no matter what your agent says, are not the same. My theory supposes that when a man, or a woman, is in their late 30s, they are no longer about to be something. They are no longer going to do something. They are no longer on their way to some different goal. In your late 30s, when you look in the mirror, you likely are what you are. Some people find this depressing. I find it oddly comforting. When the 2018 real estate market looked itself in the mirror this morning it wasn’t about to be something different. At this late date, 2018 is what it’s going to be.
But what has 2018 been, exactly? When the year began, I was worried. Worried about the stability of the stock market, worried about inventory, and slightly worried about interest rates. If the first two caused were gaping knife wounds of worry, the last one was a paper cut, and not one of those finger tip ones, either. If sellers wouldn’t sell into this market, then buyers would slowly lose patience, and they’d either jump ship and run with their tail between their legs to Michigan or some other terrible place, or they’d just hunker down in whatever it was that they already owned and wait for the inventory to arrive. At this point in 2018, the inventory did arrive, but it didn’t exactly satisfy the masses of buyers.
Still, inventory presented and then inventory sold. Some aged inventory sold as well, and it this late date in 2018 we’ve closed 20 lakefront homes with three more under contract as of this morning. The only three lakefront homes under contract (per MLS) are all my listings, which is nice. For context on that lakefront performance, consider YTD 2017 we had closed 24 lakefront homes. Does that mean the market has slipped? Of course not. It just means 2017 offered more inventory to choose from. The better context is to look back to 2012, the year that marked the low point in our recent cycle. YTD 2012 we had closed just 16 lakefront homes, and that had little to do with inventory and everything to do with worry.
The broad vacation home market, those homes with lake access with typical pricing between $200k and $1.7MM, has had itself a solid year as well. Inventory deficiencies plague this segment as well, but in spite of that concern we’ve managed to close 58 lake access homes in 2018. An additional 12 are under contract as of this morning per MLS. The condo market is fairly similarly well, with 31 YTD sales of condominiums possessing lake access to Geneva. This is a vague measurement, as it includes some bits of inventory that I wouldn’t normally consider when adding up these totals (like dockominiums, etc), but it matters if we’re just assessing the overall volume performance of the segment. YTD 2017 printed 34 sales, and YTD 2012 had closed 30. Keep in mind, this is including Abbey Springs and others, so it isn’t a pure measure of the lakefront condo market performance.
Speaking of that lakefront condo market, it’s moving quite nicely at the moment. There are two lakefront condominiums under contract as of this morning, leaving just 8 true lakefront condo units on market. As we steam towards the end of 2018, expect to see some sellers following the move of my Bay Colony seller, as price reductions hope to tempt buyers towards a few pieces of overlooked inventory. My Bay Colony listing, by the way, is now $799k, with a slip and likely the most high end interior space of any condominium on Geneva lake, excepting Stone Manor, of course.
Expect inventory to remain low through the end of the year, but don’t be surprised to see some new bits and pieces come to market over the next 30 days. Price reductions should increase over the coming two or three weeks, and the market will wind down by printing much of the remaining pending sales. 2018 has been a good year, and looks to leave us staring at 2019 with an eye on the stock market, and the hope for new inventory.
Above, my Bay Colony offering. $799k for so much lakeside luxury.
After a market downturn occurs, we must set our aim towards the goal of complete and thorough recovery. If that goal is to return a specific market segment to full health, then there are several steps that must be followed. There is no shortcut to this health, and you cannot out-volume a market issue any more effectively than I can out-lift my horrible, no good diet. If the market was bad and we wish the market to be good, then the steps must be followed.
The first step is to weed out any weak hands. Financially troubled owners have a tendency to drag on a market, negating any market gains with the constant, worrisome threat of foreclosure. If volume is printing but prices are still falling, this is generally acceptable, and will, over some period of time, work out in favor of the ownership. But if there are pieces of weak ownership that have the ongoing possibility of some form of distressed sale, this creates market drag that volume alone cannot overcome. This scenario occurred in the South Shore Club in the early years of this current decade, and the only way the SSC moved forward was by eliminating those trouble spots, which unfortunately only occurs after an owner has lost their home to the bank.
With the weak spots identified and fixed, then we need volume. Plenty of volume. We need sales in all price sectors within that segment. Some prices will be low, and we cannot be too concerned about this. If an average price in the segment is $500k, and over a particular duration there are two sales around $400k for every sale around $500k, that’s not a big deal. It’ll feel awful, but remember, the goal is not immediate health but rather a path towards it. It’s painful to watch low sales print when you know they’re creating an issue for those who wish for higher sales, but I never said this path was going to be fun.
With the weak owners flushed and the volume on the rise, the third step is bright spots of higher valuations. A sale here and there over the expected average of the segment. If we’re in this $500k range, then we’ll need to see some sales print higher- $525k, $550k. There will still be lower sales, sure, but the momentum is achieved by raising the expected ceiling. Higher sales beget higher sales, and all it takes is one or two of these sales to move a market higher.
Step four is the strengthening of volume. We need more sales. More and more sales. New listings, shorter Days On Market. Movement, that’s what we need now. Liquidity is important to both establish the market pattern and introduce new, energized ownership to a segment. The reason new owners matter is because they tend to make improvements. Remodel the kitchen, update the bathrooms. New appliances, new tile, new paint. This shows a potential buyer that they’re surrounded by neighbors who value what it is that they own. Increased volume is vital to return a market to health.
The last step is a tightening of inventory. True price gains cannot be realized if there is ample, sufficient inventory. We need limited inventory, tight conditions. We need buyers asking about product in that particular segment, be it a specific association, condominium, or price range. Without this last, crucial step, a market cannot return to full health. If you doubt these steps, consider each and every step has occurred in sequence within the South Shore Club over the past eight years. The good news for the local condominium market is that Vista Del Lago appears to be following the same, successful path.
Last week, I closed on another four bedroom unit at Vista Del Lago. I sold one in May for $520k, and I sold this recent one for $515k. Both sales represent meaningful volume for this association, and both sales prove that Vista is on the path towards full health. If you’re a condo buyer on Geneva, you generally have options with two bedrooms. Some association have three bedroom units, and some have four bedrooms. But the four bedroom condominiums tend to be pricey, located in higher-end associations like East Bank. Vista offers four bedroom units for $520k, and as long as families want a view of the lake, a slip, and a place to sleep, Vista will have a market. Speaking of the market, there are only three available units at Vista this morning, and none of those are four bedroom units. Vista isn’t yet finished with this plan, but as you can see, it’s well on its way.
I’m not sure if there’s a more interesting segment in our market than the entry level lake access market. While other segments exist because particular homes move in and out of that defined value range, the entry level market is truly the only range for which their is no defined price structure. When times are good, entry level might mean $1.5-2MM. When times were bad, we learned that entry level meant $800k-$1.2MM. If we look over any particular decade in our past, there’s nothing consistent about the pricing of this segment. In that, it’s a curious segment, but beyond that, it’s also our most important lakefront segment.
Yes, yes, we know liquidity at the top end is the most unique attribute of our market. We know our liquidity makes every other vacation market in the Midwest look like a low quality timeshare rental. But still, in spite of that robust upper bracket strength, the entry level market is the market that matters to more people. The goal of vacation home buyers, if the budget affords, is to find lakefront. Knowing that the entry level market is directly connected to the upper-end off water market, we know that if the entry level market struggles then the off-water market struggles. If the off-water market is strong, then that must mean that not only is the entry level market strong, but it’s light on inventory. These two markets are connected, and 2018 has proved that once again.
This isn’t about the off-water market, even though it is remarkably strong and liquid as a direct result of the low inventory and sales patterns of that entry level lakefront market. This is about the entry level market itself, and what 2018 has done to it, and for it. This year, there have been four lakefront homes sold between $1.1MM and $1.25MM. All four of those properties had around 50′ of frontage, and three of the four were on Walworth Avenue in Williams Bay. If you’re familiar, Walworth Avenue is the road to the North of Pier 290. The other sale was in the Elgin Club.
The fact that there have been four sales in this segment isn’t surprising. It is somewhat surprising that the prices, in spite of the spectacular market activity of 2018, have been somewhat stagnant in that tight, low buck range. While the homes that sold were certainly habitable, it wouldn’t be a stretch to suggest that they are all in need of some additional attention. Whether that comes in the from of wide-scale renovations or surface improvements, that is up to the new owners. Will any of these four be scraped to make way for a new home? No one, except the owners, can answer that question.
Walworth Avenue hasn’t shown any real strength over the mid-million dollar market. There’s a giant newer home on that road, one that represents a significant investment, but is that an individual pursuing what is best for that individual, or is that a market market-minded play? Will Walworth Avenue soon be home to more tear downs, to more new construction? And if so, will that new construction find favor in the market? I honestly don’t know the answer to my own questions. I’m inclined to suggest that new construction in that location wouldn’t be a wise play. But I know the tight inventory markets on the lakefront between $1.8MM and $2.5MM, so it wouldn’t be crazy to suggest an owner could pursue new construction here, even though the neighborhood hasn’t shown the ability to support it.
There have been a few other happenings in the entry level market this year, notably a pending foreclosure in the Lake Geneva Highlands and a private lakefront sale on Outing Drive. You’ll remember the Outing house, as I had it for sale earlier this year, and another agent had it for sale for a spell as well. The home sold in what appears to be a private sale for a price (as shown in the transfer rolls) of $1,525,000. That’s a reasonable price for that house. The Highlands lakefront is one that was on market last year and under contract (per MLS), but failed to close. That home is likely valued in the mid $1s, and I’ll be curious to discover if it comes back to market as REO, or if someone takes a stab at it through the sheriff’s sale.
Today, the entry level market is once again void of inventory. The lowest priced home with frontage is over in Trinke’s, a property with the lagoon in front of it, priced at $1.85MM. The next available lakefront is to the East of there, priced just over $2.2MM. This is a tight market, and a difficult one for would-be lakefront buyers. What’s interesting here is that the lack of inventory and consistent sales really hasn’t translated into valuation gains in this segment. I’d expect that’ll change if the market stays tight for too much longer. Maybe it won’t change at all until someone breaks the pattern on these entry level streets and builds something new. Something that seems out of place, something that doesn’t make sense. Or at least it’ll feel that way until everyone else does it, too.
One of the many benefits of this strong vacation home market is that I get to test my theories on a daily basis. These theories were first penned when the market was in rough shape, which was just a few years ago in reality but so much farther away in the minds of 2018 buyers. The theory relating to the off-water lake access market over $1MM was simple. If lakefront homes were plentiful in the $1-2MM range, then off-water homes in same range would suffer. Why buy off water when the same price put you in the front row? In the same way, if $1-2MM lakefront homes were scarce, then off-water homes in the range would attract buyers. Lake Geneva real estate can be quite simple.
Simple as it may be, the theory was difficult for many off-water sellers to understand. During those dark years, most off-water homes that sought to capture a $1-1.5MM sales price ultimately languished on the market and fell victim to the price erosion that is a hallmark of lengthy market exposure. Most of those homes ended up selling, but rather than finding buyers in that $1MM+ range, most of these homes sold between $900k and $1MM. Buyers rejoiced, sellers wept.
Over time the entry level lakefront inventory dried up, leaving available only true cottages on small lots in modest settings. As that inventory shrunk, buyers turned their attention to the off-water homes that meant something. A slip, a view, a pool, some privacy. Maybe a combination of all of those. In the fall of 2016, I printed the sale in Loramoor for $1.625MM. Then another sale in Glenwood Springs for $1.1MM. Then, in 2017, a super high priced print with no slip in Oakwood Estates north of $1.2MM. In 2017, another in Maytag Estates in the same range. Then a sale in Fontana north of $1.3MM. The market was moving, and buyers were once again looking for off-water properties simply because the on-water options were so scarce.
Last month, a new offering in this range. This one on Southland, or Black Point, as the tax records would show. $1.699MM for a few acres of wooded bliss, some terrain, a pool and a slip, a large home with pedigree, outbuildings and more. This was a property that the market rarely offers, mostly because it has no true rival. There are locations where off water homes will sell upwards and north of $2MM, but those associations are rare and historically light on inventory. The Lindens, Black Point, The 700 Club, Loramoor, Glen Fern. These are the rare associations, made that way by decades of low inventory and highly polished homes. These are the associations that matter to this segment, and this particular home was among the most rare inside even unique settings.
That’s why a buyer whom I was pleased to represent jumped. We closed on the house last week for full price, which is nothing to be ashamed of. In this context, full price was required, and full price was still less than the seller had paid for the home in the fall of 2011 when the market was in awful condition. To further prove the strength of this off-water market, consider the home that would come to market just a few weeks ago in the 700 Club. That home hit the MLS at $1.495MM and promptly received multiple offers before finally settling at a contracted price that is rumored to be far over the ask. The market doesn’t always love off-water homes over $1.5MM, but if you give the market something unique in a highly desirable setting, the buyers will find it.
To this buyer who let me guide them through this curious segment of our vacation home market, I thank you. There’s an opportunity at this property to transform it into something without equal in our market, and I’m hopeful that the end reality matches your unique and exciting vision.
In the morning I wake up, clean up, dress up (down), drink the espresso that my wife kindly makes me, take my kids to school, and go to my office. I do this five days a week. On the other two days, I skip the part where I drop the kids off at school. When I get to the office, I turn on the lights, sit down at this desk, and check the MLS. I check the new listings and the sold listings, the reduced listings, too. I think about what to write about. I think about the weather and the scenery, the lake and the sky. I think about the trees and the tinge of whatever color might be deepening or fading. I think about the lakefront market, the lake access market, the vacation home segments in their pieces and as a whole. And then, when I sit back and consider everything I just say, “man, people are paying lots of money for really basic subdivision houses.”
Most days, I ignore those primary market thoughts, and write instead about lakefronts and the sort of real estate that interests me and my clients. But today, the primary market interests me, because this trend is established and it’s serious and I can no longer ignore it. The primary market is hot, all segments, all prices, so long as we’re talking about less than $400k. Some of the primary neighborhoods are selling for more than $400k, but not with particular regularity. Those primary home subdivisions that I wrote about with fervor a few years ago have come to life, and buyers appear to be content to purchase their own version of vinyl perfection.
When I wrote about the state of the primary market, the subdivisions were mostly idle. Some construction, but not much. In the three years that have followed, the construction market has boomed. New homes are being built with frightening speed, slapped up in a matter of a couple months. Efficiency, claims the builder. Haste and synthetic materials, counters this Realtor. But still, the market is hot and I’m curious to see what, if anything, today’s buyers have learned from the past market cycle. That cycle, in case you forgot, was especially hard on neighborhoods for the simple reason that platted neighborhoods tend to function as their own specific market. If there are four comps on the road you happen to live on and all of the homes were built to a similar standard at a similar time, you can bet your value will be seriously impacted by the sales of those nearby homes.
To check on the market, let’s look at a few random, recent new home sales in the new home subdivisions on the west end of the village of Williams Bay. I won’t identify the owners or the addresses, but let’s look at sale price ranges and mortgages pulled to gauge the strength of this homebuyer. That strength is important simply because the market isn’t going to appreciate forever (too bad, OpenDoor), and once the market stalls, those with the smallest percentage of equity are the most likely to face difficulty. The first sale was well over $400k- a price threshold very rarely surpassed in the primary market. A check of the mortgage reveals the buyer only financed around 80% of the purchase. Good for them, and good for this subdivision.
Down the road, another sale. This one also over $400k, this one to a buyer who appear to have financed around 85% of the purchase. Another winning data point for this subdivision, as another strong buyer has entered the fold. The next sale was a bit under $400k, and that buyer looks to have put less than 4% down. Another sale in a different subdivision, this one in the lower $300k range, this one to a buyer who put around 5% down. Another sale, this one just over $300k, the new owner putting around 4% down. There are other examples, some with 20% down, others with less, but the concept here is simple. If you’re buying into a hot subdivision, paying hot subdivision 2018 prices, and your neighbors are, perhaps 40-50% of the time buying their homes with less than 5% down, is this is a solid model for sustainable values if we head into a down cycle within the next 4-6 years?
Personally, I don’t think it is. That’s why I wish primary home buyers would exercise caution as they rush to these newly drywalled homes. I understand the desire to be in a new home, but I’d rather be in an older home in an existing neighborhood than be surrounded by a constant cloud of low-money-down-construction-dust. An interesting side-note from my market studies of 2015 and 2016 is the desirability of subdivisions that are close to schools. If kids can walk/bike, or otherwise easily get to a school, the subdivision tends to be fairly hot. If the subdivision is outside of town, without a nearby city center or grade school, the subdivision is still somewhat stagnant. If you’re a primary buyer considering a new home priced $450k and under, please be cautious. I say that fully knowing caution doesn’t play a role in a hot market, no matter how badly I wish it would.
It’s a curious thing to watch buyers as they watch the market, and the houses that exist inside of that market. Buyers are attracted to various things, to shiny, for sure. They like marble and they like glitz, and even the most staunch defenders of Location First cannot help but be dazzled and drawn by the varying shapes and sizes of housing perfection that exist here. But beyond those things, there are locations that speak to buyers in different ways. One buyer might find a location to be busy, dense. One buyer sees that scene and they decry their lost privacy, their potential involvement with their neighbors, their exposure. And yet another buyer comes to that same scene and feels at home. They feel at peace with those same surroundings. They thrive off of the activity, the proximity, the scene. To each his own is just a saying, until you come to these shores, at which point it becomes a most steadfast rule.
This week I closed 274 Sylvan in Buena Vista for $2,775,000. The house was special not just because it shared that glamor of sparkly hardwood and expensive appliances. It was a vintage home made to live like a modern one, but still filled with the original touches that made it feel rooted on that shore. Buena Vista isn’t an association for everyone, but that’s only because there wouldn’t be enough houses to go around. There are tennis courts, an ample lakefront park and pier system, and then these scant few lakefront houses. A dozen, perhaps. These few lakefronts on this Northwest shore of Fontana Bay offer a classic lake experience combined with dynamite views of the lake and an easy stroll to Fontana’s lakefront scene.
To speak to the unique nature of this now sold offering, consider the last MLS sale to come to market here was this same house, when I sold it in the spring of 2011. Who can know when the next Buena Vista lakefront will come to market? Like every lakefront sale on this lake, once a property is under contract or sold there are numerous buyers who wish they had bought it, and this home had its fair share of regret filled buyers. That’s because it wasn’t just an old cottage on the lake. It was an old cottage with a recent addition and important updates, but it still oozed that vintage appeal. That appeal isn’t easy to find on this lake, especially if you’d like to find it in Buena Vista. To the owners who allowed me to represent them in this sale, I thank you. To the new buyer who gets to enjoy their weekends in an entirely different frame of mind, congratulations.
There’s a simple thought relating to markets like ours that supposes a specific pricing segment should prove active in different market segments. The theory would say that if $300-500k condos are selling, then those condos should be selling whether they’re on Geneva Lake, in Geneva National, or Abbey Springs. In the same way, if a $400k lake access home in Loch Vista Club is in demand, then a $400k lake access home in Cedar Point Park should also find an audience. The theory isn’t very difficult to understand, but markets don’t always behave in the most obvious ways.
Consider the lake access market on Geneva Lake right now. There are 34 active homes priced under $700k. Of those 34, no fewer than 12 are pending sale. That’s a very active market segment, with offers flying and summer contracts set to close next month. If that market is supremely busy with buyers seeking a reasonably priced vacation home experience, then the other specific vacation home segments in a similar price range should be similarly active, right?
Abbey Springs currently has 19 available condominiums and single family homes. Of those 19, the MLS shows not a single pending contract. Year To Date, Abbey Springs has closed 18 condos/homes, which isn’t awful, but it certainly pales to the 24 such sales for 2017 YTD. If there weren’t inventory, I’d understand the difference in activity, but there is inventory, even if it is a bit light.
In the same way, Geneva National has 57 available condominiums and homes priced under $700k. Of those 59, twelve are pending sale. That’s a decent amount of activity, especially for Geneva National, which has had its fair share of ups and downs over its lifespan. If the lake access market has approximately 35% of its under $700k inventory under contract, and Geneva National has 20% of its under $700k inventory under contract, then what’s eating Abbey Springs?
The answer, likely, is nothing. It’s just the unique nature of the Lake Geneva vacation home market. That’s why I write this blog as often as I do. Markets here hinge on such low overall volume that a good weekend can right any listing ship. If there were three or four new contracts written in Abbey Springs last week that have yet to show in the MLS, just like that we’d see Abbey Springs marching in lockstep with the remainder of the vacation home segment. If you’re trying to figure out the exact rhythm of sales at the lake, don’t.
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.