Blog : Market Updates

Geneva Lake Access 2016 Market Review

Geneva Lake Access 2016 Market Review

The most economical lakefront home to sell in 2016 was an odd little house in Knollwood. $1,075,000 was the required minimum price for 50′ of frontage on Geneva Lake. Farther up the road in Knollwood, the most economical lake access home of 2016 sold for $69,000. Those two entry points won’t let us assume that Knollwood is a lower end association, because that’s not at all the case. Knollwood is a beautiful association that boasts what I believe to be the nicest large association lakefront park on this entire lake. But in 2016 if you were looking to eek onto the lake, Knollwood was in focus, and if you wanted to eek into the lake access market, you had no choice but to keep your eyes on Knollwood.  This post isn’t about Knollwood.

The lake access market had a solid 2016, though in comparison the lakefront market itself fared much better. In total, there were 77 lake access homes sold in the MLS, the most economical being the $69k Knollwood cottage, the most expensive being my off-water estate in Loramoor with 3 acres, pool, slip, large house, detached garage with studio, water feature, gated entry, etc and etc, at $1.625MM.   The lowest price paid for a home with transferrable slip was in Wooddale, that of a brick Arlington Heights-esque ranch that sold in August for $330k. The highest price someone paid for a lake access home  home without a slip was $800k in Geneva Manor. In total, 12 homes with slips or private piers sold last year. I sold four of those.  A few more with available ramps or buoys sold.   2015 recorded 68 lake access sales, so by any measure our 2016 was a fantastic year.

Of the 77 sales, five closed at $1MM or more.  In that upper bracket lake access market, some things were made obvious not because of what sold, but because of what didn’t. This year offered ample, rare inventory in that segment, with homes available in Glen Fern, Black Point, The Lindens, and Academy Estates. These homes lasted through 2016 and closed the year unsold, or expired. The inventory in these associations was in the low million range, and the availability of these homes was something that the market wouldn’t typically take for granted. A home one off the lake in the Lindens would be desirable, no matter the condition. Yet the market pushed back and these homes failed to sell. What is the takeaway from this? Well, for starters, if buyers are going off-lake in the million and over range they’re expecting something pretty special. Like the Loramoor property, with a slip and a pool and big lot and big, newer house. Or something unique like my immaculate, gem box on Oakwood that I sold in Glenwood Springs for $1.1MM. Give the buyer something unique and rare and they’ll buy it. Give them a $1.3MM fixer upper built in the 1970s and they’re going to take a pass, unless the lot is somehow so incredible that a tear down is warranted.

That 2016 sold inventory included two entry level cottages in our lakefront cooperatives. A small home in the Harvard Club sold for $510,500 and a cottage in Belvedere Park sold for $411k. The Harvard Club had a slip, but Belvedere Park has all-year municipal water and sewer service, so you can pick which one you’d rather have. Nothing sold in the Congress Club, though inventory existed there for most of the year.  Foreclosures were not common in 2016, but at least two homes did sell as REO,  though both were crappy and smaller and sub-$150k.  I don’t suspect foreclosure to play any sort of starring role in 2017 either.  Of note, 25 of the 77 sales were marked as Cash closings, which I find a bit surprising. Rates were remarkably low during 2016, and I would have expected more buyers in this range to take advantage of those rates. Instead, 1/3 opted to pay cash, which proves the strong position of many Lake Geneva buyers.

For 2017, we’re low on inventory. There are just 36 lake access homes available as of this morning. That’s a low tally, especially when you consider that seven of those are priced in excess of $1MM. Our core lake access market is the $450-750k home with a slip, and of those there are just three available.  Because of this inventory condition, the lake access market will follow the lakefront market for 2017 and find itself heavily dependent on adding quality inventory. If we can add inventory in the first quarter, we’ll have a solid year. Interest rates are rising but they aren’t rising enough to squelch the desire of city families to spend their weekends in a different state of being. Expect the lake access market to have a quality 2017, but volume will not reach 2016 levels. Much of the remaining inventory is now aged, so there is plenty of value lurking in the available homes. If you’re hunting for value, I’m happy to be your guide.

 

Geneva Lakefront 2016 Market Review

Geneva Lakefront 2016 Market Review

29. It might sound like a lot, or it might sound like nothing at all. If we have 29 quarters, we don’t really even have enough money to buy a lunch at Culver’s. But then again, I’m currently battling towards the world’s most amazing physical transformation, and so I’m unable to go to Culver’s. This is difficult. If we have 29 electoral college votes, we still have nothing. But if we have 29 cars, we’d be considered to be a collector, because who, if not a collector, has so many? If we have 29 children, we’d have lots of children and we’d have a television show. But if we have 29 cousins, no one would really care. A show called “29 Cousins” wouldn’t really raise an eyebrow. But we don’t have 29 of any of those things, we have 29 lakefront sales on Geneva Lake in 2016 and we should all be very proud of that total.

Those 29 sales (that link won’t include the vacant land sales) represent a slight decrease from the remarkable 2015 tally of 31, but the reality is that both years represent about as much volume as this market can potentially muster. The 29 sales from 2016 included one home in the South Shore Club ($2.75MM), and three vacant lots. For the purposes of this morning, we’ll include the vacant lots as we average out the increasingly antiquated Price Per Foot metric. I dislike this method of valuing properties, but that’s only because I feel it fails to properly account for the compression that exists when frontage increases beyond 100 feet. The results are skewed by a larger number of entry level sales as those properties with 50 or so feel tend to sell $25-30k per front foot, while 100′ lots with barebones homes tend to sell around $20k per foot. Even so, let’s consider the PPF.

In total, 2919 feet of lakefront sold this year. That’s roughly 2.5% of the entire frontage on Geneva Lake. That’s no small number. We sold a total of 2713 feet of frontage in 2015.  During 2016, we sold $72,372,000 worth of lakefront proper, bringing our price per foot to a whopping $27,193, or an 8% increase over the 2015 average of $25,161. That number is high, but it’s not reflective of the actual value of a foot of raw frontage. The number is bloated this year for two reasons. First off, we sold seven lakefronts under $1.55MM, and those entry level properties tend to sell at a higher PPF. Secondly, we sold four properties over $4.25MM this year, and those four properties alone averaged $40,298 per front foot. They averaged this lofty number because three of those four were fantastically beautiful homes that carried a premium for their quality.  If you were to ask me for the value of a 100′ lot of reasonable size, I’d point you to the two sales on Lackey that prove out a value closer to $20k per foot than $27k per foot.

Of the 29 sales, I closed 10 of them. To put it a different way, of the $73,172,000 worth of lakefront that changed hands this year, I was directly involved in nearly 50% of that volume. I bring that up as I see some other agents’ advertising and it seems as though there’s still some confusion as to who leads the lakefront market. Anyway, the simple reality of 2016 is that it was a complete and utter success for the lakefront market. Most notable in the volume is the activity at the very top end of our market. The two sales, both my listings, that closed for $9.950MM and $7.35MM, proved that we have strength in our upper bracket, but it also proved that in order to find those buyers the product must match an incredible home on an estate sized parcel of land.

I also found the existence of entry level inventory to be curious. After several years of strong sales in this segment, we printed another six sales under $1.55MM. The lake proves that just as soon as we think we’re going to run out of a particular type of inventory, we don’t. When we think the last 100′ lot with a junky house has been sold, we see more 100′ lots with junky houses come to market. When we think the last 50′ lot for $1.25MM has sold, we sell another 50′ lot for $1.25MM. The market has a way of letting people catch up to it, so long as the buyers are patient and wait for the inventory that matches their desire. 2016 was a terrific year, but it wasn’t necessarily unexpected. I thought the year would be solid as long as inventory presented, and that’s exactly what happened.

For 2017, we’re facing higher interest rates and severely limited inventory. The rates should have some negative drag, but gains or stability in the stock market will offset that. Inventory will be the problem of 2017, as we start the year with just 13 true lakefront homes for sale. Of those, I have an offer being negotiated on one of them.  The result of this low inventory will be higher priced listings, as sellers who don’t really care to sell will likely price their homes at prices that reflect their lack of motivation. This could be a problem for 2017, but I’m guessing we’ll add enough inventory to see volume totals in a  reasonable range once this year ends. Will we sell 28 lakefronts again? Not likely. But can we get to 20?  You bet. The key in this market is for buyers to understand that even though prices have escalated, there is still value to be found. Much of the inventory that remains is now aged and buyers may have the ability to negotiate sold value. That is, assuming, they’re working with the right agent, and if you’ve just finished reading this, then you already know who that is.

Geneva Lakefront Condominium 2016 Review

Geneva Lakefront Condominium 2016 Review

Over the course of the next few weeks we’ll discuss how 2016 treated the various segments of our vacation home market.  We know the year to have been a good one for these markets, but we’ll avoid the vagaries and dig into the details.  If you wanted vagaries, you could just visit the Facebook page of your favorite Realtor, assuming that I’m not your favorite Realtor, and if not, when what have I done to deserve such a low level of favor?   The markets we’ll cover will include the following segments:  Lakefront Condo, Lakefront Single Family, Lake Access Single Family, Geneva National, Abbey Springs, and the secondary condo markets comprised of Willabay Shores, Bayside Pointe, Abbey Hill and the Abbey Villas. Let’s get started.

The lakefront condo market has been covered in depth here. Unfortunately, even as I grasp the other markets with remarkable clarity, I have been routinely dumbfounded by the behavior of the lakefront condo market. I don’t know, exactly, why the market has stalled even while the adjacent markets have excelled.  I’ve speculated that perhaps it’s due to a shift in demographics. Younger buyers, more city buyers, those who don’t want to come to the lake to share a hallway.  Even today, eight years after the start of the last housing crisis, I’m not entirely sure why this market has failed to find favor.  With 2016 now closed out, it’s clear to me that the lakefront market has remained an enigma, and the market remains stalled.

Perhaps it’s inventory that creates the problem. After all, if nice things come to market they generally sell, whether they’re condominium or single family in nature.  I sold a beautiful condo at Eastbank for $1.2MM in 2015, but that condo was recently renovated and  absolutely, entirely turn key.  So is it purely a condition of the condition? If a unit is beautiful will it sell?  Does this buyer pool just detest the thought of renovating a confined space?  If we look to the 2016 condo sales, maybe there’s a clue.

In total, the lakefront condo market closed 8 units. That’s not terrific, but it’s not the worst thing, either. A unit at Vista Del Lago sold for $362,500. That’s troubling for Vista, as the development offered several nice units throughout 2016 and yet the only sale was in January of 2016, meaning that likely wasn’t even a 2016 contract, rather a carryover from 2015.  Geneva Towers had one sale at $644,500, a fine number for a reasonably decent condo there. Somerset, a small condo association just south of downtown Lake Geneva had two sales last year, one of a short sale for $725k (though I’m assuming the buyer had additional costs associated due to the way the MLS details are written), and another unit for $1,085,000. That was an upgraded unit, and any buyer considering entry level frontage would do well to consider available inventory at Somerset and at Eastbank.

Working West, Williams Bay had two lakefront condo sales, both at Bay Colony. One of a wonderfully renovated unit, one of a unit with more basic, older finishes. The upgraded unit had sold for $600k back in 2005 when it was in original condition. That buyer then renovated the unit and sold it, after years on market, for $510k in early 2015. That same unit sold for $525k in the fall of 2016 and that, in a nutshell, is the situation with most condos on Geneva Lake. Even in terrific condition they aren’t able to sell for their 2005 valuations. The other unit in that building sold for $415k to a buyer represented by yours truly.

In 2002 I sold a three bedroom condo in Fontana Shores for $427k. That was, at the time, a nice sale for the building and a nice sale for me. That same unit just sold in 2016 for $421,750.  The last owner kept that condo for 14 years and lost money on it. During the same period, a private lakefront home may have appreciated by as much as 50-75%. Lastly, my sale at Stone Manor. At $5,995,000, it was the most expensive condo sale in our market, and likely the most expensive condo sale in Wisconsin, ever. But it’s less condo and more residence, so I won’t dwell on it here. You know it sold. I know it sold. And that sale has no effect on the remainder of the non-Stone Manor condo market here.

12 months, 8 sales.  2015 fared only slightly better, with 9 prints for that year.  There were 11 sales in 2014. But none of this particularly matters. The take away is that the market remains in a difficult way, and I don’t see any catalyst that will change that. If entry level lakefront prices rise, and that entry level inventory remains low, then perhaps the condo market will benefit.  But what I think we’re seeing is a shift away from the condo model and towards single family, and the only thing that might interrupt that shift is rare value or rare inventory.   2016 should be a solid year for the lakefront condo market, but in this context I think sold would mean 7 or 8 sales in total. To expect more would be to expect a change from the status quo, and the condo market hasn’t proven it’s capable of anything but.

Happy New Year

Happy New Year

I hate Luke Bryan. First of all, he has two first names.  A better name would have been Luke Bryant. Like Kris Bryant, without the ring and with the T.  I hate him because he sings ridiculous songs, songs that I cannot name and songs that I cannot hum. Bro-Country songs. I don’t know any of his songs. He throws his voice when he sings, like he’s trying to be someone else, like he’s trying to sing anonymously.  He’s a country Elvis, which is not to take any shots at the real Elvis who also sang a bit of country. I hate him because of his name and because of his voice but mostly because I don’t like the way his album cover looks whenever when of his songs cycles into my Pandora. I can’t Thumbs Down fast enough. So there, I hate Luke Bryan for no real reason, but for all of the other ones. Ceasing pettiness was not one of my 2016 resolutions.

But Luke Bryan has a song on the radio where he tells us that 60 seconds felt more like 30, and that is something I can agree with. 2016 is over and it flew by.  This year, the year that was so hated by the media, so hated by Memes, so difficult for so many reasons, was a pretty good year to be Dave Curry in Lake Geneva. It wasn’t without difficulty and stress, and there’s a headache that I now get that doesn’t let go for a few days at a time, but on balance the year was a terrific year. For all of the celebrity deaths in 2016, every member of my immediate or extended family made it from the first day to this, nearly the last day.  Perhaps this was because the year passed so quickly, in record time, and because of that no one really found the time to die.

On the business side of 2016, it could not have been better.  A good year in real estate is wonderful, but it’s so fleeting it’s hard not to find some discouragement in the face of all the delight.  I started selling real estate in 1996 when I was just a kid.  While my friends went off to college, I just drove a half mile from home to a real estate office and sat there wondering what I should do. I was intimidated by the sound of a ringing phone.  Once I decided that on fall Sundays there would be women shopping at the store next to my office, and the men must be sitting in their cars impatiently waiting for their wives to buy something with Lake Geneva written on it or carved into it. I thought the men would be bored and might want to watch the Bear’s game. This was back when people wanted to watch the Bears play. So I found a half sheet of plywood and scratched “BEARS GAME ON INSIDE” onto it and faced it towards the road. I turned on the tube television and adjusted the rabbit ears to get the least snowy signal I could. No one ever came inside, and that was a terrible, awful idea.

From those days in 1996 until the end of 2009, I sold around $50MM in real estate. All the while I had a family and houses and mortgages and insurance payments and bills for ads in local newspapers that never worked.  That tally matters, because those were the years where I learned what to do and how to act. I learned what to say. I learned how to fail. I learned the market and the roads and the associations and the way the water looks in the morning as it laps against the rocky point where Fontana meets Williams Bay. Those were the years that mattered more than these years. I’m humbled to write it, and uncertain as to why it happened and sheepishly proud that it did:  My 2016 sales volume was in excess of $62MM. Over the last 12 months I sold more real estate than I did in my first 14 years.

I became so accustomed to working from behind, to thriving as underdog, to wishing for some success that I had no business expecting, that now I feel a bit awkward here. I hear the praise from people I know and from others I don’t, and I don’t know exactly what to make of it. $62MM, after all, is a Walworth County all-time record, and a number that leaves my nearest single agent competitor with less than half of that volume.  I was thrilled to represent either the buyer or seller in 10 of the 26 lakefront closings during 2016, and sold 5 of the 6 lakefronts that closed over $3.9MM.  Per MLS (1/1/16-12/30/16 Walworth County sales), my personal volume was more than the 37 agent @Properties office in Lake Geneva, nearly double the production of the entire Rauland office, roughly quadruple the production of the entire D’Aprile Fontana office, and more than any individual office in Walworth County excepting one. I kind of hate writing all that, but I spent fourteen years being told that the small office can’t be as effective as the large office, so I can’t really waste this opportunity.

Does this mean I’m somehow at the top of this game? Does this mean I have no where to go but down, to slowly fade away as someone who was once pretty good at something but no longer subscribed to the process that brought him there? It seems as though this could be the case, that I might indeed just stall here at this lofty height and realize I never learned to land. But the reality of it is I know this success has very little to do with me. I know I’ve been blessed. And I know that without clients and customers trusting me for their Lake Geneva decisions I would mean nothing to the Lake Geneva market.

So today I thank you for your loyalty. I thank you for reading this drivel. I thank you for recognizing that many days and weeks I have nothing really to write about, but I try to do it anyway. I thank you for trusting in a kid from Williams Bay, who never aspired to do very much but always wanted to matter. I thank you for helping my business grow. Where it goes from here I can’t say, but I know it’s a struggle to stay at the top of anything, no matter the profession and no matter the year. I’ll keep trying, I’ll keep working, and I’ll be here if you need anything. If I’m your agent already, a most sincere thank you. If I’m not your agent yet, this is me begging.

Here’s to us, to Lake Geneva, and to a new year with more time spent at the lake.

640 Linden Sells

640 Linden Sells

Earlier this year, I sold a house on Harvard Avenue in Glenwood Springs. It was a decent old house, but more old than decent. It was the sort of house that one family loved for generations, the old bathroom and tiny kitchen quaint reminders of a time long since passed. But new buyers lack the nostalgia that makes old carpeting and small kitchens seem desirable, and so the house lingered on the market for quite some time. Eventually, the house sold because the price succumbed to the market. I sold that charming old house with the small kitchen and  private pier for $535,000 in May.

Yesterday, I sold another old house with private pier on Harvard Avenue in Glenwood Springs. This address was on Linden but the house faced Harvard, and the lake, and so it was more Harvard than Linden no matter what the address rigidly insisted. The house had been lovingly embraced by the same family for generations, much like the other house.  This house had a high pedigree, original old floors, a huge fireplace in the great room, an ample and right screened porch. When I first toured that home with the owner, I saw that fireplace and I saw that porch and I knew that the home would sell.

I listed it for $899k in the fall, and then I told you about it and I told you it would sell. Yesterday, I sold the house for $871,250. The sale, nice for the market, nice for the seller, nice for the new buyer. It’s a nice house, and a terrifically rare example of a well kept vintage home. It was a house that I was proud to market, proud to show, proud to close. The buyer of the other Harvard house, the one I sold in May for $535k, well, he liked the price, too.

Glenwood Springs is a fun association, and for all of its cramped nature and congested lakefront, there’s a feeling that accompanies a summer visit to that old association. It’s a feeling that you can’t quite explain, one you can’t quite understand. It’s a feeling of something old, something trusted, something that feels unique and rare because it is. Glenwood Springs isn’t the only lake access association that evokes that feeling, but it’s one of the associations that accomplishes that with the least amount of effort. In that, a lake house in Glenwood Springs is something that we can all appreciate.

Lackey Lane Sells

Lackey Lane Sells

At one point earlier this year, there were three homes for sale on Lackey Lane. Lackey, in case you haven’t the pleasure of wandering down that lane before, is a dead end street with a handful of homes on it to the west of the Birches. The street is unique in this market. It’s a dead end, which is always a positive here as it makes it more awkward for strangers to commit to a wandering, gawking drive.  The lakefront is level, the location on the lake creating a slight bay that keeps aggressive boaters at bay. There is little I don’t like about this street. Little not to celebrate. And that’s why there were three homes available earlier this year and as of today there are none, and I’ve sold them all.

First, the beautiful home at W3818 Lackey. I sold that home in June for $4.275MM, and what a home it was. The new owner is happy there, which makes me happy, and the street, though it possessed a history of selling in the threes, had a print in the low $4s that it needed. This print is important as it shows there is a path to value in that range, and the few tear downs that remain on the street now had an angle. Buy one for $2MM or less, build a new home for $2MM or so, and you’ll be secure in your value. This seems easy to do, but it’s not as easy on this lake as you might think.

Next, I sold the small brick ranch on 100 level front feet at W3846 for $1.91MM. Again, the value makes complete and utter sense, and not only when you consider that price per foot is just $19,000. The street can support built value, and if you’ll drive down that lane today you’ll see the foundation of a new build where the old Arlington Heights ranch had previously stood.  That was a nice sale, a  terrific value, and a new place on the lake for a long time Lake Geneva family.

Yesterday, I knocked over the last Lackey domino of 2016. W3852 Lackey closed for $1.925MM, to a delightful young family who saw what the prior family saw: opportunity to grab rare land at a very attractive price. The street now will do one of two things. It’ll either quiet down while the new owners make their mark in that dirt and along that shore, or it’ll see another offering or two as existing owners who may have an eye towards a someday sale see the value and demand that is obvious on their quiet little lane.

Coincidentally, two other lakefronts closed yesterday. One in the dead center of the Narrows, that of an older house with unremarkable attributes and a 100′ lakefront lot. That closed for $2.485MM. The other closing was in the same neighborhood as these others, but this home was immediately adjacent to a very busy boat launch. I can change out an old sink if I don’t like it. I can buy a new range if I want a shinier model. I can lay hardwood where there is now carpet. I can nail on shingles where there was vinyl. I can do lots of things to my new lakefront house, but something I can never, ever do is move a boat launch. $2.899MM was the print for a home with shiny finishes and a municipal launch for a neighbor. These sales bring the lakefront sold tally (MLS) to 25 for 2016, and I’m proud to say I’ve been involved on either the buy or sell side (or both) in 10 of those 25. That’s not bad for a kid from Williams Bay.

To the new owners on Lackey, a big congratulations. I’m never unaware of the reality of my business. I can sell lots of homes one year and very few the next. I could do this work for another decade and find success, or I could be cast aside as an insignificant blowhard who writes about Christmas trees and my grandmothers and pontoon boats. I understand that buyers and seller alike have myriad choices for representation in this market, and I’m always grateful to those customers and clients who choose me as their agent. I’d like to think I’m a bit more fun to work with, and I’d like to think I have better insight into the market (I’m actually certain of it, but humility), but mostly I’m just happy that my sale yesterday represented incredible and lasting value, and in that, I’m content.

Lake Geneva Market Update

Lake Geneva Market Update

I was going to write this morning a response to a recent article in the Wall Street Journal. The article, Homeowners Hit The Jackpot, appeared to be, at the headline level, something that might interest me. Then I read the article and deemed it rife with stupidity. How could I respond to something as lame as that article? And so I decided instead to write a market update. Lake Geneva, it’s December. It’s almost time to start talking about the year in the past tense, but if we did that now we’d miss the present. It’s December, and there’s a lot happening. Here’s your Lake Geneva Market Update.

Yesterday, I closed on W4160 Lakeview in Linn Township.  I had that cute little lakefront for sale for what felt like most of my life, but was, in fact, just the last two summers. The house was what you’d expect of an entry level lakefront. 50 feet of frontage, no garage, basic finishes. It was a charming little place, with a boathouse that most estates would like to own. The house was simple, the sales price $1,260,000. The new buyers happy, sure, but not yet certain just how good it will be to own a weekend home on this lake. The seller had owned the house for 11 years and didn’t make any money on it. In that, I failed. But the owner told me yesterday that although the house isn’t the fanciest on the lake, and although the bedrooms are small and the kitchen boasting white appliances, his family looks at that property as the place where the best of their memories were made.  That, after all, is what this whole game is about.

This week I brought to market a lake access home in Shore Haven. It’s a nice house, this Shore Haven place. It has a slight, squinting view of the lake if the leaves are in the right position (on the ground). It also has a two car garage and plenty of parking, attributes which are rare in the lake access world. The house is charming, the finishes nice enough, the layout comfortable with the possibility of attic expansion if someone so desired. But that’s not really the thing that matters with this $749k new listing. What matters is the boat slip. Slips, in the eyes of the wandering market, are all created equal. You either have one or you don’t. If you have one you’re lucky. It you haven’t one you’re sad. You didn’t need one, you said. But above a certain price point off the lake you do need one, because everyone else expects one even if you don’t. That said, this boat slip is fantastic. It’s deep and it’s big and it’s easy to pull in and out of, no matter if a north wind is howling from Williams Bay. Boat slips matter, and this slip that accompanies this house is an absolute gem.

Last week I closed on a Bay Colony condo. I don’t sell a lot of condos anymore, but I sold a ground floor two bedroom in the north building for $415k. That price is significant, as that $415k price is the lowest paid for any unit in either Bay Colony building since at least 2005.  Does the kitchen have a Viking range? Don’t be ridiculous. It might after the remodel, but it doesn’t now, and that’s why I negotiated on behalf of a client and we pushed a $475k asking price to a $415k closing price. Want to buy a condo on the lake? We can go bargain hunting together.

For the remainder of the year we’ll see a few new contracts, but mostly we’ll see the closings of homes that have been placed under contract over recent weeks and months. Lest you think it’s a bad idea to buy a lake house in December, consider the importance and duration of a Lake Geneva summer. If you want to be ready for summer you have to prepare in the winter. It’s December, which means it’s basically winter, and now is the time to start your preparations for the upcoming summer. The summer, not coincidentally, which has the chance to either be the best summer of your life or just another one.

 

Above, the new Shore Haven listing for $749k. 
1014 South Lakeshore Sells

1014 South Lakeshore Sells

The most important lakefront home I’ve ever sold is 1014 South Lakeshore Drive in Fontana. I sold that home for the first time in 2010 for $5.885MM. At the time, it was the largest sale I had ever completed, by a factor of at least two. It mattered, this sale, it mattered a whole lot. The fact that I sold the home owned by the owner of our largest local brokerage was something that people noticed, and it helped propel me to the volume that I’ve been pleased to represent since. Last week, I sold that home again. This time for $7,350,000, and as you could imagine, the sale matters this time around as well.

I first listed that home two years ago and received an offer within a few months of the initial listing. That offer didn’t come together, and then the property sat on the market for all of the following year.  The reason it languished for some time is simple: when buyers are looking to spend $7.95MM they are expecting perfection, and any slight blemish that might interrupt that perception is cause for rejection. And so I worked and I worked and then over the summer a new contract, a new scheduled closing date, a new buyer on the line for 1014 South Lakeshore.

In the months that followed there were plenty of ups and downs, other buyers wishing to buy the house came forward, and the house that I couldn’t sell for nearly two years became a house I could have sold two or three times. The market turned, buyers at the higher levels materialized, and 1014 South Lakeshore became a house that was no longer just an expensive house in Fontana. It was THE house in Fontana. Last week it closed, and I remain eternally grateful to the seller who has trusted me with so many lakefront purchases and sales.  Loyalty is a frail thing in real estate, and when a client remains loyal over a fifteen year period that’s a special and unique thing. To that seller I owe much, perhaps a career.

Another sale last week, this one with more intrigue. In November of 2015 pier 514 sold for $3.95MM. It was a nice sale, a good market price for 186 feet of Fontana frontage spread out over 4 acres.  That lakefront just sold again last week, this time for $5.45MM. There is no typo here. There were no improvements done to the house, unlike the sale at 1014 that underwent a supreme facelift and renovation over the years since the 2010 print.  Pier 514 just sold for $1.5MM more than it sold for last year. 12 months, 38% appreciation.  Wow.

So did the market move that much? Of course not. To suggest it did is pure insanity. The market didn’t move more than a few points, but some buyer from somewhere, perhaps a buyer with a penchant for filming Lincoln commercials, that buyer thought $5.45MM was a reasonable ransom for that large property.  Do I think that buyer overpaid? It doesn’t particularly matter, because if a buyer wanted 186′ in Fontana with 4 acres of woods, there were no other options. Personally, I like my sale near Pebble Point with 181′ of frontage and 4 acres for $3.93MM much better, but that’s just me, and I’m value minded.  For the market, it’s a terrific sale, for that buyer turned seller, a magnificent maneuver in a typically stodgy market.

Another week, two more sales, both over $5MM. I wasn’t involved in the lower priced sale, but 2016 has now seen six lakefront properties print over $3.9MM. Of those six, I’ve represented either the buyer or seller in five of them. Those sales have helped push my sales volume over $56,000,000 on the year, and I don’t mention that to be vain. I simply mention that to prove a point. If you’re a lakefront buyer or seller with a Geneva focus, now we both know I’m the guy for you.

Geneva National Market Update

Geneva National Market Update

Every segment of the lake access and lakefront market has activity. If you list a $69k shed in Knollwood, like the one that was listed last week, it’ll sell (and it already did). If you list a $10MM house on Pebble Point, it’ll sell,  assuming you list it with me (and they did and then it did). If you list a house with a slip for $600k, it’ll sell, and a $2MM lakefront tear down? Sold.  Most segments of our non-lake access vacation home segment sell with some regularity as well. A farmette with 10 acres and a neat old barn will sell to a couple from Bucktown who have already grown tired of the 606. A condo at Abbey Hill will sell to someone who wants a Fontana vacation getaway on a budget. Everything sells, no matter what. Unless it’s in Geneva National.

As of this morning, there are 31 available properties within those gated confines listed for more than $500k.  Those are single family homes and traditional condominiums, though obviously the vast majority are of the single home variety. The homes are nice, often possessing fancy appliances and fancy trim, sometimes, usually, at least one gaudy chandelier that screams 2004.  Some of these homes are newer, some are original dinosaurs built in the early and mid 1990s. The thing about homes built in the 1990s is that if they haven’t been substantially renovated, they’re really quite lame.  Geneva National, in spite of an incredible year in the lake access market surrounding Geneva, remains plagued by pockets of heavy inventory.

So far this year there have been just six sales (per MLS) that closed over $500k. It’s mid-November, and without a single pending property in this price range, it’s likely GN ends the year stuck at six.   All of 2015 registered just seven such sales, so six isn’t such a let down, it’s just that it isn’t a market undergoing a solid recovery, it’s a market bogged down by too many sellers thinking this is the time to sell. The numbers are telling us a different story- this isn’t the time to sell.  In 2006 there were 19 sales in GN over $500k, so if you’re looking to sell in this price range, 2006 would be a good place to visit.

But this is unfair, unkind,  and it isn’t the fault of would-be sellers. It’s not the fault of the Realtors. It’s not entirely the fault of golf and its dwindling numbers, even though we’d be foolish to suggest that the decline in golf’s popularity doesn’t have something to do with this. No, this is simply a matter of supply and demand, and Geneva National has, and likely will always have, too much supply. It’s not that the homes there aren’t beautiful, as many are, and it isn’t that the development isn’t one of the most aesthetically pleasing you can find- it is. It’s just that there are too many homes there, and when the built inventory requires more buyers than the market can produce, you’re going to have stagnant prices and tepid demand.

Demand creates demand, this is obvious. More buyers bring more buyers, it’s just the way real estate is. But when you can’t create demand, and you can’t convince a buyer that they had better act soon or they’ll miss out, then what is left? Just a bunch of nice enough houses on nice gated streets. Certain styles of homes will still sell. Those homes that are architecturally unique or otherwise interesting, those will find buyers even now. But the vast majority of homes are going to struggle to find buyers, and that’s exactly what’s been happening over recent years.

I love Geneva National, I really do. I’ve built in GN, remodeled in GN, bought and sold in GN. I enjoy the golf courses immensely. But even in this environment of super low interest rates and broad market demand Geneva National has faltered, and I don’t know what it’ll take to bring it out of its funk.  Sadly, the only fix for Geneva National’s upper bracket housing market is more buyers and I don’t mean seven per year.  Does this slowdown create opportunity? Of course it does, but unfortunately, as long as this inventory remains inflated GN won’t experience a full recovery.

Veteran’s Day

Veteran’s Day

I grew up in Williams Bay.  I remember my older brother wore black in 1992 when Bill Clinton was elected. No one cared that he did that, because he wore black and he went to school and then he went home and he mowed a few lawns. That was his protest. In 2010 when Scott Walker was elected Governor of Wisconsin, I drove to a small bar on the North Shore of Delavan Lake and ate some cheese curds with a friend. This was our celebration. The next day, I woke up and went to work.

This week, a new president.  A peaceful transition of power now underway, in spite of the protests of those whose protest is akin to marching with angry shouts towards the sky, decrying the clouds.  I am optimistic for our country, just as I was optimistic after every presidential election of my adult life. Maybe things will change, maybe they’ll stay the same, maybe the government will spend a little less time in my business and more time letting me go about it. Maybe things will be the better or stay the same, maybe the kids who protest will do as I’ve always done.  Wake up, brush my teeth, shower, and put my head down in hopes of accomplishing something.

Will this election somehow skew our real estate market? Will it turn a good thing bad?  There’s no way to know that, but I cannot see how a free-market thinking president will spoil a solid run in the luxury real estate market. Will there be pause in our markets one of these days? Sure. Would that pause occur no matter who was elected last Tuesday? Of course. For now, I look for a stable stock market, and excepting the after-hours trading Tuesday night,  we’ve had just that. I look for fiscal policy that attempts to reign in spending, and we theoretically have that in aim.  Will some Lake Geneva revelers be sad over this election? Yes. Will some be happy? Yes. Will the water still be clear and the sky blue and the market prized for its remarkable strength? Duh.

This week, two closings. One at Stone Manor. The ground floor unit at Stone Manor, the unit that I first listed two years ago, has closed. The price for all those square feet in that building that Otto Young built? $5.995MM.  I assume that sale is now the most expensive condominium to ever sell in the state of Wisconsin. But that’s an assumption because I don’t particularly care if it is, or it isn’t. It’s a terrific sale for the lake and a terrific sale for the owner of that iconic unit. I was pleased to represent that family in the process.

Another closing, that of my large off-water listing in Loramoor. $1.625MM was the print for that large parcel with boatslip, swimming pool, auxiliary garage, and loads of square footage. That was a rare offering in this market, the unique off-water home that plays like a small estate but still offers the owner lake access and a slip on Geneva. It’s a nice sale, and I was happy to be involved.  As a staggering aside, those sales have pushed my 2016 sales volume to nearly $49MM, a total that represents an all-time annual high for Walworth County. The next closest “competitor” has tallied just over half of that total. It’s humbling and unexpected, and I’m not dumb enough to think I’d be in this strata if not for my clients and customers who trust me with their Lake Geneva moves.  I enjoyed playing the underdog so much I’m not certain how to react to the blessings of this year, but I think I’ll just keep my head down and work.

Finally, Veteran’s Day.  A sincere thank you to every veteran who has ever served. It’s a sacrifice that I didn’t make, and a sacrifice that very few I know have made.  The only sacrifice I made this week was in ordering a John Deere Gator and NOT opting for the front storage rack.  I’m thankful for those who have bled and died so that I can worry about selling condos at Stone Manor, and worry about boatslips and association rules and limited inventory. What a pitiful list of things to worry about. Thank you to our veterans who gave their time and their lives so that college kids can weep in the street and so this kid can pursue his dreams in Williams Bay, Wisconsin.

Pleasant View Sells

Pleasant View Sells

No, this doesn’t mean your cottage with lake access is going to sell for $1.1MM. It doesn’t mean that small cottages with views and private piers are always going to sell quickly and without particular trouble. But it does mean that a perfect cottage in a perfect location with a perfect little pier and a perfect view just might sell. That’s why I closed on 434 Oakwood in Glenwood Springs last week. Because it’s a perfect cottage and perfection will always find a buyer. Congratulations to the new buyer for securing a most unique piece of our vacation home market.

 

 

Geneva Lakefront Market Update

Geneva Lakefront Market Update

The way I see it, any buyer of a lakefront home here has two options. You can buy for now or you can buy for later. If you’re buying for now, you’re buying something that’s done, something that’s ready, something that makes you happy. That’s a house that already has a coffee table where you plan to put a coffee table, and the tile of the kitchen backsplash is the same tile you would have picked if you were the one tasked with the picking. Or, you can buy for later. You can buy because right now you’re not ready to pick the tile, but you are ready to secure your piece of this scene. You’ll be more ready next year, even more ready the year after, but you see what you know you like and you buy it because the property is all that matters. Who would buy a house based on backsplash tile?

Contrary to popular opinion, I do not necessarily prefer one approach over the other. If you can find what you love and it’s done, buy it. If you can’t find what you love, build it. And if you’re ready to buy now, buy now. If you’re ready to buy next year, buy next year. But a particular hybrid of that buyer is the one who knows he can more easily afford to buy next year, but he finds what he loves and he buys now instead. That’s conviction, that’s bold, that’s the sort of buyer I tip my hat to. Also, I think I might start wearing a cowboy hat. It’ll be hard to wear it in an un-ironic way, but if I stick with it I think people will come to appreciate that hat.

The lake this year has had plenty of  buyers, those buying for now, those buying for tomorrow, and those buying now because they don’t think they’ll find the same options tomorrow.  YTD we’ve sold 16 lakefront homes. That’s a very respectable tally, though it falls well short of YTD 2015 which had 23 lakefronts trade by this date. What’s different this year is we have 9 lakefronts pending sale as of this morning. That’s a whole lot of lakefront activity, and it’s wonderful. Last year we added another 7 lakefront closings between 10/26 and 12/31, bringing our total (including Glenwood Springs first-offs and the South Shore Club) to 30 on the year. This  year, it’s more likely that we end up around 27 or 28, but that’s still a most astounding total.

What makes it so incredible is the cycle of lakefront buyers. Typically, one high volume year is followed by a lower volume year, as buyers who buy are not always replaced with more buyers who buy. In my business, if I have a terrific year it’s usually followed by a less terrific year, because I’ve spent through the buyers and sellers that have employed me, and then I must go out and find more smart buyers and smart sellers to hire me.  That’s why the strength of the market in back to back years is far more meaningful than the strength of the market after a down year. In other words, this lakefront market, man, it’s something.

There are two deals pending in the Lake Geneva Highlands, both listed in the $1.3s. One listing is mine, so that’s good. Working up the food chain, I have a new deal on the last remaining Lackey Lane offering, priced at $1.95MM. That’s 100′ of level frontage on a quiet dead end lane, surrounded by $4MM+ homes. What’s not to like? Not coincidentally, if this deal closes in 2016 that will represent the third sale on Lackey of this year, and then I’ll have brought in the buyer for all three sales. Can you tell I like Lackey Lane?  There’s a lakefront home pending on Marianne Terrace in Lake Geneva in the low $2s,  with my listing right next door still available at a similar price. To note, my listing has undergone some nice clean up over recent weeks so if you’ve seen it already and thought it was boring, come back to see it again. It’s better now.

There’s a fresh contract on a lakefront in Cedar Point listed in the $2.4s, that of a double lot. I’m expecting this will be torn down and then we’ll see two homes built on this site. I’m just guessing, but that’s the best use of that property. There’s a new deal on a mid $2s lakefront in the Birches. I’m not a fan of that house, but it’s a big deep lot so it make sense that the market absorbed it. The Sidney Smith new construction in the $3.8s is still pending, as is my large lakefront estate at 1014 South Lakeshore listed in the high $7s. Rounding out the notable pending inventory, my Stone Manor residence listed just under $6 should be closing soon.

If there were supposed to be jitters leading up to this presidential election, I haven’t noticed any. The one thing that does help Lake Geneva during times of distress is our low volume, and our low inventory. We do not have spec activity here that drags on a market as soon as we need to take a pause. As of this morning, there are just 18 true lakefront homes available,  and that’s a shockingly low total. I expect that to remain the case through the Holiday season, which should keep buyers in the market as they search for something new to consider.

Geneva Lakefront Market Update

Geneva Lakefront Market Update

This time of year the Lake Geneva real estate market will do one of two things. It will either push slowly and methodically to the end of the year, or it will remain as active as it has been for much of the past several months. Under the first scenario, it’s just a tidying up of the closings on properties that are already under contract, inching inevitably closer towards December 31st. The market will calm, fresh deals will be fewer and far between, and we’ll focus our attention on closing out what will prove to be the best year ever for the upper bracket lakefront market. The alternative course is that we add some new inventory over the next few weeks and that inventory is met with buyer interest. If that occurs, we’ll also likely see a push on some of the aged inventory that has been clogging the market for most of this year. New inventory that sells quickly helps aged inventory simply because it shows buyers that time is, likely, of the essence.

It’s early fall here, but it’s late fall for the real estate market. We have plenty of time left of active selling season, as I’d just as easily sell a lakefront in October as in June. The serious buyers will remain engaged throughout the change of seasons, those who understand that this search should not be taken lightly nor should it be considered over just because the leaves have begun to change.  But the summer buyers who operate on whim and fancy, those buyers will slowly drop off as the temperatures cool and the leaves dull and fall. November, now that’s a month for the serious buyer. Things are brown, and the things that aren’t brown are gray. Daylight is limited, sunshine, too. The buyers that remain through October and last into November are the real buyers, and I think there are more of them in the market today than I’ve seen in a long time.

The issue today is inventory, as we only have 22 true lakefront homes available as of this morning.  We haven’t seen much by way of new product this fall, and the two of the three new lakefronts that have hit the market recently sold immediately (Lakeview, $1.3s, Sidney Smith, $3.8s). I continue to expect new lakefront inventory to come to market, but I continue to be disappointed with each passing day. In February, it’s no big deal when a week passes without fresh inventory, because the next week will be better and the week after might be March. But in October, the next week might also be quiet and the week after might be November.  Lakefront properties have been listed between Thanksgiving and Christmas, but that’s a rare seller who decides to present to the market during that traditionally slow market. Still, if a seller is paying attention to the limited inventory she would do well to list into that environment, no matter what the calendar says.

Today there are several lakefronts pending sale. There’s the entry level on Lakeview that I mentioned earlier, and there’s the Marianne Terrace listing in the low $2s. That’s right next door to my listing that’s offered at a similar price. Shamefully, I haven’t sold my listing yet. The new listing on Sidney Smith of a home under construction sold quickly, and that sale is a very important data point for buyers looking to build new. That property sold for $1.925MM in 2015, and the seller began construction on a new home just a couple of months ago. That home was new, but it struck me as being rather basic as presented to the market, yet it sold and it sold quickly.  For buyers considering new construction projects, this is a reminder that the market is quite liquid for newer construction on reasonably nice lots (100 or so feet of frontage) priced below $4.5MM. This is a segment of the market that wasn’t particularly tested until this year, and it’s now obvious that buyers will gravitate towards new construction in this price range.  Lastly, my lakefront for $7.95MM in Fontana is pending sale.

So which scenario do think will play out? Will there be new inventory that will be excitedly gobbled up by the market? Or will the market slow as a result of stale inventory? I think it’s likely the latter, but I also know that as soon as you count this market out and expect it to sleep for a few months, it has a tendency to surprise. Still, expect a normalized market as we head into fall. Buyers will revisit aged inventory one last time, and they’ll be ready to pounce if any interesting new inventory presents itself as we move towards winter.

Market Timing

Market Timing

Earlier this year, I wrote an email to an owner of vacant lot. I told him should be be interested in selling, there was a likely premium awaiting him. He hadn’t bought the property too long ago, but the market had been looking for what he owned, and it was obvious to me at that time that some pent up demand had to exist. He emailed me back and said he wasn’t interested. This was earlier this year. Recently, he emailed me asking for a price for his property. I told him a number that was indeed a premium, but not as significant of a premium as I had mentioned earlier this year. He was angered by my number, and suggested that I must have forgotten what I told him only a few short months prior. In fact, I hadn’t forgotten that lofty number at all, but in the time since that quote the market had added inventory in this specific segment, and that inventory had failed to sell. The market momentum that I sensed earlier this year had been squashed under the weight of competing inventory. The time to sell was last spring, the momentum was there, the market ripe, the window missed. This is not my fault.

Sellers have a hard time with this discovery. When it comes to real estate, you can either sell when the market wants you to sell, or sell when you want to sell. There’s no other choice. If you sell when the market wants you to sell, you behave like I do- you lock a gain when you see one, and you move on to the next project. When you sell when you want to sell, you assume the market will respond kindly, because after all, you’re a seller and your house has that sweet gold faucet in the master bathroom. But the market doesn’t care about you, it doesn’t care about your faucet, and if you decide to sell when the market isn’t primed for your specific offering, you’ll flutter in the wind as you await the whim of the market to turn your way. This concept isn’t that hard: Sell when the market is good, hold when it’s bad, but don’t sell into a bad market and expect to overcome it just because your house is special. Yes, I know that in that line of ranch homes your home has an outdoor kitchen that consists of some stacked concrete blocks with a grill precariously perched in the middle.

If you’re a long term holder of real estate, then you needn’t worry about the right time or the wrong time, you just live and you enjoy the seasons and you replace the roof when the time comes. This is how most of us tend to view real estate. We view it as though we’re there forever, or for long enough that market peaks and valleys matter little to us because after a long time of ownership we’ll have enjoyed some appreciation no matter the immediate mood of the market. But this self considering view is incorrect, because most of us move every 5-7 years and if we’re timing those moves at the peak of a cycle then we’re selling high and buying high, and if we miss the peak then we’re buying low and selling low, the net gains are the same.  So if we’re going to buy and sell, shouldn’t we do so in an opportunistic manner?

The time is now to be an opportunistic seller if you’re an owner of a lakefront home with a market value in excess of $3MM. Never before has there been so much liquidity in the upper bracket of this market, and I do mean never. Sellers of homes in $3-4MM range have always enjoyed some level of active market, so their inclusion in this segment isn’t unexpected. What it unexpected is the demand over $4MM, and that demand continues with pace all the way through $8MM. Without exaggeration, several of the homes I’ve sold this year are homes that I could have sold twice. The market needn’t  have one hundred buyers in this segment to thrive, it just needs a handful and that’s exactly what it has right now.

And that brings us back to the timing of it all. Yes, conventional wisdom says to list in the spring. But conventional wisdom is wrong in this case. If you’re a lakefront owner with a property in this discussed segment, now is the time to sell. You don’t need to sell now, obviously, instead you could wait until next year when you’re more ready. But next year has its own set of unknowns and the only thing known is what the market is doing today, and today it wants to buy your expensive lakefront home. This year, three lakefront properties have closed over $3.9MM. I’ve been involved in all three of those sales. Two more sales over $5MM are pending sale right now, and those are both my listings as well. It shouldn’t need to be repeated but if you’re a lakefront seller looking to capitalize on this market, I’m your guy.

 

Geneva Lakefront Market Update

Geneva Lakefront Market Update

The entry level lakefront market is a perplexing little market. On one hand, it’s obvious that a cheap lakefront on Geneva will always find an audience. This is unavoidable. On the other hand, the inventory is slight in this segment and yet there have been two entry level lakefront homes toiling under $1.4MM for much of this year and nearly for all of last. In the same segment, a new lakefront was listed last week and has since gone under contract (I’m not involved in the transaction). Not only is the new home in the same segment, it’s on the same street, and it sold without much ado even as the other two sit. This bothers me, but it proves the market absolutely loves new inventory and at the same time finds something distasteful about aged inventory, no matter what benefits the aged inventory can offer. New inventory good, old inventory bad, or so the market proves.

Last month the wide frontage on Basswood closed for $3.55MM. Lest you think this was some amazing, full depth Basswood lot, I assure you that it wasn’t as ideal as it first sounds. The property was wide at the lake, beautiful indeed, but the lot angled back to a sliver as it headed towards Basswood. Compare this to my listing on Basswood (more money, granted) that runs a complete rectangle from lake to Basswood, full of old deciduous growth. Still, the lot that sold is nice and the house could very well be renovated. I’ll be curious to see if there’s a sizable renovation there, or just a lipstick renovation, or if the structure follows the well worn path towards demolition. Time will tell.

That sale was the seventh lakefront this year to print at or over $2.75MM.  Not coincidentally, of those seven sales, I represented either buyer or seller in five of them, including the three highest priced sales of 2016. Last year at this time we had closed just four lakefronts at or over $2.75MM, so there’s little doubt that the market at the higher end has much more strength now than it did before.  As I wrote last week, what this upper bracket markets wants now is more inventory. We can’t sell what we don’t have available, and so there are buyers on the hunt and increasingly less game in the field. My large lakefront in Fontana is under contract, leaving just 11 lakefronts priced over $3MM for sale. Of those, two or three of them are in no danger of selling, perhaps ever.  The highest priced listing to grace our lakefront this year has just been reduced from $16.45MM to $14.5MM.

And that brings us back to the entry level market and the lesson of the week.  In this lower inventory environment, new inventory will always be met with excitement. Sellers who are thinking of waiting until next spring to list their lakefront home are doing themselves a disservice by not taking advantage of the market conditions that exist today. Why trade the relative certainty of today for the complete uncertainty of some time far into the future? The thing is, even with this low inventory environment, there are deals to be had. There are aged bits of inventory that look appealing to me, but that’s because I’m value driven and I know that just because the market hasn’t been excited by a property that doesn’t mean there isn’t value hidden under all those days on market. Below and above, my Basswood estate listing.

North Lakeshore Sells

North Lakeshore Sells

Sometimes, there’s not much to write.

There’s a seller and a buyer and they get along and they’re both honorable and they complete a transaction. Sometimes, the house is perfect, the price is accurate, the deal pure. That’s what happened with W4449 North Lakeshore Drive in Linn Township this summer. I listed this home in July, and it closed yesterday for $9,950,000 (the fully furnished number, transfer will be less). The print is wonderful for the lake, wonderful for those of us who care about proving liquidity at the high range. If you offer perfection and you present it to the market in a  way that proves the pedigree,  good things will happen. In this case, I was honored to represent the seller who trusted me with this fantastic listing.  I’m beyond grateful.

This sale puts me over $37,000,000 closed on the year. That’s a humbling total that’s nearly double my next closest “competitor”. If you’re a lakefront buyer or seller with a Geneva aim,  I’m here to help.

 

Inventory Alert

Inventory Alert

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

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

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

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

That’s me. I’m that guy.

Loramoor Sells

Loramoor Sells

It seems to me that what this lakefront market really wants is newer inventory in the $3-5MM range. There are buyers in that range seeking newer homes on reasonably nice lots, and this is what they haven’t been able to find. My sale on Lackey Lane  ($4.375MM) fit that mold. The sale last year on the hill in Fontana for $5.1MM, too. Those sorts of homes are what the market wishes for, and yet that sort of home is what we haven’t been able to offer. Inventory concerns are real, and on Geneva right now the ideal inventory is what I’m describing today.

The curious part of this hole in the inventory is that the inventory has existed, but it hasn’t been built. It’s raw land, or it’s a tear down, but it does exist and it has existed for much of the past two years. There were two sales on Sidney Smith, then a sale on Lackey (of a tear down). Then, the vacant lot in Loramoor that I sold less than two years ago came back to market earlier this year. The key to building a new house and being all-in for less than $4.5MM is in buying the dirt for around $2MM. If the dirt is more, your budget is blown before you put a shovel in the ground. If the dirt is considerably less, you don’t have the sort of property that can support that elevated target price, no matter how shiny your Wolf oven is.

This is why when a buyer asks for an entry level tear down, I question the math of it all. Yes, it’s true that you can buy an entry level tear down somewhere around $1.1MM right now. But what have you bought? Likely the answer is around 50′ of frontage. That’s nice frontage, and if you wanted to buy a tear down for $1.1MM and build a new house for $700k, that might be a good idea. But what if you’re looking to buy $1.1MM dirt and then build a $1.4MM new house (5000 square feet x $300ish/ft)? Then you’ll be $2.5MM into a 50′ lakefront lot and again, I’m not concerned about how terrific your kitchen island is because that price doesn’t make much sense. The investment was a bad idea before it started.

That’s why the market has a sweet spot, that of a $2MM type lakefront lot possessing around 100′ of frontage, and on top of that it’s reasonable to build a $2MM or so new home. The market, with the sale on Lackey and the sale on the cliff in Fontana, has proven it can absorb new construction of a higher level in the $4-5MM range. With this known, if you’re a buying in the $4 range why wouldn’t you just build a new house? The answer is confounding, usually related to a distaste for the building process, or perhaps a lack of patience to wait the 10-16 months to have a build completed.  The thing buyers forget is that the house they’ll end up with for $4something will be exactly and precisely the home they wanted all along. There’s a wait involved, sure, but the outcome is individualized perfection that the market also appreciates.

Last Friday I closed on the Loramoor lot that I brought to market earlier this year. The seller had great hopes for that property, but life changed and focus shifted. That shift allowed a new buyer, a young family with eyes set on the lakefront, to find their way to the parcel that will hopefully be their lake home for decades or generations to come.  They paid $2.075MM for 110′ of frontage and 1.43 acres, and that’s something that will always make sense on this lake. The trick now will be to keep the all-in budget in that $4MM range, and once that happens the buyer will end up in a home that the market simply couldn’t offer. Want to find that $4MM new construction on Geneva? Then it’s time to get a bit dirty and build it.

Abbey Springs Market Update

Abbey Springs Market Update

There’s a truth we need to agree on this morning. Abbey Springs is nice. That’s a truth. Abbey Springs has a golf course, another truth. I have hit many Abbey Springs houses with golf balls that were launched off of a club face under my “control”, super truthful. Also, the Abbey Springs beach on a sunny holiday weekend is less a beach and more a flesh blanket. It’s a flesh blanket. Mind if I lay my head on your stomach, because I can’t find any open spot of sand? Flesh. Blanket.

But this is unfair, because it’s a nice flesh blanket and it’s the only association of its kind that has a beach at all. It’s a miniature Geneva National but instead of being located on Lake Como, it’s located on our Geneva Lake. It’s also just 592 units in size, which makes it enormous but still about one third the size of Geneva National. In this size difference there is a key to the market. Instead of needing to print 60-100 sales per year to keep pace with market demands, Abbey Springs can leisurely print 18-25 sales per year and everything will be fine. Smaller associations are like that, and Abbey Springs has both a holiday beach draped in a flesh blanket and a really solid market. Let’s talk more about the market.

Last year at this time there had been 14 closings in Abbey Springs, with just one of those sales printing over $500k. This year Abbey Springs has closed 28 total sales with five over $500k, including two over $800k.  With that you know this: Abbey Springs is having itself an absolutely terrific year. The condominiums are selling, the houses are selling, the beach has a blanket of flesh and the golf balls are knocking roofs. The grounds are well maintained and the ghosts of large past special assessments all but forgotten. Abbey Springs might be having the best year of any individual association around this lake, and that’s a really good thing.

But the market isn’t without holes. There are issues here, chiefly the market’s relative difficulty in printing sales over $700k. Yes, this year there have been two over $800k, but look back and consider since 2010 there have been just 9 single family sales over $700k in Abbey Springs. That’s a little more than one per year, and that’s not terrific.  There are loads of Abbey Springs homes valued over $700k. Lots and lots of them. Yet the market still has a hard time absorbing that nicer inventory. For an association as strong as Abbey Springs, with the indulgent amenities, I’d expect a stronger market over that price point. For context, Geneva National offers bigger and better homes for the money, but GN has printed 15 sales over $700k since 2010, so GN has finally beat Abbey Springs at something.

I have plenty of buyers who contact me in search of some nice single family home in Abbey Springs priced around $500k. This is hard for me to say, but Abbey Springs around $500k in a single family home situation doesn’t offer much. It’ll give you a reasonably decent house that needs updating. If you’re looking to spend $500k and you want a Viking stove, better check elsewhere. This does create a market for the buyer who wishes to improve a built home, as nice homes with elevated, newer finishes in Abbey Springs generally start at that $700k mark and run upward from there. Looking to create value in Abbey Springs? Buy an older house and fix it up. You know, like they do on TV.

I’ll be working this holiday weekend, so if you find yourself at the lake and in need of some advice, fire away. Unless you want to call me at 11 am Sunday morning and you’re hoping to see seven homes at noon, then don’t call me. Just email me and we’ll see what happens. Have a terrific weekend at the lake.

Luxury Markets

Luxury Markets

If you bought a mountain home in Aspen last year, I don’t quite know what to say. Aspen seems nice, though I’ve never been, and I admit that most of my knowledge of the town comes from a 1990s movie starring Lloyd and Harry. The market in Aspen, according to numerous news stories I’ve read over recent weeks, is not so good. Brokers are on record saying “They’ve never seen anything like this”. Generally, whether coming from a doctor or a Realtor, this is not welcome news. The market in Aspen has paused after a tremendous and breathtaking run with YTD volume off more than 40% from YTD 2015. Over the last decade buyers flooded in from all parts of the world to snag their own craggy piece of mountainside, but recently these affluent buyers appear to have vanished into thin air (altitude joke).

In East Hampton, which I presume to be East of Hampton, which is to the East of West Hampton, things are similarly bleak. Volume is off 53% YTD, and no one in the media is quite sure as to the cause. Is it stock market jitters? New regulations on off-shore money laundering? Zika? The collapse of many South American economies? No one is sure. One article I’ve read does mention the lack of inventory as being a contributing factor, but that’s quickly brushed aside before returning to theories about the petrodollar.

Uber-Expensive condominiums in Miami are off this year as well, with volume down more than 40% for condos priced over $1MM. This isn’t terrific news, and the same worries abound. Zika? Brazil? Knowledge that Miami is awful and filled with disgusting things?  Aspen, East Hampton, Miami, all off their game, all struggling to find volume. While I sit here in the comforts of my Midwestern office, there’s one obvious question to ask: Is Lake Geneva next?

YTD lakefront sales are outpacing YTD 2015 by a single sale, with 14 lakefront sales printing so far this year versus 13 for the year prior. There are three more lakefront sales pending, four if you count one private one, meaning we’ll be on track for a solid volume year. In that, we have already fared better than these other luxe markets. But does that mean we’re in the clear? Does it mean that Lake Geneva is impervious to jitters? If you were with me for the 2008-2013 cycle, you know that we’re not impervious to anything, except leaches. We don’t do leaches here.  We can get the jitters just like any high end vacation home destination, but there are a few things that insulate Lake Geneva better than most other high end vacation home markets in these United States.

For starters, we don’t have any dependency on the foreign buyer. This matters. It matters a whole lot. Aspen, riddled with foreign buyers. Hamptons, same. Miami, obviously. The thing about foreign buyers is that they’re not close to any of our markets, so each market competes for this same group of buyers. Sure there are tendencies for certain foreigners to gravitate towards certain markets, but for the most part a Russian buyer may be as likely to buy in Manhattan as in Miami as in Aspen as in Deer Valley. With no geographic constraints, a foreign buyer can buy anywhere. Lake Geneva, in comparison, requires buyers who live within 2 hours of our shores, of which, as no small coincidence, there are about 10 million people. Our market is small but our potential audience is huge. This matters.

In that lies the next point- the size of our market. Aspen is a two billion dollar per year real estate market. Lake Geneva, as it relates to the lakefront itself, is a $50-80MM per year market. We’re tiny in comparison. In fact, we need just 16-26 sales per year to keep this market operating as it should.  We don’t need some massive influx of new buyers to consume all of our new inventory, and that’s because we don’t really have any new inventory. New developments on the lake in the last 20 years  include the South Shore Club, and the South Shore Club. Also, the South Shore Club. We don’t do development here, so we don’t need to keep growing our buyer base. We just need to keep operating as an exclusive enclave that appeals to the well-to-do of Chicago.

We don’t have Zika here.

We do have Wall Street jitters, and our market is somewhat dependent on the health of the significant hedge fund industry in Chicago. Along those lines, I do see one concern for Lake Geneva moving forward. If the city of Chicago itself chooses to continue to tax its residents into submission, and if crime makes its way into or near the affluent sections of the city, Lake Geneva will inevitably suffer. My theory says that city dwellers are more likely to buy vacation homes when compared to similarly wealthy suburban residents. If you live in Lincoln Park, you better have a Lake Geneva lake house, this is obvious. But if you live in Lake Forest, you’re more likely to convince yourself that a country club will make up for a lack of a lake house. I need the affluent to continue the trend of living in the city because if that trend falters, Lake Geneva may lose a few buyers annually, and that’s not good for anyone.

Is Lake Geneva immune to the macro issues that can affect and afflict all luxury markets? Of course not. Do we have a leg up on our better known brethren because we don’t need a steady and uninterrupted influx of foreign buyers to keep our market moving forward? Most obviously, yes.

South Shore Club Sale

South Shore Club Sale

Last month I listed a home in the South Shore Club. This month, I sold that home in the South Shore Club.  This doesn’t seem like a big deal, but it kind of is. Imagine the South Shore Club of before, of pre-2012. It was a nice place, with boats and green lawns and that pool and a tennis court. It was a beautiful place back then, just as it is today. But back then the market was struggling with the concept, struggling with the idea that something off the lake with so many vacant lots could ever find its place in this lakefront scene. In spite of finished roads and amenities, in spite of fanciful built homes and happy owners, there was a dilemma: Would this place ever hold its own?

The answer, admittedly, was not then known. It couldn’t be known. There were too many vacant lots, too few sales, too much uncertainty. Would the developer go bankrupt? Of course not, but the question was still asked.  In 2012, these question that was the South Shore Club started to find answers. The lots were selling, the houses, too. Inventory was shrinking,  distressed owners were leaving. When I took over the marketing of the SSC it was an uncertain place, but by the end of 2015, when the last bit of old inventory was cleared and the last lot sold, it was obvious that the South Shore Club was on solid ground. Market acceptance is a wonderful thing.

This summer, the first real test. New inventory, new pricing, new product. Would the SSC absorb this quickly, or would the development stall at its first opportunity to show that it has indeed turned the corner? When I listed this home on Lakeside Lane in July, no one was more interested in the answer than I was. Yesterday, that home closed for $2.75MM, and that answered the question. The South Shore Club makes sense, the market understands it, and the woes of prior years are squarely in our rear view mirror. For the South Shore Club, no two sales have ever mattered more than the first sale of 2012 for $3.575MM and the first sale of 2016 for $2.75MM. The 2012 sale kickstarted a nervous market, and the 2016 sale proved that the SSC can compete with lakefront homes for the attention of new buyers.

I was pleased to have represented this seller, and am grateful for the opportunity to continue the momentum that the South Shore Club has worked so hard to gain. I’m always happy for these sales, but some do mean more than others. This sale doesn’t mean more to me than the sales that have come before and the sales that will follow, but to the South Shore Club this sale means the world. If you’re interested in being part of the South Shore Club scene, my vacant lot offering on Forest Hill listed at $598k is your best bet.

Lake Geneva Foreclosures

Lake Geneva Foreclosures

The first foreclosure I bought was in 2009. January of 2009, to be exact. The home was ugly, the property decent, the list price somewhere around $249k. In January of 2009 there was some sense that the market was bad, but what wasn’t clear yet was just how bad it would get. I bought, perhaps premature in the downward cycle, but I bought because I needed a place to live and had recently sold my primary home in Geneva National. As a broker who writes about vacation homes only, and as an audience that seeks info on vacation homes only, it’s sometimes forgotten that people buy homes primarily so they have a place to live. I admit I tend to think people buy homes so they have a pier to swim from. Anyway, I bought that house, that foreclosure, and I fixed it up.

I bought that home for $177k, put about $60k into a remodel, and sold it for $274k in the summer of 2012.  Had I bought that home in 2011, and sold it in 2014, the gain would have likely been far more significant, due to the lower purchase price and the higher sale price.  Prior to that property, this was the first foreclosure (REO) I had ever bought. Since that property, I have not bought any others. It’s strange to me to think about that, and I wonder why I didn’t buy more real estate when things were bad.  The only answer I can come up with is that I wasn’t interested in the project, because foreclosures here tend to be projects. I love projects, but I tend to only love the next one once I’ve forgotten about the tribulations of the last one.

Even though I haven’t indulged the REO, I have a tendency to watch for these bank owned listings. When one comes to market, usually by one of the brokers that specializes in that sort of thing (I have listed and sold three lakefront foreclosures, but never anything off-water), I pay attention. I look at the details. I look at the pictures. I find myself contemplating the idea. I wrote an offer on a foreclosure last year, a personal offer, and then when the bank didn’t negotiate, neither did I.  Last week, another foreclosure came to market, this one in Fontana, and cheap. I thought about it. I thought I should make an offer. It would need to be strong, at ask or better, and I thought about the possibilities for a while. A few minutes later I decided that it wasn’t for me, and I let the feeling pass.

But this is what foreclosures do, they incite a buying public to action, because even after seven years of seeing foreclosures with some frequency we have something programmed deep inside that assumes a distressed sale is a value. It’s a steal.  When the market was in rough shape, I’d receive emails often wherein the sender asked me about lakefront foreclosures. They were interested, they’d say. Foreclosures, foreclosures, foreclosures. I’d always respond with the same suggestion. What if I can find you a better deal on a better property that’s not a foreclosure? This was typically the end of the email exchange, because for many a foreclosure was the opportunity they wanted even though value was what they purported to be seeking.

Today, foreclosures are not so exciting. They exist, but in small quantities. Some of the foreclosure action around the lake is the same stuff we’ve been talking about for years. The Loramoor lakefront is supposedly foreclosed on and re-sold already, but I don’t know the exact details. The short sale in Williams Bay that’s been for sale for years is scheduled for another sheriff’s sale. There’s a sheriff’s sale pending over by the Lake Geneva Country Club. Another one in Country Club Estates brewing, and one in Country Club Estates that’s available as REO. There’s the large lakefront estate that remains under IRS control, and perhaps that sale will someday occur via public auction. But for now, for the rest of us, the reminder today is simple. Distressed sales do not always mean value, even though we’re programmed to believe that they do. Better value is found in properties that are merely aged on the market, as those are the deals we should be seeking. If one happens to be a foreclosure, so be it.

Lake Geneva Market Update

Lake Geneva Market Update

It’s getting late. The greens are no longer bright. The grass is beginning to fade. The corn is drying as it should, first at the bottom and then, slowly, eventually, all the way to the top. The beans will start turning soon, from green to gold. Vast fields of gold. The lake is warm now, as it has been all summer, but it’s really warm now. This is peak summer, and much like peak anything, it can’t last forever. Soon the kids will walk past this office on their way to school, solemnly marching up this hill on their way to learn something. Today they’ll ride their bikes down the hill, down to the beach and to the ice cream shops. Today it’s still summer, but everyone can hear then ticking of the clock and it sounds like nothing but inevitability.

Sellers hear this clock, too, and they’re anxious. The August lull is here. It starts right about now, and it lasts a month, maybe a bit more, sometimes a bit less. It’s the back to school pause. The first two weeks of August are prime vacation weeks, and so the lake is full and the kids are smiling and the boats are gassed. The last two weeks of August are prime school return and school prep weeks, which is to say that they’re terrible but necessary. The market here will pause while this reorientation occurs, but once the kids are settled at their various schools near and far, the parents will look around and realize that September might sound like fall, but it still looks like summer. By the middle of September the market will spark once again, but not until sellers feel the uncomfortable weight of winter on their shoulders and consider reducing their price just one more time.

And this is the issue today, sellers who have been sellers for longer than they’d like are faced with doing something, with doing anything. The price reductions of fall have already begun, but they’ll accelerate over the coming two weeks. That’s because it’s Beverly Hills that sells houses by rolling out red carpets and hiring mermaids to swim in pools, and it’s the Midwest that sells houses by offering those houses at better prices. We’re sensible here. But in the fall reduction cycle there is opportunity for both buyers and sellers. Buyers know the market will slow over the coming months, and they know what I’ve just written: some sellers really do want to sell. But this situation also creates opportunity for new sellers. At this point in the season the aged inventory is just that- aged. It’s picked over and dismissed for one reason or many others. New inventory is always sexy, and fall is prime time for new inventory to come to market and in doing so, quench the thirst of desperate buyers.

The market has been moving this month, with new sales aplenty. I have a deal on my vacant lakefront lot in Loramoor, as a buyer recognized just how nice 110′ of level frontage backed by 1.43 acres of rolling land just is. That deal will close this fall. There’s another fresh deal on the finest listing that I’ve ever been tapped to represent. My wondrous estate on Pebble Point that I listed in July for $9,950,000 is pending sale to an excited new buyer. This sale will be the highest sale since the Pritzker family purchased Casa Del Sueno several years ago. This sale will also show the market that there are buyers over $8MM if, and I mean to write IF, the house and property are befitting the asking price. This should bring new hope to the multitude of owners who are currently $8-12MM deep into the newer builds of the past decade. While Geneva is still primarily a $2-4MM market, the new norm may very well become fewer but higher sales, as the $5-10MM range proves it has buyers.

For now, sellers of aged inventory should be looking at their position in the market and considering reductions. I just reduced my lakefront on Marianne Terrace from $2.475MM to $2.195MM, as a seller recognized the market context of his home. More sellers will follow suit in the coming weeks. New sellers would be keen to list soon, to take advantage of the limited inventory and considerable buyer traffic. And buyers would do well to consider all of the above. Pick off the aged inventory for value, and quickly focus on the exciting new inventory as there will be a handful of properties whose owners wanted to have just one more summer at the lake.

Lake Geneva Lakefront Update

Lake Geneva Lakefront Update

August.  It’s August now and it’s too late for you. If you’re at home and your vacation home dreams are there with you, then you’ve already blown it. This August will not be special for you. It might be special for you if you enter into a contract to buy a vacation home during this month, but otherwise it’ll be uneventful and horrible. You went to Lollapalooza over the weekend? Terrific, that also sounds boring. The good news is that while this August is a complete and utter waste, next August can be spectacular. And next July, too. June, sure. May, and its Memorial Day, delightful. And so it goes, a summer still underway but an August already wasted. That’s your upbeat Monday morning message. Enjoy your week!

The market is remarkably active today. The lakefront in particular. A few weeks ago I sold my large lakefront listing on the North Shore near Pebble Point. A buyer paid $3.93MM for 181′ of dead level frontage and four acres of fabulous depth. This lot is likely the best vacant lot to sell on this lake in quite some time. I prefer it over the lot that sold near Alta Vista a few years back for $6MM. That lot is sold, and with it I’m back to where I belong in the MLS rankings for Walworth County- Number One.  Another large lakefront on Basswood is under contract with an asking price just under $4MM. That home had been for sale for quite a while, and finally found a spurt of activity this summer before finalizing a contract last month.  Two hundred feet of frontage with an old house will always find a buyer, assuming the price slowly succumbs to the market’s expectations.

The South Shore Club has had a nice injection of activity, as I listed and then almost immediately went under contract on a large home just to the lakeside and west of the pool. At $2.99MM this was the first home in this sort of location to come to market since I sold a foreclosure two years ago on the east side of the pool. The home sold quickly because it’s a large home, with elevated finishes, and a most beautiful lake view. The other listing in the South Shore Club is farther towards the back, with less of a view, but I expect that home to benefit from my soon-to-print-comp, and that home will sell this year as well. If you’re looking at the SSC and don’t want to swing the $2.7MM+ price to be on the circle, I have my lot on Forest Hill Court available for just $598k, including home plans.

Just last week a home on the Abbey Harbor came to market, and then this last weekend that home went under contract. Do buyers love harbor front? Of course not, but buyers do love new and fancy and if you’re a buyer who loves large boats and new and fancy well then you’ve met your ideal situation. At $2.8MM the seller was rewarded in large part because of the lack of quality lakefront inventory in that price range.  The SSC home is a similar beneficiary. If the lakefront had more inventory in the $2-5MM segment, buyers would absorb much of it with little delay. If you’re a seller sitting on a home in that segment and you’ve thought of selling, now is the time to call me. Actually, email me, since my return phone call habits are terrible at best.

Entry level lakefronts continue to be shown regularly, but are failing to attract contracts. I just reduced my lakefront on Lakeview to $1.419MM, and that’s likely the best entry level property on the market.  With just 27 lakefront homes available, and two more vacation lots (my Loramoor lakefront being the best option there), buyers have few options to choose from. The good news for buyers is that aged inventory is already starting the reduction process. Sellers know that while this market is a 365 day market now, buyer traffic will slow by November, meaning there’s just 90 days of solid market time left for 2016. Smart sellers are evaluating their position in the market and reducing. It’s not a desperate move by any means, it’s just smart business. Watch for the savvy sellers who have experienced significant market time to reduce soon. Of course the smart buyers are the ones working with me to both strangle deals out of this aged inventory and pounce on the new inventory.

 

Above, the boathouse at my W4160 Lakeview listing. Yours for $1.419MM.

 

Geneva Lakefront Condo Update

Geneva Lakefront Condo Update

The problem with market updates is that they require some movement in the market before they’ll really make sense. It’s like being a beat writer for a baseball team. If the team plays on a Monday and they lose, you write about the loss. The pitcher was terrible, the star outfielder always hits into double plays, and the fans were generally unhappy. You can say things like the crowd was unruly, or if they were so distraught that they were simply quiet and stunned, you can write that. Then, on a Tuesday the team wins. You can write about redemption, about the struggle of the star outfielder who finally found a gap, and about the pitcher who threw enough strikes, but not too many. The crowd roared and squealed, delighted by the victory. When the game was over and the players had left for the locker room, the crowd sang. It would be fun to be a beat writer for a baseball team.

But I’m not a beat writer for a baseball team, I’m just a beat writer for the Lake Geneva vacation home market. Sometimes, the market soars and we get to delight in that. I like writing about things that are happening, or will soon happen. For instance, my beautiful North Lakeshore estate property ($4.295MM) is selling this week. That’s terrific fun to write that statement. The South Shore Club home that I listed last week is under contract already, and that’s also nice.  But much of the time I’m expected to write about something that is happening, even when nothing is. Certain segments are active today- the lakefront especially so- but certain segments are absolutely terrible. And as long as we’re talking about terrible market segments, let’s spend a few minutes on the Lake Geneva lakefront condo segment.

I’m not going to beat a dead horse about how great the market used to be. I’m not going to slouch low in my chair and sigh just because I used to be the king of the lakefront condo, and now that title both doesn’t apply and wouldn’t mean anything even if it did.  No one would proclaim to be something that no other person would care about. If someone told me they were the king of lawn chair sitting near the basement entrance to their office, it wouldn’t bother me, but I would question their sanity. So I won’t be telling you about how great the market once was, nor will I be telling you that I was the king, nor will I tell you that I am the king. I’m just a kid who feels sorry for the lakefront condo market on Geneva Lake.

It isn’t that the market is terrible, because it isn’t. It’s just that the market isn’t as active as the similarly priced single family segments that surround it. The condo market has printed four lakefront sales this year. One at Vista Del Lago, one at Fontana Shores, one of a shore sale at Somerset, and one in Geneva Towers. Four sales isn’t horrible, but it certainly isn’t dynamic.  As the single family lake access market in the $300-$700k price range has thrived, the condo market has simply managed to tread water. Perhaps that’s as good as we can hope for, to maintain. Inventory is low, with just a handful of units available today. Some in the usual suspects- Bay Colony, Vista Del Lago, the Fontana Club, Geneva Towers, etc and etc. My fabulous unit at Stone Manor is still available, so if you’re in the market for unique and irreplaceable, I’m your guy. The king of Stone Manor maybe? Or certainly the king of Eastbank, but these are condominiums that play more like single family, and so the market senses that and responds with increased interest.

Perhaps the condo market is being mistreated. Perhaps all of this just isn’t fair. The lakefront condo does, after all, offer a buyer the best opportunity to be on the water, with a view and probably a boatslip, and from $400-$600k that’s something that a single family home cannot offer. Ease of ownership, ease of use, views and slips and no lawn to mow. It all seems quite perfect. But the market isn’t producing lakefront condo buyers like it used to, and until it does, we’ll lament the state of the market until the momentum changes and we can once again find cause to celebrate.

Lake Geneva Lakefront Update

Lake Geneva Lakefront Update

Perception is an interesting thing.  For instance, when I’m in front of a mirror with no one around me, I think that things are looking pretty good. When I hang out with certain friends who are more un-fit than I am, I feel pretty good about this, too. But then when I spend time with friends who are extremely fit I think that I shouldn’t spend so much time out in public.  Depending on where I am and who I’m around, things just seem different. The market is like this, without all the shame. If you took a boat ride around the lake this weekend, as I suspect you’ll do, you might think you’re noticing lots of lakefront homes for sale. In fact, you’ll see many with my name on them and you’ll think to yourself that this cannot be good. You’ll think it’s good for me, but then you’ll think that it must also be bad for me, because of so much unsold inventory and so many sellers leaking patience like the back left tire in my fishing truck that has not one, but two screws stuck into it.

But just like my solo mirror perception, your perception of the lake would be wrong. Dead wrong. In fact, there are just 23 single family homes for sale on the lake, including one in the South Shore Club. There are others, homes that aren’t quite lakefront but feel like lakefront- the chief example being my listing for $1.295MM on South Lakeshore Drive. There’s a Congress Club listing playing like lakefront, and a new listing on Sybil that I didn’t think would be valued quite so high (no slip for $1.295MM). But the lakefront itself, it’s limited. There are two lakefront lots available, my listing in Loramoor that you’re only going to be able to resist for so long, and a big property on Black Point.

The activity on the lake has been spotty this year, but that should be expected given the low inventory. There are the three lakefronts that I sold in June, and now there are two more than I have fresh contracts on. The large lakefront property known as Pikewood on North Lakeshore Drive ($4.295MM) is under contract now, as is my beautiful listing at 1014 South Lakeshore Drive ($7.95MM). Of course fresh contracts are not sold properties, but it’s a pretty important step in the closing process. There’s another new contract on a large lakefront property in Fontana that isn’t currently on market. If you look at these sales, it proves there is liquidity in the upper reaches of our market, if only you’ll be patient enough for it to arrive.

There’s another new contract, that on a new listing in Geneva Bay Estates for $2.85MM. I showed this home last week, and while it was a nice home it wouldn’t have blown your mind.  It went under contract so quickly in part because of the market’s newfound desire to be close to town. Downtown Lake Geneva used to be a poison of sorts, and now it’s as a bowl of sweet honey set outside on a hot summer day and we, the bees.  New inventory should be coming to market in the coming weeks, not because I have any secret insider way of knowing this (I do), but because it’s bound to happen. Sellers will notice this lack of inventory and if they’re considering a move up or down in this market, they’ll look for opportunities. Speaking of moving up, there’s a new listing at $16.45MM on Snake Road. What a beautiful property this is, but beautiful alone doesn’t convince someone to part with $16MM (I’m assuming a slight discount off ask).  I’ll be very interested to see if the market can produce a buyer in this strata. I’m guessing it won’t happen.

For now, enjoy the weekend. Be safe. Don’t tow your kids on tubs during the middle of the day on Saturday, Sunday, and Monday. Just don’t do it. If you go out for the fireworks, don’t boat drunk. If you light fireworks, don’t blow off part of your hand. That’s a terrible way to celebrate our Independence.

Another Lackey Lane Sale

Another Lackey Lane Sale

Sometimes, you just want what you want. You want to be on the lake, that’s smart. You want to see a weekend like the one just ended and you want to see it from the front row, up close and personal. You want to be on a road, something of pedigree, something that matters, not just any road.  You want the road to be easy. You want it to be on this shore or that shore, but you want it to be quiet and peaceful and you don’t want the rumble of a wayward motorcycle tour to interrupt your Sunday. You want a dead end, that’s what you really want, but you know it’s not easy to find a dead end. Bonnie Brae is a dead end, and if a car wanders down to your end of the lane home you can be sure it’ll be quickly followed by a many pointed Y turn, but Bonnie Brae is not on the shore you want. You end up looking and looking, content to be patient but wishing it wouldn’t take so long.

Then Lackey Lane comes to life with not one, nor two, but three properties available. On a street so small, an exodus so large. And so you see those 100 level feet and that wooded approach and you say that Lackey Lane is where you want to be. And then last Friday you close on that lakefront, the one with the small brick ranch that would be so much more at home in Niles. $1.91MM for 100′ of frontage, that Lackey Lane location, and a dream that someday soon you’ll have built a new home on Lackey Lane that will compliment but not mimic the newer homes that have already been built on that short little lane.

You’ll remember that last Wednesday I also sold the $4.275MM Pickell built home on Lackey. You’ll also understand now that $1.91MM makes thorough sense. It’s not that easy to find a location on the lake where a $1.91MM land buy can lead to solid, demonstrable value in the $4.5MM range, but on Lackey that’s possible. That’s why this post is about the two sales I just completed, sure, but it’s more about the one property that’s left on Lackey Lane. If you’re a buyer on Geneva right now, you should be letting me lead you to Lackey. The house that’s available is fine. You could fix it up and live in in for a long while. Or you could do the likely thing-  buy it, tear it down, and build at the same time the adjacent, new neighbor is building.  If there are few streets where $4.5MM all in costs are easy to justify (Loramoor is another one), then there are even fewer where you can build a new home next to another new build, at the same time.  The convenience of one singular disruption is difficult to fully appreciate until you’ve spent a summer next door a new build.  Just ask anyone in the 1030 area of South Lakeshore Drive, Fontana.

But I lied a bit, because this isn’t just about the available lot, and it’s not just about a fabulous client who let me help him into the new Lackey property, it’s a bit about me, because real estate requires shameless self promotion. That sale pushes me over $140MM in sales since the start of 2010, including $10MM worth of sales in just the past two weeks.  No single agent (operating without a multiple person team) has sold so much real estate in Walworth County since then, and that’s exceedingly humbling to me. Additionally, no other active top agent has, since that cold day in January of 2010, an average sales price in excess of $1MM. I think those things matter, and they should matter to any lakefront buyer or seller seeking to buy or sell some slice of Geneva Lake.  I’m well aware that these production numbers wouldn’t be possible except for the loyalty of my incredible and growing client base, and for that, I’m supremely grateful.

To the newest owner on Lackey, congratulations and thank you.  The market should be keen to watch a new home rise from that site over the coming months, and I’m certain we’ll all be the beneficiaries of what promises to be a most beautiful new home. If you’re a buyer and you want to have a beautiful new home and a lovely family as your next door neighbor, we need to start talking, like stat.

Lackey Lane Sells

Lackey Lane Sells

It should be no secret that the cool  people are buying at Lake Geneva. It’s not just the people, but the cool people. The kids who live in the city who know that city life is for weekdays. The young affluent set that realize brunch lines are best left for 24 year olds who have yet gained the financial ability to escape the clutches of that tall city for two days a week. This is the group that has learned of Lake Geneva, embraced Lake Geneva, and are benefiting from Lake Geneva. Our market is benefiting from them as well, as there’s a new generation coming to these shores to indulge in the things that make this place so darn special. But while this new generation of buyers is needed and wonderful, the last generation is still active in the market.  Each year there are new faces, new families, new kids jumping into their dad’s arms from white wooden piers for the first time, but each year there are also the others, those who have been here who just felt the need to do something different. Something bigger, something smaller, something on this shore instead of that shore.

This week, I sold W3818 Lackey Lane for $4,275,000. I negotiated that deal on behalf of a cherished client last November, and from that day in mid fall through this day in late spring, the property was under contract. The buyer waiting with nervous anticipation. The seller, presumably, hoping the deal would hold together and close. It did, and the buyer need only sit in a lakeside lounge chair on a day like today to realize the reward of the effort. The seller need only check his bank account balance to see his reward. The deal worked, and for that we can all be pleased.

The lake has a considerable absence of printed sales in the $4MM range. The reason for this is quite simple: There just aren’t that many high quality, newer homes on reasonably large but not huge lots. The trend on this lake has been clear: Buy a beautiful lot between $3-4MM, tear down whatever might have been built on the lot, and build new. The new build costs for these larger homes are safely between $3-6MM.  The lake has gone long on builds with all in costs between $7-10MM, and yet these newer properties, excepting the incredible home on Pebble Point, have not typically come to market. The cliff-top sale in Fontana in the low $5s last year was as close as we’ve come to touching on this particular segment. But what’s less common is a $2MM lot with a $2-3MM house on it. These are the types of properties that the market could more easily absorb, and this is where Lackey Lane fits in.

This sale, for as common as it might look in this market, is somewhat rare. It’s a newer Orren Pickell built home, so it’s of pedigree. And along those lines,  please don’t forget that builders matter here. If you wish to obtain some level of premium when you look to sell your newly built or dramatically renovated home, I do hope you’ve chosen a builder wisely. Pickell, Lowell, Engerman, these are the names that matter to this lake. Don’t think they don’t. And so this home was built properly, with the proper elevated finishes one would expect from a renowned high end builder. The landscaping was ideal. The lot level, 100′ worth. The home large but not too large. The sale making perfect, complete sense.

When this home first came to market last summer, the asking price was $5.275MM. I thought it had a chance to sell in the $5 range, but only because the inventory was low and this was a most beautiful home that the market wasn’t expecting. Alas, it did not sell, and when the price was adjusted a couple of times over the course of the fall, my buyer took notice. That’s why he’s sitting on the pier right now contemplating just how terrific life is on a Friday morning when the water is glassy and clear and the fish swim, dodging only the toothier fish and the plastic baits of the trolling fishermen. The seller of this property was wise to reduce until he found his market. The buyer was wise to wait.

With a decided absence of very recent comps in this range, how do we ascertain value? Well, we look at the land first. 100′ level frontage, $2MM all day. Two more comps on the street for tear downs bear that out. One of those I’m closing on today, the other is available. It should be noted that the other one on Lackey at $2.15MM, along with my Loramoor lot at $2.34MM are the best, easiest options for a buyer seeking a new home on Geneva Lake in the $3.5-4MM range. So if the land is worth $2MM, what’s a 6189 square foot Orren Pickell home going to cost us? Well, it’s probably going to cost between $2-2.5MM. And so there you have it, the cost approach for helping pin point value. In the case of this house, there’s a very real chance that the purchase price is  below replacement cost. If we’re considering a lakefront purchase, isn’t that a pretty nice data point?

For now, the new owner will be content in his new lakefront. I’ll be content to have helped. The market will be content to have printed another high value sale.  The question is, does a brunch line on Sunday morning really make you content? And yes, I know the hollandaise is amazing.

Geneva Lakefront Sale

Geneva Lakefront Sale

We tend to buy real estate based on emotion and sell it based upon fact. This shouldn’t come as a surprise to anyone who has ever bought or sold real estate. We buy it because we love it, because we want it, because it makes sense in some ways, sure, but mostly because we just have to have it. We sell it because we still love it, we still want it, but we know there are better ideas or better options, and so we adopt a more pragmatic approach and we move on past the thing that we so dearly loved. The hang up in real estate is when we’re buying something that we don’t truly love, that we don’t really want. Then every hiccup is perceived to be a bad omen, every slight difficulty a catastrophic event. When we sell, if we don’t truly understand that selling is what’s best, we cling to this real estate like grim death, knowing we have to sell but badly wishing against it.  Then we poison the process with emotion, the side of the process that’s supposed to be more fact based. This is real estate.

On Friday, I sold 976 South Lakeshore Drive in Fontana. I represented one of my favorite clients in that transaction, and the deal came together in the way that we wish all deals might. We listed the house, we showed the house, we received an offer on the house, then another, and then we sold the house for $3,300,000. Just $95k off of our original April ask. That’s a scenario that most sellers dream of, and indeed it is a process of which I’d love to be a consistent participant. For now, we’ll leave aside the part of the deal wherein I represented a fantastic seller as that family pursues the ultimate lakefront arrangement, and we’ll instead focus on the truths of this deal and try our best to learn from them.

I sold this home to this seller in 2013 for $2.95MM. The seller did some improving of the home, but nothing too overwhelming. The property just sold for $3.3MM, representing a 12% increase over the 2013 price. This is Takeaway #1 from this sale: The lakefront market is up around 12% from 2013. Is this a uniform number, benefiting or cursing all lakefront homes? Of course not. Some have risen more, others less, but this is a solid benchmark, proven out not by my own interpretation of the market mood, but by cold hard statistics. Other properties have been bought and resold over recent years, but these properties often have had some form of dramatic renovation between the time they first sold and the time they most recently sold, so those statistics offer simply more proof of a market tendency to overpay for renovated kitchens.

This property, at the time that it hit the market, was the only lakefront home in Fontana listed for sale under $7MM. As a result of that market gap, the seller of this home could have taken a common seller approach of assuming that because he was the only game in town, the market would dramatically overpay for the rights to own his exclusivity. I hear this often from sellers, and when they explain just how rare their property is I tend to daydream about things that don’t make me lose all faith in humanity, like trout streams and the lake on a calm summer morning. The sellers explain, if a buyer wants this particular thing, in this particular location, they’ll have to pay. Unintelligent sellers call this the “price of admission”. It is true that there is a price of admission, but you know I like to compare real estate to cars, so to be a seller offering his rare property for a ridiculous number is akin to me listing my 5 year old BMW for $100,000 because that is indeed the only BMW in Williams Bay listed for sale. If you want that sweet BMW, you’ll have to pay up. Sellers of houses are just as ridiculous, and this seller didn’t succumb to that absurdity. Instead, we discussed the market, targeted a price range, and we listed the home at what the market indicated would be an acceptable price. One month later we had two buyers in line, proving our theory correct.

The lakefront market as a whole is relatively slow right now. There are two other lakefronts closing this week, both to buyers whom I’m pleased to represent, and another in Lake Geneva with a shared pier. Don’t ask how I feel about shared piers. Two weeks ago the older lakefront home on the hill in Cedar Point closed for $1.515MM, representing a reasonable ransom for a house with a tremendous view and approximately three trillion stairs to and from the water.  YTD there have been 9 lakefront sales. 2015 had ten lakefronts closed as of June 13th, with two of those sales being involved in a trade. The market today feels somewhat sluggish, but it’s actually right on track. Last year, from June 14th through December 31st, there were a whopping 20 lakefronts closed, meaning 2016 has some big shoes to fill. The market could very well turn on in a similar fashion to last year, and I have a sneaking suspicion it’s going to do just that. The only difference between last year and this year is that our inventory is tighter, and without enough dry tinder there’s no way to get that fire quite as hot as last year.

 

Affordable Lake Geneva

Affordable Lake Geneva

Take to the highways and county roads this summer and you’ll notice plenty of things. You’ll notice that semi drivers often change lanes with relatively little warning, which is especially rude when I’m in the middle of writing a lengthy email. I’m beginning to think it’s not just texting and driving that’s dangerous, but also emailing and driving. Perhaps the public awareness campaigns will tweak their message. You’ll also notice motorcycles. I’m afraid of motorcycles, I admit it. My dad told me once that a motorcycle driver took a corner too fast near some house he lived in when he was a child. He said he had to go in the house to get towels and sheets to help his mom mop up the blood from the street. I find this to be implausible, completely and utterly so. There’s no way you’d worry about mopping up the street especially if rain was in the forecast. You’ll also notice campers and RVs and tow behind camping apparatuses. The world goes camping, even if we don’t.

There’s something else that’s common on these roads in this season and in the cars, trucks, and SUVs that are towing these camping things: The occupants of the car are generally in a fair mood. They’re going camping, with that pop up camper thing, and they’re happy about it. They’re driving someplace far, or someplace near, but they’re going to get there and then they’re going to set up their camper and they’re going to pop open their folding lawn chairs and they’re going to eat hotdogs around the fire. When night falls, they’re going to sleep in that camper, mom and dad in the bed part that sticks out over the bed of the truck, and the kids somewhere else. I’ve never been in one of these camper things, so I’m just imagining how it all works. But regardless of the cramped quarters, the lack of finesse, these people who do these things are content. They’re content because they’re getting away from their weekday lives and living differently, if only for awhile until the time comes to pay the park attendant the weekend rent and fold the camper back to its traveling form.

I’m never going to camp like this. Odds are, neither are you. But we can do things like this in a more comfortable way, and we can do them affordably. For every $7MM listing that Lake Geneva can offer you, there are 20 $189k vacation condos. For every $800k association home with a  boatstlip there are five $220k association homes with lake access. This is a market for the affluent, sure, but it’s a market for anyone who has a few extra dollars of disposable income and a feverish desire to get out of town on the weekends. Lake Geneva has always been the place, but it’s not just the place for business icons and those of affluence, it’s for everyone who wants to make a few sacrifices and spend their weekends living in a different place, in a different way, just like those happy campers who clog up in the interstate.

Along those lines, consider the economical Lake Geneva vacation condominium. I have some rules for this sort of purchase, and it includes avoiding condo-tels, because those are ridiculous.  You’re also not allowed to buy some condo in some absurd setting, like the condos that were created in the part of Williams Bay best left for lower value housing and commercial buildings. So let’s look at the condo market, and consider where you should be considering. Willabay Shores, this is an easy one. Priced from the painfully low $130s up through the $250s, these are simple two and three bedroom condominiums. They’re not new, so be ready to do some updating, but they’re walkable to the lake and the Williams Bay beach, and they have a pool and tennis courts and one car garages. You’ll feel part of the scene here, because you are part of the scene. Grab a fishing pole and walk across to the piers to fish. It’s terrific fun, and Willabay is still cheap.

Bayside Pointe is just up the road from Willabay, a bit farther from the water but still close. The units are newer, larger, so if you’re looking for newer and larger and you’re in the $200-300k price range, these are worth a look.  You won’t get any lake access with Willabay or Bayside Point, but you’ll be close. Can you tell that proximity matters? Walking distance to the lake is a good thing, and you should want it. Unless you’re considering Geneva National, in which case you’re not walking distance to any lake (Como doesn’t count in this context), but you’re tucked inside a beautiful enclave with what I deem to be the finest golf in the area. You needn’t be a golfer to vacation here, because who could hate beautifully manicured lawns, even if there are small holes with flags sticking out of them every so often?  If you’re a buyer in the $100-$300k range and you’re looking for a Lake Geneva vacation home, Geneva National should probably be the first place you consider. I have two condos in GN in this entry level range pending, and the buyers are making wise decisions. The values are still depressed, so there’s still value to be found. Yes, the market there is subject to some tumult, but you won’t mind so much when you’re living large in a very affordable vacation home.

In Fontana, affordability is nicely intertwined with the extremely unaffordable. In town, you can buy a condo for $700k. Or you can buy an Abbey Villa between $199-$299k. The villas are older, so they’re not huge and they’re not particularly high end (unless you find a renovated unit), but they will get you into the Fontana scene on the cheap. They’re sort of part of the hotel but mostly not part of the hotel, but you have pools to use and the beach a short walk away. You can’t bring your pets to the villas, so if you need to bring Fido each weekend, the villas won’t work. If you need to bring your dog, consider Abbey Hill. A bit farther from the lake, but still close to the scene. The units here are diverse, interesting, and I’ve always liked this place. In the $200-300k range, there’s no better option in Fontana.

Abbey Springs might take offense to that statement, and if they did they’d have a point. Want the whole scene in one development? The tennis, the golf, the pools, the beach, the restaurants, etc and etc? Then Abbey Springs is for you. Units between $140k and $350k offer a bit of everything, including some very odd floor plans.  The designs are a bit haphazard,  but they’re also fun and quite effective. I’d be considering Abbey Springs if I wanted an amenity packed association in the heart of the Lake Geneva scene.

If you’re looking for an affordable weekend retreat, skip the camper and the packing and the cramped sleeping arrangements, and just talk to me about a Lake Geneva vacation condominium in one of these terrific associations.