The entry level lake access market as it relates to Geneva Lake is a tortured market, of sorts. On one hand, the market benefits from a price point ($150k-$500k) that many well to do families and individuals can entertain. The buying pool, even in the exclusive realm of those who can afford any sort of vacation homes, it quite wide and surprisingly deep. Yet this enlarged buying group is also more influenced by macro economic news and by the returns or losses generated by retirement accounts and other investments. If the ultra wealthy buy based on flippant desire, the buyer of an entry level lake access vacation home is indeed wealthy, but also willing to give up a larger portion of net worth in order to pursue weekend bliss.
The single family lake access market at Geneva has run a pretty wild gamut of twists and turns this year, starting off hot, cooling some, then burning again during early summer, only to hit a lull that has led us to today. Even with the current dry spell, the market has racked up 30 YTD single lake access family sales priced under $500k. For context, consider that 2010 had 27 YTD sales by now, 2009 just 17, 2008 a mere 16. In fact, you’d have to go all the way back to a rosier time in the life cycle of a market- 2005- before YTD sales figures exceeded the 30 set this year (2005 had 36 such sales by now). So while there is a lull, these troubles seem to be light and momentary given the broader context of a market in the midst of a serious, full fledged, almost remarkable volume recovery.
In spite of ramped up sales this year, pricing remains soft. As a general rule, homes in this segment of the broader vacation home market are off roughly 20-30% from the market highs. There are exclusions to this rule, as with any market rule, and some homes have held their value within 15% of market highs while others have lost as much as 35% of that once realistic valuation. While the YTD numbers are impressive, and the inventory ample, the current weakness in the market bothers me. It’s late September, it’s Lake Geneva, and it’s not raining buyers. It’s pretty much just raining.
I hate to blame weather for diminishing real estate activity. If there isn’t a hurricane or a blizzard, it seems reasonable that a market should operate smoothly and efficiently. But this is not the case, and it hasn’t been the case for this whole month. Typically, September is a solid month here. Buyers on the prowl tend to narrow their focus and pounce once the high season is over. This calculated buying decision usually provides Lake Geneva with a nice volume bump in October and November. This year, this historical increase hasn’t yet made its presence felt. There are buyers on the scene, but there are not as of yet pending sales to prove their existence.
In the entry level market I like several of the 48 offerings right now. There are a few in the Loch Vista Club that deserve a look- including the one priced tragically low around $325k. Country Club Estates has some rather affordable listings, particularly if you’re looking to sneak into a vacation home in the $180s or slightly above. Glenwood Springs has gotten comparably cheap, with a cottage offered in the low $300ks. Just this morning a listing on Sybil Lane came to market in the upper $300ks, a rare offering in a rarefied association. Only last night I reduced my Oakwood Estates home to $269,900, making that three bedroom the most affordable home in that high quality association. There is solid inventory, and I’m betting that once this fall run of buyers start slinging offers around we’ll have some serious value being discovered in these ultimate sales prices.
Today, I see just two sales pending in this entry level market, those being a listing in the Birches and my cottage in the Harvard Club. If we are to finish the year on a positive note, we’ll need to add four or five more entry level sales before 2011 is dead to us. Since purchases in this segment typically involve some financing, the ridiculously low interest rates will be a motivating factor for those looking to buy. If the stock market calms and the weather in October proves to be more like October and less like November, then 2011 should finish with a very loud bang.