1530 Lakeshore Sells

1530 Lakeshore Sells

The problem with being in the real estate business is that if you’re doing it all the time you lose sight of pretty much everything else. I can remember days when I woke up and didn’t immediately think about houses and deals and clients. I can remember nights when I’d dream deep dreams about fantastical things, before the dreams came where I dream mostly about houses and clients and deals. Last night, I had a vivid dream about a client who was yelling at me. These are the dreams of a real estate veteran.

There was a time when I’d sell a lakefront house and I would be so insanely pleased. In fact, the year I would be engaged to my wife I figured I’d spring for the ring if I sold a lakefront house. I did, for around $900k, back in 2000, and then I was engaged. The lakefront sale then was so elusive that I was willing to pin a most important life decision on the completion of one. Today, as part of this new bread of real estate blindness that has afflicted me, I tend to expect these lakefront sales. And I shouldn’t.

Yesterday, I was super happy to represent a buyer in the purchase of his first lake home. There’s joy in every lakefront purchase, for every individual or family that bites off such a move. There’s joy for a family who has spent many of their years wishing for a lakefront home. These families have spent time in associations or condominiums, close to that lake but never on it. When they muster the financial courage to make the leap, it’s a wonderful thing to have a part in the capture of this long deferred dream. But, in the same way, it’s a terrific thing when a family who has had little prior experience with this lake comes to these shores and quickly decides that it’s right for them.

This is the new buyer of 1530 Lakeshore Drive, in the city of Lake Geneva. For $1.53MM, this young family is now the steward of a blue chip piece of lakefront. There were other properties considered, plenty of them. There was another property that held our focus for a very long time, but yesterday’s closing put an end to a couple years of hunting and hope and bitter disappointment. Today, the family begins a new chapter, one that if read properly will be truly transformational. In a good way, not in that governmental campaigny way.

The sweet emotions of the deal aside, and the fact that this sale represented my 26th lakefront transaction side since 2010 (trailing only one agent by only one side for the lakefront lead over that time), there are nuts and bolts and market facts to be considered. $1.53MM for a small piece of lakefront with a nice pier and a very nicely put together house is a pretty good deal, no matter the context. In 2010, when the markets were in very rough shape, this home sold for $1.475MM. To buy that property these improved years later for effectively the same number is a good thing. That tells us we’re in line with the market. Remember, if you’re buying a house now that sold in 2010 you should be buying it for a price that reflects a slight gain for the owner, but not a huge gain, unless the seller’s basis has increased due to renovations.

This sort of property, with 50 feet of level frontage, is a relatively safe place to park money, but is it a future market beater? Can a home like this be fantastically improved to such a point that a future sale will represent a windfall of profits for the owner? I’d say no. I’d say a property like this in a neighborhood like this is always going to be somewhat range bound, and while appreciation fluctuations to the tune of 10-15% may be easily expected, I’d argue that a home like this will always be a $1.5-$1.7MM home. That’s because buyers in the $2MM range either want a super nice house on a small lot, or they want a bad house on a better lot. This house should always be a very nice house on a very simple lot, and in that it should always hold the attention of that entry level market. It’s a safe play, a stable play, but it isn’t a play made with an eye towards a $2MM valuation.

The entry level market inventory is, pure and simple, on the wane. I’ve been saying this for a few years now, and with every sale it’s proving more true. There is limited inventory now, and limited inventory is great for owners and bad for buyers. My modern styled boat house on Lakeview is down to $1.685MM, from a prior ask in the $2.4MM range. Homes that were in this range will ultimately find a buyer, because an entry level buyer is motivated by price first, and by every single other thing second. Expect a few more entry level sales this year, and we’ll continue to see that the market that once thrived in the $1.2-$1.35MM range is now going to thrive in the $1.5-$1.65MM range.

A special thanks to the buyer of this new lakefront home. I’m sorry that you bought a house on September 11th, which was, in hindsight, a day after summer died.

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