I trust everyone had a spectacular Christmas weekend. If not, I’m sorry for bringing it up. If you had a rough holiday, rest assured the lakefront condo market knows your deep and troubling sorrow. It’s just that, instead of a rough holiday, the lakefront condo market has had a rough three years. The Geneva lakefront condo, once the prize of every $500k Lake Geneva vacation home budget, has fallen from grace, which is a kin to saying that the portable CD walkman has grown a touch unpopular.
As of this morning, there are 15 lakefront condominiums available on Geneva Lake. Since it’s the holiday season, I’ve decided to extend my benevolence this morning to the stoic cement box that is Geneva Towers. While the harbor front units at the Abbey Villas might tug at my shirt with tears in their eyes and offer up a sniffling overture, I cannot extend this benevolence to these harbor front units. The Abbey Harbor is not the lake any more than Southwick Creek is. And if Southwick Creek is lakefront, then we need to really consider tearing down MidAmerica bank in order to subdivide the land into estate sized parcels. You can see how this might get complicated.
In spite of ample inventory, and available units in buildings where offerings seldom reach the open market, the lakefront condo has sputtered and wheezed its way through 2010. Just four lakefront units sold (per MLS) during this past year. I write this with four days remaining, but I’m fairly confident, given the lack of pending contracts, that anything will close before the week, and the year, are both out. Even though I write FOUR as if it’s a horrible number, it’s not that far out of line with the weak sales totals of the past several years. One sale was at Bay Shore ($420k), another was a three bedroom unit I sold at Fontana Shores ($456k), another a low sale at Vista Del Lago ($370k), and the last was a larger unit at the Old Boatyard Condominiums in Lake Geneva ($590k). I hesitate to include the Boatyard sale, as those condos don’t really feel like lakefront condos in the same way that a unit at Fontana Shores or Bay Colony does. The units are located one lot off the lake, and the lakefront is actually city owned, affording only a pier with slips for those unit owners. Even so, it’s the holidays, and my spirit remains generous.
Now that we’ve established how disappointing the year past was for the lakefront condo here, let’s go about the tricky business of forecasting what the year to come will look like. In my 2009 review of the lakefront condo market (4 total units sales during 2009 as well), I discussed how difficult the market is, but didn’t squeeze in anything about what the market will look like in 2010. I will not make such a mistake again. 2011 isn’t going to be a good year for the lakefront condo market. There, I said it. I expect total volume to remain in the 3-5 unit range, though there are several factors that could lead this number to increase.
Foreclosures. The foreclosure crisis that has been ravaging the nation has, surprisingly, hardly even touched the lakefront condo market. While the rest of our market has had at least some exposure to foreclosures, the strongest single market has actually been the lakefront condo market. This doesn’t make much sense to me, as it stands to reason that condominiums, with their mandatory monthly fees acting like additional weights around troubled borrowers collective necks, should be more prone to foreclosure troubles. Yet for all this supposed strain, the lakefront condo market on Geneva has held up remarkably well. There is currently only one (per MLS, as far as I can tell) lakefront condo on the market listed as Bank Owned. This is also the only lakefront condominium foreclosure I’ve been aware of all year. There was one sale last year, a one bedroom at Bay Shore, that narrowly avoided the sheriff’s sale gavel, but even that off-market sale was the only singular unit I was aware during 2009. The lakefront condo market, even as it struggles through a lack of liquidity, has held up incredibly well as it relates to the broader market.
Why do I bring that up here? Because any increase in foreclosure trouble for the lakefront condo market would probably be a boon for the liquidity of that market. Bank Owned properties tend to sell for the very basic reason that they undercut the rest of the market. If we had a few foreclosures involving lakefront condo’s, which I don’t see happening, we could increase volume for 2011 significantly. The other factor that could lead to an increase in sales is, most obviously, motivated sellers acquiescing to price reductions. The lakefront condo market hasn’t really adjusted in price in the same way that the single family lakefront market has, and this price barrier has been keeping buyers at arm’s length for the better part of three years.
I see the 2011 lakefront condo market looking very much like the 2010 market, which in turn looked very much like the 2009 market. I don’t see any sweeping rejuvenation coming to this segment of our vacation home market, and I say that with a somber voice. Even so, things could improve, and volume could increase, even though 2011 pricing will largely remain stable or even face a slight decline. The year will depend on inventory, and if inventory builds during January and February as I expect it to, and if those list prices are attractive, we could start off the first half of 2011 with a very small handful of sales. The problem, as I see it, is that those are very big ifs.