2012 Geneva Lakefront Market Review

Most arguments have two sides. This is what makes them arguments and not agreements. Many obvious things can become arguments between sane and insane people, but mostly we argue about nuanced things that reasonable people can somehow see both sides of even if they’d never admit to it. I like to play the contrarian in life, and I don’t know now if I actually like playing the contrarian or if that’s just who I’ve become at age almost 35. Either way, I’ll argue with most people about most things but today, here, now, there’s no way to argue this, not between sane or insane or reasonable or unreasonable people: The lakefront market on Geneva Lake had an absolutely incredible 2012.

The lakefront market on Geneva is easily defined as a market that consists of lakefront homes. That’s the easy part. The hard part is defining “lakefront homes”. It’s hard for some people, but not for us, not today. Today, actually on all days, lakefront home is defined as a home that participates in the lakefront market in terms of desirability and price structure. This is why Buena Vista lakefronts are considered lakefronts, even though they are technically park front homes with private piers. Same goes for Glenwood Springs, at least for most of the seemingly lakefront homes there, as they have private piers and look like lakefront homes but they have a narrow strip of association land that separates their homes from their piers.

This is also why a listing that sold in Glenwood Springs this year, one that looks like it’s right up on the lake, isn’t a lakefront home. At $950k the price is marginally acceptable for lakefront consideration, but that home doesn’t have a pier, so, in fact, it can’t compete in the lakefront market. That sale, for what it’s worth, at $950k, wasn’t all that cool given the size of the home made it more of a lakefront condo product than a lakefront home. Even so.

The South Shore Club technically isn’t lakefront, but it counts as lakefront because the homes compete in the same price range as true lakefront homes. So this last year the two public sales in there (both courtesy of this guy) will count towards our lakefront numbers. That said, it’s time to say this. We had 25 such lakefront sales on Geneva Lake during 2012 (not included on that list is one that an agent incorrectly entered into the MLS, so it doesn’t show up under Geneva Lake sales). 2011 had 16 lakefront sales, 2010 had 19, including an REO at the South Shore Club and a sale at Clear Sky Lodge. 2009 had, right, 2009 doesn’t matter.

The volume averages of the past three years rival the averages from the market peak of the early 2000s, and the sales from 2012 put the market on path for yet another year like it in 2013. Consider that we entered 2013 with at least four hold over pending sales from 2012, and today we have at least 5 lakefront sales pending on Geneva. The properties that went under contract in late 2012 were properties that I expected to close before 2013, an assumption based on the promise of increased capital gains taxes in 2013. That assumption didn’t hold entirely true, as these hold over sales indicate.

The issue on Geneva from year to year is always one of demand. Specifically, will we be able to replace 2012 buyers with new 2013 buyers. I think the answer this year is an obvious as it has ever been, and that answer is yes. With 5 sales already on the agenda, we’ll end up getting a rare head start on this new volume year. The inventory will need to grow in order to see more volume, as much of what is available today is either picked over and discarded for one reason or another, or the quality inventory remains over priced. Expect prices to soften still, though increased competition will make many new listings sell more quickly than they have in the recent past. If prices are right, there is no deficit of interest. Low interest rates will motivate buyers to join the market this year, as those rates, along with the inflationary pressure that sooner or later will have to push against home prices, will create a very ideal buying scenario. The buying market of 2009-2011 has ended to some degree, as competition has increased and rendered the representation that provides buyers with their market insight even more valuable. Improved market conditions mean hasty decisions at times, and hasty decisions if not guided by intelligent analysis can be absolutely disastrous.

On a personal note, I was blessed to have sold five lakefront homes during 2012. That’s a big number, and I’m happy with it, but the problem with January is that December production doesn’t count any more. I need new deals, new sellers, new buyers on the hunt for value because that’s ultimately what this is whole game is about. It’s about legacy, yes, and it’s about the first summer of many summers of lakeside fun, of course. But your pier looks better, your boat bigger, your lawn greener, your children even more well behaved, your spouse thinner, perhaps taller, if first you find value in this dynamic lakefront market.

Pictured above is N1621 Lakeside Lane, sold in May for $3.575MM, the highest ever resale at the South Shore Club.