2013 Lake Geneva Lakefront Condo Review

I would normally reserve my year end reviews for January, once the year I’m writing about has actually ended, but today I’m taking liberties. Or at least one, and we’re going to go ahead and consider 2013 for the lakefront condominium on Geneva. We can do this because the inventory has thinned, with some sellers opting to ride out the Holiday season off the market, and we do this because this morning the MLS isn’t showing any accepted offers on lakefront condominiums. Some buyer could write an offer today and close by 12/31, but we’re odds players here. With that introduction, I bring you the authoritative 2013 Lake Geneva Lakefront Condo Market Review, or 2013LGLCMR, an acronym I promise to never repeat.

The luxury of writing this in 2013 is that we don’t need to talk about the way the condo market used to be. Those days when I’d show condos and then sell those condos with relative ease are long gone, but they also don’t matter much anymore. What matters on December 16th, 2013 is how the condo market behaved in 2013. It matters what buyers thought, what they paid, and what they bought. It matters because of what sold, and it matters because of what has been left unsold. It should be noted that the inventory left unsold will enter 2014 as property still needing to be sold, so while the outstanding deals are rapidly evaporating in the residential lakefront market, they are available both now and into the new year in the condo market.

Interest rates were low this year, like insanely low. In theory, this should have fueled the lakefront condo market, and in practice it did. There were 8 true lakefront condo sales this year, with units closing at Bay Colony, Bay Colony South, Fontana Shores, Bay Shore, and Vista Del Lago. Of these sales, five were financed transactions. Three presented as cash, and all three of those cash deals were of my listings. That isn’t to say that I attract cash buyers, but if I were another agent in another time, I would take out ads telling you that I do just that. We can surmise that the attractive interest rates led to this quasi-boom of condo sales, so that’s the one upside of achieving little return on our saved money.

The other key of 2013 was the continued absence of lakefront condo foreclosures. Of the 8 condo sales, none were recorded as being distressed in any variety. In 2012 I sold an REO at Bay Shore, but that was 2012 and this is 2013. If we had to point the finger towards one group that should have experienced foreclosure trouble it would be directed right at the temple of the lakefront condominium owner. This segment has been as illiquid as any in our vacation home market, and while the taxes are not especially heavy, the combination of taxes with somewhat lofty association dues should have been the pressure that broke a few troubled owners. That is what we would have expected, but that didn’t happen. There were a few near misses, as one sale at Bay Shore (not mine) was possibly heading to a distressed situation, and another listing at Somerset in Lake Geneva that was offered via short sale that as of this date doesn’t appear to have sold.

So, if interest rates drove much of the market, and if distressed sales were avoided, what did prices do? While the broader lakefront market has recovered some of its prior losses, it’s safe to say that the lakefront condo market hasn’t had such success. Prices are down, likely on the same level as 2012 prices. The lakefront condo has not given back as much equity as the residential lakefront market has, as sellers of these lakefront condos have been stubborn in their price moves. This is why the condo market was seized up for the last several years, as sellers opted to stick firm to their numbers in spite of buyers pleas. 2013 brought a few price concessions, as sellers at Bay Colony, Bay Colony South, and Vista Del Lago all succumbed to prices that were much lower than their original list. I just talked about Vista Del Lago a couple of weeks ago, so we’ll spare them from further conversation.

Geneva Towers had six sales in 2012, and not a single sale in 2013. Many of those 2012 sales were acquisitions of inventory by a developer who has been seeking a re-brand of Geneva Towers at an elevated finish level and pricing commensurate with that upgrade. This has not proven an easy task, as the MLS shows nothing sold here this entire year. I have mentioned this effort in prior posts, and while I commend the approach I don’t think the condo market is ready for $1MM units. If a buyer is in that strata, it would be better to look to Eastbank, where a unit can be bought and rehabbed to magnificent residential splendor, no elevator ride required.

That said, 2014 is going to look a lot like 2013. The interest rates might not be as attractive this spring as they were last, but they are still darn low. Expect to see the same number of lakefront deals in 2014 as we saw in 2013. This volume will be achieved mostly through sellers cutting list prices, especially at Vista Del Lago and other communities that failed to attract buyers at the current price levels. Geneva Towers may have to do some slashing as well to attract more interest. My unit at Eastbank will sell in 2014, as few units on the lake can offer a canopied boatslip, a two car attached garage, two fireplaces, and loads of living space all within a gated setting. That unit is down to $775k and will sell, as will one or two units at Fontana Shores. Bay Colony will probably adjust lower now that I’ve printed a $445k comp in that building. If sellers adjust in light of that value, Bay Colony will have a sale in 2014 as well.

I think we’ll get to 6-8 sales in 2014, with prices in line with 2013. Unless something wildly positive happens in our world within the next few months, except prices and volume to be flat in the condo market in 2014. This won’t be well received by sellers, but buyers should be pleased. While the rest of our market is picking up and seeing prices inch upwards, the lakefront condo market is seeing no such phenomenon. If you fear you’ve missed the market and your opportunity to buy a lakefront condo, 2014 will offer you redemption. As the lakefront condo sales leader in 2013, I’m here to help.