2019 Lakefront Market Year End Review

2019 Lakefront Market Year End Review

2019 Lakefront Market Year End Review

In August of this year, it’ll mark 24 years that I’ve been sitting at this desk. That means I’ve spent the majority of my life thinking about this market. In fact, there are few things, if any, that I think about more. Because of this market infatuation, I tend to see the years differently than you might. I see a year in review and feel what the market did. That feeling isn’t based on a review of statistics alone, rather it’s forged over the prior 12 months of listing appointments, showing appointments, offers written and offers accepted. It’s a cumulative compilation of the year of emotions and trials, something that is only available to those who live in these very nicely coiffed trenches. Anyone can look over the statistics and pretend to understand them, but there are very few of us who actually know what the market was like. Thankfully, not only am I the ranking official in this trench, I’m also a fast typer.

We’ll get into the boring statistics from 2019, those statistics that will show a dramatic increase in tedious things like price per front foot and price per square foot, but for now, a discussion of the market that doesn’t involve statistics. It involves behavior. I’ve written often that the only reason people buy real estate is because they’re confident and the only reason they really sell real estate (aside from a switch in asset shape or size) is fear. Always remember this, as I’ve never written a more true statement. Understanding this fact, we can understand the more important aspect of 2019. There wasn’t an ounce of fear present in the market. Beyond that, an incredible stock market and low interest rates fueled a remarkable, unimaginable level of confidence. When you remove all fear and douse an already affluent person with confidence, you have the makings of a most incredible year. Lake Geneva, take a bow, because it was your year.

But you already knew that. You already knew the market was hot. You know it because you’ve looked into it, or you bought into it, or you already own in it. The market was hot. Agents were crazed, and if you needed any proof of that just consider the Open House. In 2011, agents only held open houses because they had nothing else to do. In 2019, the open houses were held because agents knew something important. Buyers were out. Buyers were wandering. Buyers were seeking to figure out this market on their own, (to their ultimate detriment), and as a result, they were fair game on the weekends. Imagine an industry pretending to be overtaken by technology only to see the reality of the landscape. We place little directional signs with shiny arrows and maybe balloons and hope you’ll wander in and buyer something. Technology be damned.

My feeling about 2019 was somewhat complicated. On one hand, I once again dominated the market. I closed over $52,000,000 in sales, leading Walworth County in that important year end tally for the fifth time in the past six years. Further, my $318,000,000+ in sold inventory for the decade was the tops among individual agents for Walworth County, and second place wasn’t even close. It was the best decade any agent in Walworth County has ever had. On my tombstone, please write that, so people can realize just how silly my entire life really was. But enough of that, and back to my feelings about the year just ended. I felt the year made some sense. The market was active because the stock market was elevated. The market was active because confidence was high. But this isn’t my real takeaway from the year. My lasting impression of 2019 is that buyers made some awfully bad decisions.

Yes, I said it. Bad decisions. But bad might not be the right word for it. Ignorant would be more befitting the behavior. And perhaps not as ignorant as hasty. Maybe just stubborn. There were deals struck and deals closed that made little market sense to me. Some buyers decided areas of the lake were ready for gentrification and opted to save a few pennies over making a few dollars. Buyers bought tear downs, and some of those, like the sale on Basswood (I wasn’t involved in the buy or sell side, $4,450,000) made total market sense. Other tear down decisions? Uninformed. But it wasn’t just the teardown market that had some anomalies. I look at the sales from 2019 I see at least ten deals that I think were difficult for the buyers, and amazing for the sellers. Confidence is like that. Each day on my drive to work I see squirrels that were confident they could make it across the road. Their confidence led to a fatal miscalculation.

Sold by David Curry, $6,950,000

Onto the numbers. In 2019 the market closed (MLS sales, true lakefront homes only) just over $65,000,000 worth of lakefront real estate. Counting sides, that’s $130,000,000 up for grabs among the local agents. For my involvement, I personally closed 30% of that lakefront volume. As a market, we closed 1903 feet of lakefront, more than 958,000 square feet of lakefront land mass, and 92,441 square feet of living space. The top Lake Geneva lakefront sale was my listing on Basswood that closed for $7,200,000. Those market totals are all down from 2018, but the averages prove the market was anything but down. Our Price Per Foot, that favorite lakefront measurement for the old-timey set that thinks the number is uniformly accurate, was up from $27,684 in 2018 to $34,200 in 2019. The Price Per Square Foot of living space increased from $625 per SF to $704. Price Per Square Foot of land mass increased from $51.66 to $67.91. These numbers represent a market shift in the neighborhood of 25-30%. So did the lakefront market appreciate 25-30%? Of course it didn’t.

The top sale of 2019: Sold by David Curry (list side), $7,200,000

This is why I hate the metrics of our market when considering year over year gains or losses. Because our volume is low (22 lakefronts sold in 2019, including the South Shore Club sale and Glenwood Springs sale), the statistics can be violently skewed from year to year. Last year, we had a significant number of entry level lakefronts sell (4 under $1.85MM) and the top end sales (three over $4.99MM, all my listings and two of my buyers) were on reasonably average (size) parcels of land. Because of this, the sales figures appear aggressively elevated when they were, as a point of fact, only modestly elevated. I would guess the accurate price increase on the lakefront for 2019 to be in the neighborhood of 10%.

2020 is off to a roaring start, leading me to believe that unless we have a political event that is detrimental to the wealth creators among us, our 2020 is going to be another solid year. While the market is full of easily avoidable market mistakes (work with me, I’ll help you avoid them), there is one noble thread to our market performance. People are just trying to live their lives. They’re trying to enjoy their wealth. That’s all this market boils down to. The rest is just noise.

Above, the delightful pier at 389 North LakeShore Drive, sold by yours truly in the spring of 2019.

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