Last February, I wrote the 2019 lakefront market review. I spelled out the statistics that make up this dynamic lakefront market of ours, but I also commented on the behavior within the market. I saw numerous market mistakes made in 2019, and considering the confidence present in the market during that year, those mistakes were expected. The market operated with a complete and thorough absence of fear, indeed buyer confidence ruled the day, and ultimately, the year. For 2020, the theme continued with multiple market mistakes, as buyers bought whatever they could find, even when what they found wasn’t any good. The difference between 2020 and 2019 was that fear played a tremendous role in the market, but it wasn’t the sort of fear that usually crushes a real estate market.
Historically, buyers buy when they are confident and sellers sell when they are fearful. This means that buyers buy when they are confident in their financial positions, and sellers sell when they are fearful of either their personal financial situation, or the financial situation of the world around them. Market dynamics (inventory, sold statistics, etc) matter, but the driving force behind luxury real estate is the psychological and financial status of the participants. Last year we started with an absence of fear and quickly escalated into a world rife with it. The financial fear manifested before the pandemic fear, but even as the pandemic fear spread and grew, the financial fear dissipated in the face of a significant rally in equities. Rather than sit at home and fret, buyers decided to head to the lake and splash their way through summer. I contend that the only reason they did this in these meaningful numbers is because the stock market rallied so dramatically, but nonetheless, the lakefront market at Lake Geneva benefited tremendously from the pandemic and from the stock market rally that endured throughout the summer and fall.
Last year, the broad market closed 28 total lakefront sales on Geneva. This includes one sale that never made it to the MLS (will be reflected in 2021 likely, as it’s a spec build), one vacant lot sale (Black Point, in which I represented the buyer), and a few sales that I don’t really consider to be lakefront but the market does. I closed on a private-sale in the South Shore Club this past fall. A condominium style ownership at the old Westgate property closed, a small cottage across the street from the lake in Wooddale with 20′ of frontage closed, as did my Clear Sky Lodge home with shared frontage, and the back half of the old Ryerson home on Bonnie Brae that has 100′ of frontage accessible via a skinny strip of easement. Lastly, in the list of “lakefronts, but really?”, I’d include the property behind the Trinke’s lagoon with some actual frontage but a lagoon in between the lawn and the lake. Of those 28 sales, the least expensive was the 20′ Wooddale house for $1.385M, and the most expensive was the Black Point home with the big lagoon that closed for $6.75M after first coming to market years ago at a price well over $10M.
The 2020 sold lakefront volume was $95,989,000, up from $65,000,000 in 2019. Of the nearly 192,000,000 in transactional volume up for grabs, I personally closed more than $51,000,000 of that, or 27% of the overall market volume. That’s down from the 30% of the lakefront market that I closed in 2019, but I’ll take it. The broad market traded 2882′ of frontage, up from the 1903′ closed in 2019. The increasingly irrelevant statistic that Lake Geneva absolutely adores, the price per foot of lakefront, finished 2020 at $31,491, which is actually down from 2019’s average of $34,200. This is why the metric is meaningless, and if you find someone telling you how important it is I urge you to tell them that they are objectively wrong. The 2020 average was skewed by the two Black Point sales, which had large frontage (464′ and 301′ respectively) and relatively modest sales prices. Lastly, the average price per square foot of finished living space for 2020 was $773, up from the $704 we registered in 2019.
So what does it all mean? Did lakefront homes appreciate 20%, which is how it felt? Or was the market reasonably flat from 2019, which is what the statistics would prove? They key to understanding the statics from 2020 is that the market didn’t heat up significantly until the year was half over, so the sales from January through June weighed on the year end totals. Combine that with those two Black Point sales and the averages were skewed to the downside. I would suggest the market was actually up somewhere around 10% in 2020 over 2019, and that as we enter 2021 the market appears to be up another 10% from the first half of last year. The heavily nuanced nature of our lakefront market often renders the market data misleading, which is the reason your choice for market representation matters so much.
As we move into 2021, there are a few factors at play that should be recognized. First, the pandemic appears to be here to stay, meaning summer 2021 in the city and suburbs will still not be back to normal. That will bring more buyers to our sparkling shores, and that means more competition and higher prices. As of this morning, there are just three lakefront homes available on Geneva, with six more pending sale. We very well may dance with the real possibility at some point this spring of having not a single lakefront home for sale on Lake Geneva. If you were a buyer in 2012, when we had upwards of 40 lakefront homes available, you should be incredibly thankful for your wonderful timing. If you’re a buyer today, you have a very clear choice as to how you approach the market. You can either run from house to house and agent to agent like your hair is on fire, or you can just calm down and work with me to help you navigate this tight and often confusing market. As the market leader here, I consider it my duty to properly present the facts of the market while making certain that my clients do not make the sort of market mistakes that I absolutely abhor. Onward to 2021.
Above, pier 163, which I closed this past fall.