In early January of 2023 I wrote my market forecast and suggested that inventory would remain tight in 2023 and that pricing would be difficult for buyers. I added that sellers would find continued liquidity if they priced their properties consistent with comparable sales. As I look back at the year now ended it’s apparent that both of those pieces of forward looking advice held true. Inventory was present throughout most of 2023, but it trickled to the market which allowed pricing to remain consistent with 2022 (even though our price per front foot increased more than 15%). The timing of inventory is almost as important as the inventory itself, and Lake Geneva managed to thread the needle in 2023 in such a way that our overall market volume rebounded to 2021 levels even as pricing held steady. Find another luxury market in the country that featured an increase in volume 2023 over 2022 and pricing consistency year over year.
The market in 2023 was buoyed by three upper bracket transitions, those with asking prices of $17.95M, $14M, and $10.99M, respectively. I was honored to represent each of those three properties, and two of the three buyers. The remarkable strength at the top end of our market has been on display over recent years, but the lakefront market did have one segment struggle throughout much of 2023. The entry level of the market remains intact with near instant liquidity in the $2.9-3.5M range, and that segment featured several 2023 prints to reinforce the consistency of that pricing. But the middle of the lakefront market, those homes priced $4.5M-6.5M struggled to absorb inventory that was largely available throughout the entire summer and into the fall. As prices normalize, you can expect buyers to shun lakefronts that are in troubled locations, however they may present. During the covid market, the market decided to overlook such obvious detriments to value, but it appears to be once again judging properties in a more objective manner.
I would argue the market rebuffed several pieces of inventory based solely on aspirational pricing that looked to build upon prior sales rather than fall in line with them. If there’s one change in the market that became obvious to me in 2023 and should continue into 2024 it’s that accurate pricing should no longer look to a prior comp as a floor to value. If the last comparable sale was at $4.8M, then the next piece of similar inventory should be priced at $4.8M. This is in stark contrast to the pricing style of 2021 and 2022 when it was common practice to see a prior sale at $4.8M and list the next piece of inventory for $5.3M.
For buyers, this should be viewed as a positive. Pricing should start to make more sense for those buyers who understand pricing should follow a comparable sale pattern. For sellers, this should similarly be viewed as a positive, as pricing is no longer wildly subjective. If you are a seller desiring liquidity, look to a prior comp and price accordingly. This shouldn’t be a surprise, but after three years of covid era pricing irregularity it has taken sellers some time to adjust to a new norm.
The equity market rally from 2023 and a slow decline in long term interest rates should set up 2024 to be another solid year for the lakefront market here. Buyer demand has softened modestly, but inventory remains constricted. A glut of buyers during the covid-era was nice, but I believe in 2024 we’ll prove that an even pace of supply and demand is more than enough to keep our lakefront prices stable. The key for 2024 will be a controlled supply of inventory and pricing that accurately reflects recent comparable sales. Aspirational seller pricing will likely be met with buyer resistance, but proper pricing of lakefronts in quality locations will undoubtedly be absorbed with ease. If the equity markets hold up and rates continue to soften, I think 2024 is going to look a lot like 2023.
As always, if you’d like to fully understand this deeply nuanced market and enjoy visibility into the on and off market maneuvering of the lakefront set, I’m here to help.