If I was in need of proof that four of my Lake Geneva based real estate theories are indeed deadly accurate, a closing last week at the Congress Club provided all the proof necessary in one concise sale. The Congress Club home, the lone new construction in the development, closed last week for $1.25MM. For the buyer, they will now get to enjoy Lake Geneva as select few ever do- as a part of an historical club where ownership is generally measured not in years, but in generations. The sale was a positive for the market no matter how you slice is, even if I view the sale as more of a specimen that is now splayed out in front of me. I, with scalpel in my scrubbed up hands, am ready to begin the autopsy.
As is my tendency, I must first declare that I find the Congress Club highly seductive. I love the trees and the lawn and the white buildings and their green roofs. I love the way the shore path weaves through the property, and I love even more the uniquely Club style pier arrangement, where one pier is dedicated for the sole purpose of swimming and sunning. I love that I’ve ignored the no fishing sign and fished at will off of that same pier. I love the Club, but that doesn’t mean I love this sale. There were several factors at play that morphed this property from a cottage that sold for a mere $310k in 1999, to one that sold for a budget busting $1.25MM in 2011. The existing home was torn down two summers ago, only to be reconstructed last year in a similar form and design. As a matter of opinion, I did not like the interior design of the house, but I’m just a kid from Lake Geneva.
The Overton Window was on display here, as it tends to be with many Lake Geneva properties of late, as this home originally hit the market with a $1.775MM asking price that teetered on the absurd. The price re-set expectations, and once the ultimate asking price of $1.395MM was set in place, the property had already gone through numerous price reductions. That pricing theory isn’t one that I subscribe to, but take one look at this sale, and it’d be hard to refute the effectiveness of such a system. Overton Window alive and well at Lake Geneva? Indeed. If you think my video making skills are bad now, check out how stroke-inducing they were a few years ago…
As I mentioned earlier, this is the only new home in the Congress Club. The others are old- like really old- and while all are generally in remarkable condition, they remain old homes under the shine. I find this historical relevance appealing, though buyers obviously don’t find the same charm in 100+ year old structures as I do. The history inside one of these hallowed buildings is captivating, and old homes live and breath in a way that new homes can only dream of. The other home available in the Congress Club last year was one of these grand old dames of the lakefront. The home is impressive, and I personally love it. The last active list price was $1.1MM, and I would have much rather made a play on this home than on the new one that just sold for $1.25MM. The proclivity of Lake Geneva vacation home buyers to choose new over old is one that I don’t quite understand, but it’s an irrefutable market tendency that is alive and well in 2011.
The closing price of $1.25MM is significant, particularly when viewed in conjunction with the other Congress Club sale from 2010. The other property was right up front on the lake, and boasted one of the most idyllic locations imaginable, even if some buyers undoubtedly complained that the home was too close to the lake. That property was privately offered, and the rumored close price was $1.5MM. The owner had purchased the same home at was was probably the peak of the market for roughly the same price. The $1.25MM sale in 2011 was probably a number that the same home, had it been built in 2005, could have fetched then. The sales of these Congress Club cottages in the $310k- $550k range for most of the 1990s proves that the 2011 pricing for the Congress Club is pretty much on par with the 2006 prices. In other words, the Congress Club hasn’t really dropped in value since the market peak. While the real estate around it has declined as much as 30%, I cannot find any evidence that the Congress Club itself has experienced any decline at all.
The moral of this story? Exclusivity is a safe harbor against economic downturns, and if you’re in one of the most exclusive developments in an already exclusive market, you’re going to be able to ride through the storm with uncanny stability. I wouldn’t have been a buyer of this home for $1.25MM. I would, however, be a buyer of the $1.1MM offering (currently off the market, but presumably returning this spring). I’d buy and renovate, and I’d be left with a grand lakeside retreat that oozes historical charm. That’s what I’d do. What would a modern day buyer do? They’d be influenced by the Overton Window, then they’d seek new construction, they’d find exclusivity, and they just might buy for a market topping price. And in the case of last week’s sale, sometimes they’ll do all four in rapid succession. To the new buyer, congratulations on your fine purchase. If you see me fishing off the swimming pier in May, please turn a blind eye.
Love this.