There should be a special support group made up entirely of those unfortunate people who were entry level Geneva lakefront home buyers between the years of 2005 and 2007. This group would meet on Wednesday evenings, at the local Lions Club building, and every while the various snacks would change from week to week the crying would never, ever cease. And why would it? Between those years it wasn’t uncommon for the “cheapest” home on the lake to be listed in the $1.85MM range, with many, many lakefront homes that were worth as little as $550k in the mid 90s, selling for $2MM or slightly more. It was a strange time, indeed.
Back in 2009, it was obvious that the price on these entry level homes had fallen, but by how much? Were the prices in the $1.6MM range now, as many would have had you believe? Or was the price destined to be lower still, down where those prices hadn’t been since sometime in 2001, or 2002, or perhaps early 2003? My instinct was that prices would need to settle around $1.2MM, some to the higher side of that figure and some to the lower, but that number would indeed become the consensus. In case I am to be accused of revisionist commentary, consider what I wrote in June of 2010 on this site:
If you have a small-ish house on a small-ish lot on Geneva, chances are the house needs to sell between $1MM and $1.3MM.
With that articulated, it should be no surprise then that I just closed on a lakefront home in Dartmouth Woods for $1.225MM. That home was a nice home, sold fully furnished, with clean finishes and a dynamite view looking South towards that other shore, and West, towards Fontana and the sunset. The home was listed in the summer of 2009 for $1.89MM, a price that proved too heavy for the market then and during every day until a particularly foul day in February when I showed the home to the nice young couple who would become the new owner this past Tuesday. The price was pleasing to me, and to the market, and it further cemented the movement that I forecast back in 2009 and 2010. Not that I’m the only one to guess that price settlement, but I might be the only one who actually put a number to it with a digital pen.
The closer we look at the Dartmouth Woods sale, the more sense it makes. The home that just sold for $1.225MM had sold back in 1992 for $625k. Entry level lake access homes were selling in the $500k-$700k range as late as 1999, so the sale at $625k at the time put it in the mid range of entry level lakefront homes, perhaps even teetering on the high end of that acceptable swing. Looking deeper at the pricing, the neighboring home sold in 2001 for $1.15MM. If a home was properly maintained over the last decade, the home should, in theory, be selling in 2013 for the 2003 valuation. If the neighboring home sold for $1.15MM in 2001, it was likely worth $1.3MM or so in 2003, placing our sale at $1.225MM directly in line with that value expectation.
While the value of this sale is apparent, this isn’t entirely good news. The entry level lakefront market on Geneva is quite active. There are three other entry level lakefront homes pending sale today. All will sell in that low $1MM range. The problem here is not with the group in the West meeting room at the Lions Club, the problem now is with the group that meets in the same building every other Tuesday and sometimes on Thursdays. This group is also crying. But they’re crying not because of what they paid in 2006 but because they watched the market in 2006, and in 2013 they’re still watching the market. Pricing has settled at its bottom, and the bottom is slowly being eaten up by motivated buyers. This group isn’t motivated, though they struggle with the thought that one day they might be. If I’m them, and I’m in that room with tears in my eyes, I find some motivation and hunt down an entry level lakefront home while they still exist in this price range.