Value, like beauty, is many times in the eye of the beholder. The eye of the beholder. We only employ that phrase when we don’t agree with the beholder. Like when we’re describing our friends’ new girlfriend to another friend. We say, well, she’s a nice enough girl, but beauty is indeed in the eye of the beholder. Value, it’s the same way. When we see a sale and we shrug our shoulders, we might end a long written ridicule of the sale by saying that value, too, is in the eye of the beholder. This is how it is because value and beauty alike are often subjective.
But sometimes, they are not. Sometimes a girl so beautiful comes along that everyone, everywhere can agree on her beauty. When we do this, then we make sure she’s on the cover of various things and we set her up with a famous quarterback. When beauty fails to no longer be simply in the eye of the beholder, but in fact, in the eye of everyone, that’s when beauty has evolved from subjective to matter of fact truth. In real estate, most every value is subjective. A property is worth one number to one person and it’s worth many different numbers to different people. Generally, the person who finds the most value in a property is the high bidder and the new owner, and even if we don’t agree with the final number we can’t disagree with the buyer’s decision just because he found value in a place where we didn’t.
Other times, value isn’t subjective and it isn’t delicate and there is no nuance to it. Value can, at times, be so blatant and so bold that it no longer sneaks up on us and slowly convinces us of its status and its worth. Instead, it walks up to us, looks us in our eyes, boxes our ears, and slaps our face. This is how it is at Folly Lane, and when I sold this lakefront property on Friday for $1.65MM there is no one, anywhere that can dispute the outrageous value that was secured here. This sale doesn’t need all that much context, but because I’m not as kind-spirited as I should be, consider the sale of the REO on Maple Lane from last fall. That buyer paid $1.86MM for a similar lot with a lesser house and a far worse view. That, and this: To get to Folly Lane you get to drive past William Wrigley and Pat Ryan and Richard Driehaus. To get to Maple Lane you get to drive past a convenience store.
The sale at Folly still falls, if at the low end, within our expected range for lakefront parcels of this size. That range, however, is subject to change, and if I have my faculties about me, and I believe I do, I’m looking for that range to change this year. The $16-$18k per front foot range that many lakefront properties have fallen into will, at some point, no longer be relevant. The market is running out of Folly Lanes. That isn’t to say that value will not exist moving forward, as it most certainly will, but it is to say that these sorts of values are bound to show themselves with far less frequency. I expect certain lakefront properties to slip through the cracks and sell at severely discounted prices, but as the Maple Lane sale from last fall proved, it only takes one buyer here and there to pay high prices in order to skew recorded values to the upside.
For now, we should congratulate the buyer of Folly for his discernment. Many buyers passed on this home because it didn’t have the polish that other homes have, and those in the market who are attracted to shiny objects didn’t find Folly all that enticing. I’d suggest that those buyers simply looked in the wrong place for all that glitters. They looked in the kitchen and they looked in the bathrooms and then they went downstairs and they looked around there and when they were done looking they still hadn’t found anything so they walked outside and sat down in their cars and drove away. The buyer who captured this value did so because he knew the only thing that needs to sparkle was right out at the edge of that 101′ wide front yard.