I’m rooting for the rain this morning. Rain, please go about your melting and wash any traces of this miserable winter from my sight. As of today there remains just one lakefront home listed for sale under $1.94MM. This lightness of inventory is in stark contrast to the market from one year ago, and more closely mirrors the lakefront market during the 2004 or 2005 season, when lakefront homes in the $1.5MM range were rare birds, and many lakefront offerings in that range inexplicably sold soon after hitting the market as buyers pulled a beautiful knee-jerk reaction to availability where there previously was none. To make matters worse, the one lakefront home that exists in this “entry level” range is located right next to a boat launch. If we were on Twitter, and I was limited to 140 characters, the last five characters of my post would be #fail.
What might be overlooked by some, but certainly not by me, is that the inventory drought in the entry level lakefront market has forced the hand of some motivated buyers, and they’ve bought other sorts of Lake Geneva vacation homes that might have typically been overlooked. If there were five lakefront homes for sale between $1.2MM and $1.6MM, do you think the Congress Club cottage would have sold last month for $1.25MM? I’m not so sure either. Other beneficiaries of this current situation where entry level lakefront homes are all but absent from our market include the two homes on Wrigley Drive in Lake Geneva. These homes were actually quite nice, even if I do hate cement board siding, and they were originally listed for close to $2MM. That was two years ago, back when the entry level lakefront market afforded more than one option. Over the past two months, both of those Wrigley properties have gone under contract, with one closing expected this month and the other next. Would both of these homes have sold in the middle of a Lake Geneva winter if there were three lakefront homes priced around $1.5MM? I doubt it.
There’s much speculation on my part about the fate of the lakefront short sale candidate on South Lake Shore Drive in Fontana. This home was rumored to have sold yesterday, which was also the date of the sheriff’s sale. The question is whether or not this home actually sold via sheriff’s sale, or if it sold conventionally on a date that just coincidentally happened to be the date of the foreclosure sale. I’m sure the answer will be known soon, but the sale might have morphed from a great deal for a buyer into a clouded deal where the ultimate sales price may be much higher than it had been if a little patience were exercised. I’m the sort that thinks a bank will sell for less money when they’re the outright owner, which leads me to believe that if this home did sell via short sale or sheriff’s sale, the buyer would have been wise to watch and wait. Would this home have incited a bit of a fevered reaction had there been four other lakefront homes listed around $1.5MM on the market? Probably not.
In much the way that several of these winter sales look to have consummated as a result of a lack of available inventory on the lakefront, and as such the lack of inventory resulted in a boon for these second tier type properties, what does this winter phenomenon say for homes in this price range that didn’t sell? That is to say, if you have a non-lakefront home in the $1MM-$1.5MM range, like the property I love on Conference Point with slip and pool, is there a chance that you missed the absolute perfect market conditions that set up as if just for you? If buyers were scrambling to make purchases, and their budgets were limited, and your home was sitting there, staring them in the face with dewy, longing eyes, and they passed it up in favor of another property, can this be anything but an opportunity lost? Well, that depends. If the entry level lakefront inventory remains absent, then the opportunities for non-lakefront properties in this lofty price range will continue. But if we add a couple entry level lakefronts to the market over the next eight weeks, as I suspect we will, then you very well may have missed the boat. It was a Cobalt, I think.
The other side affect of this strange lack of inventory is the resulting pent up interest in the entry level lakefront home. The indifference that pervaded the market during 2008, 2009, and 2010, will likely be gone once, or if, the entry level lakefront inventory picks up. Buyers will be more motivated, sellers will be less so, and the result could be disastrous for buyers seeking entry level lakefronts at 2010 levels. I’m not preaching price increases like other Realtors, but I am saying that if entry level lakefront homes trickle to the market over the next several months, you can expect to see them sell much more quickly than they have in the previous three years. Buyers who waited out 2010 feel a bit burned, and if the opportunity presents itself again in 2011, you can be sure they won’t miss. Fool me once, shame on you… Fool me twice, uh… the point is, you’re not going to fool me again.
(Special thanks to my new web guru for making some tweaks to the site. I hope you notice and like them. Particularly, I hope you like the new header photos. They’re going to be incredible.)