Geneva Lakefront Update

I have a nasty tendency to hate volume that isn’t created in some part by me. It’s only natural, really. So when I scan the market on a week like this and see several new pending lakefront homes, it at once excites me and bothers me. I’m really happy for the market, but I really wish that I had a greater position in making the current market. Selfish, I know. But today we can forget about what it means for me and realize that it means nothing but good things for the broader market.

Today there are pending sales on Geneva, loads and loads of them. There is a sale pending on a curious piece of lakefront in Williams Bay. This lakefront property has a home on it, but no one really thinks the home is of any value or importance. The property sits between two giant condominiums, making the property suited for nothing except a foundation for another giant condominium. While this makes some sense, it doesn’t make any sense to consider building a condo on the lake today when the condo market is as void of buyers as it currently is. That, my friends, is a strange piece of property ($1.5MM).

Strange or not, it’s pending, so it counts. Another property is recently pending in Geneva Bay Estates. This lakefront is okay, though no one would go through the trouble to buy the pen and paper or the stamp to write home about it. At $1.95MM it’s a fine enough property, but the $52k tax bill has always been enough to dissuade any buyers of mine from nibbling at it. The lakefront adjacent to the Sunset Hills parking lot is still pending as well, and in that sentence I told you everything you need to know about that property. At $2.799MM it’s a great house, if parking lots make as good of neighbors as they claim to.

A lakefront in the 700 Club is still pending, this the last of the three properties to sell in a 500′ stretch of lakefront during this year. At $2.95MM for $150′ of frontage it’s certainly in the ballpark, and once the sale closes we’ll probably find a price per foot somewhere around $18k, which is the expected average for what amounts to a land buy in that strata. The lakefront at Sunny Hill that was recently reduced from $7MMsomething to $3.5MM is under contract as well, which shouldn’t be a surprise to anyone who pays attention. With 235′ of frontage and 6+ acres, it’s a huge piece of property for the money. It’s also as elevated as elevated ever was, so it’s a unique buyer who would tackle that project. Expect to see a wrecking ball on that site in the next 12 months, though I say that without any knowledge as to whether or not that will actually occur. Just guessing.

That sale will render price per foot ratios quite useless, as the price of $18k per foot that we’re accustomed to for such a volume of lakefront will not hold up here (Captain Obvious). Those who measure price per foot and send that around to owners on postcards as if it is some all encompassing explanation of value will struggle with this one. But that’s not me, I just put pictures of myself in sagging bathing suits on the covers of my postcards, so you can judge which is better.

The REO on Maple Lane is under contract as well. But that’s all I’m going to say about that today.

A large lakefront on Jerseyhurst is under contract as well, priced in the very high $4MMs. This property is large, but in that price range the parcel of land isn’t exactly what most would expect. It’s a bit shallow, but that’s no matter. The house is large, the frontage too, and the property in a high rent district. I don’t mind the sale one bit if the mid $4MMs is where it prints. Lastly, Clear Sky Lodge is also mostly under contract ($3.995MM). Thankfully, this is my listing so I’m in on the September activity to some degree. I say mostly under contract as the process of contracting on an REO can drag just a bit, but the property is effectively locked up, so that’s that.

I just rattled off eight pending sales now, to go along with the 11 closed sales YTD (remember, yesterday?). This is a ton of volume for the lakefront, and given the buyer activity still swarming the lakefront I’m guessing we’ll see 3-5 more sales before the end of this year. Why all the sudden activity? That’s a great question. Much of it is a result of lower prices, as opportunistic buyers see value and pounce. Much of those lower prices might have something to do with crushing capital gains increases coming in 2013. No matter that increased capital gains tax rates has proven to generate less revenue than lower rates, this isn’t about economics, it’s about fairness. Remember?

As I scan the market today I see value, and as is typical I don’t see value in most of the list prices but rather in what I perceive to be their ultimate sales prices. There are deals to be had this fall, and if you want to snag one of them you best call a broker. If, however, you’d like to not only snag one, but you’d like to steal one, it’s probably a great idea to call me. Dave Curry.