Geneva National Market Update

Earlier this year, I decreed that we should no longer look back at YTD figures from the hellish years of 2009 and 2010. I said that we weren’t going to do this anymore for many reasons. First, it will make agents feel bad. Second, the remembrance of how limited the volume was in those recessionary years is no longer a fundamental component of the current status of the now recovered market. That said, let’s look back anyway, because it’s fun and I am like the Commander in Chief of this blog, except that I really don’t need congressional approval to change laws all willy nilly like. Looking back at these years is like recalling a near death experience. If we’re on a television show and we’re remembering about how some bear almost ate us, but didn’t, we’d certainly cry and gasp for breath as we retold the story. But when we retell the story to our friends while out for a Friday fish fry, we probably laugh and smile because, after all, the bear didn’t eat us. It’s exactly like that. The bear didn’t eat us, even though it ate some of our friends, but we can laugh now anyway.

Geneva National has a tendency, proven through several market cycles, to correct aggressively, unnecessarily, and then to correct that correction in a similarly aggressive, overdone way. Geneva National has no use of the slow and steady, instead preferring to rush up and rush down, always rushing but never finding a way to continue plodding forward. As such, the market activity from year to year is somewhat and entirely unpredictable. What has prompted this discussion today is the sale from this week of a home on Saint Andrews at $1.2MM. Not a typo. One point two million dollars. That’s a big, fat number, and it’s great for GN. I knew the house fairly well, and I would have pegged its value far below that number. But my pegging points don’t matter, as the sale printed at $1.2MM and has created a new cycle high for GN homes. This is a great thing for the market.

And with that sale, I figured a GN update was in order. Today I see 100 homes and condominiums available in GN. I see five pending sales, though a few more may exist. I see some solid value in the single family market here, and I see some possible steals in the condo market. While the broader vacation home market has rebounded nicely, first in terms of volume and now this year in terms of actual pricing, GN has languished. Activity is up in 2013, with 50 YTD sales. Of those 50 sales, just three of those are over $500k. Only one of those was over $586k, that being the brick home on Saint Andrews that, in case you’ve already forgotten, sold for ONE POINT TWO MILLION DOLLARS. Capitalization deployed for emphasis.

This is where the YTD statistics get fun. The 50 sales so far this year dwarf the 30 sales at this date during 2012. Geneva National had 37 YTD sales during 2011, and just 25 during 2010. The peak year at GN was likely 2005, with the pricing peak reached sometime during late 2005 and into 2006. YTD sales in GN for 2005? 100. One Hundred. Four times the amount of volume that 2010 generated, and double what we’ve seen this year. GN was a machine back then, routinely and effortlessly putting buyers into homes and condominiums. Even I got into the act, buying a small Fairway unit to live in while I built a home in the Barclay Club. I bought that two bedroom condo in June of 2005 for $147k, and sold it in December of 2006 for $187k. That’s the sort of move that condos were making back then, and what a great time was had by all of us who got in, and then got out. The buy and hold principle has never worked in GN, evidenced by the owners of vacant lots who purchased in the early 1990s and are looking, in many cases, at current values of 50% off those 20 year old prices. That’s not great.

Geneva National is, however, slowly recovering. The danger now will be new construction, as if we can keep builders at bay things will continue to improve. The problem is that builders have a tendency to pounce on any spurt of nascent recovery, and in doing so they pile new inventory onto a market that can barely support its current inventory. This is what happens in GN time and time again, and I’m hopeful that this time builders will hold off for a while longer. That would be really nice, but I’m betting that $1.2MM sale this week already has some builder, somewhere, thinking that there’s now a market for a $1MM spec home in GN. There isn’t.

Above, my super charming Geneva National listing on Edinborough Court at $429k.