I decided this morning that some market behavior has no choice but to flood over into different market segments. If, as we discussed last Friday, the primary home market is on fire below $350k, then the lake access and vacation home segment should be similarly torrid under that same mark. There’s no greater concentration of sub-$350k properties in the vacation home segment than in Geneva National, and so, as the theory goes, we should assume the market there is performing quiet well. Guess what? It is.
In Geneva National today, there are 80 MLS offerings of condominiums and single family homes (zoned condo). Of those 80, 12 are pending sale. Looking deeper, of those 12 pending properties, 10 are priced under $350k. This is a positive for Geneva National as much as it is a glaring negative. The condo market is doing just fine under that benchmark price, even though the prices are stagnant, but above that price Geneva National continues its decades long falter.
Of the 80 total homes and condos on the market, 39 of those are priced at or above $400k. Of those 39, just one is under contract today per the MLS. I’m not really worried about the homes in the $400-700k range within GN, as I think they will always have some relative liquidity in the market. The drag on those homes, as we’ve discussed, is the availability of loads of vacant lots and the incredibly low prices of many of those available lots. Why buy someone’s old house for $600k when you can build a new one for $575k?
On that subject, Geneva National would be wise to consider a revision of their condo declaration. I’m not attorney, so I’m not advocating as one, but I think GN could solve some of its vacant land inventory glut if they amended their declaration to allow property owners to purchase adjacent vacant lots and not pay the monthly assessment on those lots until they are sold by that owner or until a home is built. If I’m an owner in GN I might consider buying the lot next to me if it’s $25k, just because I’d like the privacy. But if I do that today I’m going to pay $300 or so per month in association dues, on top of the same amount I pay for my built house. Because of this, I might shy away, but if I didn’t have the pay those additional dues, I might consider it. Eliminating the vacant lot inventory should be the goal of Geneva National, and this is one way to help accomplish that.
The biggest question for GN today awaits it at the top of the market. There are seven homes offered today priced over $1MM. These are nice homes, to be sure, and they likely couldn’t be built (at least some of them) for what they could be bought for, but there’s a problem here. The market in GN has closed three homes over $1MM since 2010. That’s one home every two years, rounding down out of kindness. Today GN has 14 years worth of $1MM+ inventory on its books. This is a bad thing, and I’m not sure how the market ever catches up to these heavier offerings if the housing market between $500k-$999k is still suffering as well.
So what do I like in Geneva National? I like the condos priced under $250k. I think they’re cheap, I think they can’t easily be replicated at those prices, and I like them for a vacation home seeker who doesn’t want to break the bank. In spite of the unique difficulties facing Geneva National, I continue to think there’s nothing quite like it in our market, heck, in the Midwest, and for that reason it deserves consideration.