Foreclosures bore me. Perhaps the only thing that bores me more than foreclosures is hearing Realtors talk about foreclosures. If your target market is one that is rife with foreclosures and distressed sales, by all means, listen up. But if your target market is Lake Geneva, and let’s be honest, why wouldn’t it be, then foreclosures are more of a superfluous ingredient without a discernible flavor, used solely to provide one more note of depth. There’s nothing too exciting about the foreclosure scene as it affects the Lake Geneva vacation home market, but out of duty to you, I will now discuss it.
There have been a few recent developments that would, in a normal year, appear significant. A Geneva lakefront home sold at sheriff’s sale this fall, for a price that is rumored to be around $900k. That sounds, on the surface, like a screaming good deal. The home has a large lot, which is nice, and a city of Lake Geneva location, which is especially nice if you love really high tax bills. The house is a wreck, but with a nice level lot, it sounds like a deal, no? No. It’s a lot positioned squarely under the 1960’s inspired shadow of Vista Del Lago’s building #1, leaving me less impressed with the deal than I would have been had the parcel been located nearly anywhere else on the lake. Except Walworth Avenue in Williams Bay, I don’t like that stretch much either (again, condominiums in the near vicinity). This sale has been the sum total of the lakefront foreclosure activity of late, and there’s no reason to cry over this spilled milk. I think it was sour anyway.
The rest of the lakefront market appears solid in the face of foreclosure temptations, as does the South Shore Club for now. With the exception of the singular REO vacant lot available in the SSC, I can’t see any other pending foreclosures in this development at the moment. Those of you who missed out on the $1.75MM REO sale last month, it’s best to either buy that vacant lot, or keep waiting. The upper tier lake access market had one home that narrowly avoided foreclosure earlier this fall, as the home in Loramoor sold just days before a possible foreclosure was initiated. The lakefront condo market has been curiously strong this year, and the last, with only one single foreclosure filing that I’m aware of. The unit in question was at Bay Shore in Williams Bay, and it sold to a neighbor before the foreclosure could be finalized.
Abbey Ridge and Country Club Estates have two of the more interesting foreclosures cases in the works right now. These two properties have been flirting with foreclosure off and on for at least 18 months, and the fact that they still haven’t made it to sheriff’s sale is a sign that banks really don’t want to foreclose on properties, no matter what you think. Unfortunately for owners that continue to narrowly escape the awkward sheriff’s sale process, the odds are stacked against those owners that cannot distance themselves from their financial troubles for any length of time. There’s another foreclosure in the works (according to lis pendens filings) in the Birches, another in Cedar Point Park (vacant lot, probably won’t go to sale as it’s a foreclosure that appears to be enacted by the association, probably for past due association fees), and a couple in Indian Hills. The Abbey Villas have a couple in the works, and I should note that I’m surprised there isn’t a higher level of foreclosure activity here. With prices on the severe decline, and a thorough lack of liquidity, I would have thought a few more properties would have been given back to the banks by now. The fact that there haven’t been more is another surprising sign of strength by the individual unit owners there.
Geneva National, for all its trouble this year, hasn’t had quite as many foreclosures as I would have guessed, even though I fear much of the unsold, spec built, single family homes there may ultimately end up being owned by the banks that generously offered to finance those doomed projects. Abbey Springs looks as strong as ever, with only a scattered lis pendens filing here and there, and one or two lis pendens filings in a year means nothing for an association with 592 total units.
Something to note- the short sale phenomenon hasn’t really developed in the Lake Geneva vacation home market as many have assumed it would. Check some condominium listings downtown Chicago, and short sales look to be the rule rather than the exception. Short sales here are hard to find, which is a wonderful thing for our market. Short sales flood the market with potentially misleading inventory numbers, and can make a market look much weaker than it really is. Another thing to note- our square friend Clark Howard told me (and a couple million other people) that short sales are having equally destructive affects on credit scores as foreclosures are. Credit rating agencies are not differentiating between short sales and foreclosures, which begs the question, why are people opting for short sales over straight up defaults? If we’re going to stick it to those big bad banks that trusted us with other peoples money so we could have granite counters and limestone floors, why wouldn’t we just let them have the property back without all the fighting and crying? Why go through all the tumult of a short sale? What is the gain?
I ask those questions candidly, but I really do question the short sale phenomenon. I don’t understand what the ultimate goal is of the owners who are seeking the short sale. If the credit damage is the same, and if the bank won’t seek a deficiency judgment, why not just offer up a deed in lieu of foreclosure and walk from the property before all the drama begins? I don’t know the answer, but I’m incredibly grateful that the short sale trend hasn’t yet touched out pristine shores. For now, if foreclosures give you a tickle up your leg like Obama gives to a naive Chris Matthews, let’s do our best to identify those opportunities as they exist. The reality of the Lake Geneva vacation home market is that the opportunities that exist right now have nothing to do with bank owned status, and everything to do with location.