This is the in between. The entry level lake access market is somewhat active at the moment, with a few pending contracts and a few closings already on the 2014 books. The lakefront market is remarkably active, with all sorts of offers circulating and many pending offers. While this activity in these segments is wonderful, there are two distinct holes in the market. One in terms of inventory, the other in terms of buyer. Both problems may stem from a lack of quality inventory, or they may stem from a lack of buyers. One is our chicken and the other our egg.
The entry level lakefront market has always been a unique market. It’s unique in that many of the homes sold as $1.3MM homes do not remain those same sorts of homes. In that, buyers buy entry level homes and then they improve them to the point where they are no longer in that entry level price structure. If we buy a lakefront home for $1.3MM and then we put a $450k renovation/addition onto that home, it should be obvious that it is no longer a $1.3MM home. This has been the trend on Geneva of late, and I’ve said it before many times just as I’ll say again now: We’re sort of running out of entry level lakefront homes.
Given this, it shouldn’t be a surprise that the current lakefront inventory is void of any true entry level lakefront offering. In a statement more worthy of 2007 than 2014, there isn’t a true lakefront home for sale today priced under $1.8MM. That’s surprising even to me, as we had a long stretch of market conditions were entry level lakefront homes in the $1.3MM range were readily and constantly available. Today, that inventory has dried up, and while it certainly doesn’t mean that there aren’t those sorts of homes in existence, it does mean that the owners of those homes appear mostly content in their ownership. A few entry level lakefronts that were available and left unsold in 2013 should come back to market this year, and if they do we’ll expect buyers to be all over them.
The entry level lakefront market might be slow because of an absence of inventory, but the higher end lake access market is slow in spite of its inventory. There are 25 single family lake access homes priced between $400k and $900k. Of those, the MLS shows that only one is pending sale. That pending property is the REO on Geneva Oaks listed in the high $700k range. That segment has inventory in most of our quality lake access associations, and some of those homes have been reduced rather dramatically over their cumulative market times. There are homes with slips and homes with views, and on the surface it would look like there’s simply a lack of buyers in this segment, given a basic acceptance that the inventory is sufficient enough.
To look deeper into the inventory, we’ll find homes that aren’t selling for very specific, individualized reasons. There are several homes on this list with boat slips. Those slips, when viewed through the text of the MLS, are all created equal. Unfortunately for some homes, that isn’t the case. Some of the available homes have slips that are troubled- either in extra shallow water, or in a location that makes navigating on anything but the calmest of days a very difficult undertaking. Many times, slips are both- shallow and difficult. Other homes are in high tax districts, with pleasing asking prices but bloated tax bills, creating pause based less on the dining room light fixture and more on the suffocating tax bill that accompanies it.
In spite of the properties that are hampered by some pronounced factor, there is a bit of quality inventory in this segment. There are homes worth a closer look, and it stands to reason that in this very active spring market a few of these homes would be pending. For sellers, this is likely frustrating. For buyers, this is a signal of opportunity. Quality homes that are not selling for one reason or many are always worth a look, and I see inventory out there that may be primed to sell right. With a quasi-thaw in our near future, expect some movement in this lake access market and look for some long awaited inventory in the entry level lakefront market.