Earlier this year, the entry level lake access market was roughly as awake as I was last Thursday morning after spending a rare late night in Chicago listening to the soothing stylings of one Jackson Browne at the Chicago Theater (special thanks/apologies to the gentleman in front of me who had to retrieve my dropped phone for me). Ask me some other time what I think of the smells emanating from the sewer grates along Michigan Avenue. The entry level market wasn’t exactly asleep, but it was definitely stretching the loose parameters of the roadway. The market had little direction earlier this year, as buyers anticipated further price drops and sellers resisted as best they could. Yet the entry level market, for all of its huffing and puffing and statistical gyrations, hasn’t changed all that much.
There was a time when most entry level Geneva Lake access homes were priced in excess of $300k. The sweet spot in this price range was always the $349k list price. After some difficult years (2008 and 2009), the market drifted to a point were many cottages that were once valued in the mid $300ks would be lucky to fetch $270k. There is also reason to think that the lowest price of all entry level lake access homes here have been hurt the most. Properties in need of much work are now selling in the $160k-$180k range, when they would have previously been in the mid $250ks. In spite of all of these market mandated price adjustments, when I look today at the entry level lake access market it looks very much like it did a few years ago. And now, with this stellar September providing liquidity to a market that previously had very little, the activity is starting to feel more like 2006 as well.
How’s that for a cheerleading Realtor line? The truth is, I do believe much of the entry level market has further to drop. The fact that prices may slide a little is no reason to assume that buyer activity will cease until that time. I’ve said it before, as have many other people, that market bottoms only exist in theory when viewed from some point in the future. There’s no present market bottom, and no reason to act like one must arrive before a purchase can be made. If a property fits your eye, and the lifestyle you’re looking to discover can be easily accomplished by the purchase, then by all means negotiate the heck out of the deal and buy yourself a second home at Lake Geneva. If you’re solely buying based on the numbers, there’s reason to believe you should be waiting until November to make your move.
The MLS today shows 44 single family homes with private lake access to Geneva Lake, priced from $137,500 to $499k. Of course, there are a couple of those homes listed improperly by the listing brokers, in that they show on the MLS that there are private lakerights when, in fact, there are none. Best work with me so we can avoid these sorts of embarrassing mistakes together. There are four homes in this price range currently pending sale. Those homes are in Country Club Estates, Indian Hills, and Cedar Point Park. The Cedar Point Park offering is a classic example of market chasing. The home is currently listed for $309k, which is a fair price for the market. This home is right across from a lake access parkway in Cedar Point, but it’s directly on Cedar Point Drive, making for a busier front yard than most buyers would prefer. This home was listed for the first time in this sequence all the way back in 2006. Four years ago, at what was the height of this market, the home was listed for $449,900. Over the next four years the listing would be on and off the market, slowly, but steadily, making it’s way downward in price as the sellers chased a retreating market. The ultimate sales price is as of yet unknown, but it’s easy math to assume that the final price will be roughly 35% less than the original asking price.
Does this mean the buyer got a screaming great deal? Not necessarily. While the house is a solid option in this price range, the property was probably only worth $350k at the real height of the market. So in fact, while the listing price shows a reduction of as much as 35%, the real reduction in value from the peak through today is probably more along the lines of 15%. Still a significant reduction, but not as much as the numbers would lead you to believe.
The entry level lake access market is ripe to give up a few deals yet this year, and I fully expect it to do so. There are many properties that have been begrudgingly giving up systematic price reductions, and I think several of those properties will ultimately sell for “cheap” once the peak buying market of November and December arrives. If you’re an entry level buyer seeking a Lake Geneva vacation home, it’s a great time to be looking. The inventory is ample, and crisp fall days are perfect for kicking a few leaves and figurative tires as well. Look now, negotiate in November, close in January. Renovate or decorate until April, and in May, begin what will be the first of many glorious summers spent at the lake. Oh, and it doesn’t hurt that interest rates are really low. Like Japan low.