Lake Geneva Foreclosure Update

A few completely unrelated items prior to the post today… First off, remember when I said I was going on a diet like a month ago? I lied. I meant to say that diet starts today. I may or may not have gorged myself at Hot Doug’s last week, and I also may have eaten most of a box of those new fudge mint Oreo’s. I’m not saying I did, I’m just saying I may have. I also want to wish my beloved ball club good luck today. I’d also like to tell Tom Rickets that I would have been much more excited to see a $10MM arm in the bullpen rather than a $10MM upgrade to the bathrooms. Lastly, I’m not going to call these “posts” anymore. Instead, I’m going to call them columns. Posts are where “bloggers” write 120 words and link to some other story or article. I’d like to think these are more column like, and even if they’re not, I’m going to call them such. Now, onto the post, err, column.

The Lake Geneva foreclosure market is boring me. In the spirit of the Oreo confession, I must admit this to you now. I hate foreclosures, REO’s and short sales. Short sales are the biggest waste of time, and more times than not, they either don’t work, or the price the buyer pays isn’t all that exciting anyway. That’s another thing about foreclosures that I think most people (buyers) miss- they aren’t necessarily getting a great deal on the property, they’re just paying what it’s actually worth. I played tennis last week at the Grand Geneva, and my defeated tennis foe asked me about foreclosures. In a bit of off the cuff profoundness, for which I am famous, I told him that the deals that are out there aren’t really deals at all. A buyer paying $70k for a house in Elkhorn isn’t really getting a deal, he’s just paying what that previously $150k house is actually worth now. No deal, just a readjustment of what normal is. Foreclosures rarely strike me as being terrific deals, and yet as I’ve written about in the past, they tend to garner more than their fair share of attention.

The foreclosure situation as it affects our vacation home market at Lake Geneva remains largely unchanged. I’m seeing a couple foreclosures in Country Club Estate’s right now, and at least one or two in the Abbey Villas. Cedar Point Park looks to have a couple pending foreclosures right now, and with past lis pendens activity, I can see a scenario where two or three REO’s hit the market in this lake association sometime over the next three months. The possible vacant lot foreclosure in the South Shore Club still looms, as does a new sheriff’s sale in the Wrightwood Condominiums in Lake Geneva. I’ve never been a fan of that development, so the foreclosure there doesn’t bother me much. Cruel, I know.

Elkhorn, Delavan, Whitewater, and the Pell Lake area continue to dominate the foreclosure filings in Walworth County. There appears to be no let up in the filings, and I was particularly dismayed by the sheer numbers of foreclosures in these named towns. At this point, there is no way that prices within these municipalities will not be significantly affected. The vacation home markets as a whole have fared quite well, as even periphery lakes like Delavan, Lauderdale, and Como have avoided any serious foreclosure trends. I did spot one foreclosure on Delavan Lake, but one does not make a trend, and most of these individualized vacation home markets can absorb a random foreclosure or two each quarter without too much difficulty.

I continue to think the foreclosure “crisis” will not affect the upper end vacation home market here, even if Nicholas Cage chose to let his California estate go through a foreclosure vehicle. When you make $20 million per bad film, foreclosures are called strategic default, and in this the only victim is that big bad evil bank who was laid on the stone altar, and the neighbors who now get to watch an REO strain the prices in their immediate neighborhood. The lakefront market on Geneva still has at least one potential foreclosure on the horizon, but it’s a lame house in a worse location, and I don’t have any interest in it. If it wants to sell for sub $1MM, then I’ll encourage buyers to jump on it, but if it hits the market and closes in the $1.2MM to $1.3MM range, as I fully expect it to, it’s no deal. Just like most of the foreclosures here.