As much as I look forward to the day when I can sit here and tell you that the current foreclosure cycle is dwindling, it is obvious to me that on this day that day is many, many days away. If I can make any snap judgment on the Walworth County foreclosure market it’s that the cycle of walking away is continuing, and looks to be closer to accelerating than ebbing. For my sake, and yours, this blog isn’t about Walworth County, it’s about the Lake Geneva vacation home market, which just so happens to be located in Walworth County, but the two markets could not be any more different. Walworth County the primary market is marred by foreclosure, an unfortunate condition that I have diagnosed as being a result of strategic default and borrowers unwillingness to stick by their mortgages. You wanted me to say the foreclosure crisis for the county has been brought about by job loss and illness, and in some cases it obviously has. In others? Living rent free for a while in your own home and taking that Cancun vacation this winter sounds like a much better idea than paying that annoying mortgage. Bonus- declare bankruptcy when the foreclosure cycle is almost complete and buy yourself even more time!
The vacation home market here remains a stable influence on the greater market, and both the pending sheriff’s sales and lis pendens notices that predict foreclosure appear to be affecting properties that I would expect to be affected. If you’re looking to gauge a foreclosure trend in any market, watch the segments of the market that are the most illiquid, and chances are you’ll find the most foreclosures.The Grand Geneva time share and condominium experiments, while successful for the resort, have been anything but for most owners, and foreclosures are relatively rampant there as a result. Same goes for the Lodges at Lake Lawn, as owners discover that a new resort owner doesn’t do much for the lack of buyer interest in the condotel. The Abbey condotels are in the same boat, and foreclosures in all three of these condotel style situations are far from a surprise.
The Bella Vista hotel in Lake Geneva avoided foreclosure trouble for a while, but appears now to be heading into a bit more trouble on that front. It’s another illiquid property, so foreclosures are going to trend higher in there over the upcoming months. How bad is it at the Bella Vista? There is a unit owned by Fannie Mae listed at $56,250 right now. That unit sold in 1998 for $129,900. Does this mean I think you should buy it? Not particularly. The taxes are $3k+ and the monthly fees are $400+, so if the unit cash flows, go for it. Otherwise, let’s skip it. This trend is going to exist in the Bella Vista for quite some time, and it gives further credence to my idea that all 39 units should accept a buy out and the hotel should be bought by one single entity. It should be a hotel, not a condotel.
The Abbey Villas remain illiquid, for the most part, and foreclosure trouble continues to plague this once high flying condominium. I don’t see any let up here, and my continued worries about this particular market put me in a position where I can’t say that a turn around is coming any time soon. On the bright side, Abbey Springs remains a ridiculous example of success as that development dips and dives and remains mostly foreclosure free. 592 total units, and it appears as though just a few owners this year are going to face a distressed sale. Well done, Abbey Springs.
Geneva National also remains a surprise. Even though foreclosures continually brew here, there aren’t as many as I would have guessed. Three or four foreclosures every couple months don’t register as a crisis for an 1100+ unit development, but it does mean opportunities will exist here for buyers. Prices continue to decline here, with some of that decline due to distressed sales dragging on comps, but most of that decline is simply a result of the severe illiquid nature of this particular market. I don’t see things changing here anytime soon either, so buying opportunities will exist, particularly towards December of this year when seller’s apathy is at an all time annual high.
There is a foreclosure in the works at Bay Shore in Williams Bay, and at this time it is the only lakefront condominium headed to sheriff’s sale. There are a couple of houses in Cedar Point Park in danger of foreclosure, though neither boast superb locations or any other unique aspect that might catch my eye. There is a foreclosure action started against a strange home listed currently in Wooddale. I expect to see this foreclosure carried from lis pendens, where it is now, all the way to sheriff’s sale, as the nature of this property doesn’t give me much confidence that it will sell prior to the gavel falling. I’ll watch this one for you, as it might make sense for someone if the bank returns it to market as an REO at an attractive price.
Abbey Ridge has another foreclosure to deal with, and this loan amount is low enough that it might warrant some interest at the actual sheriff’s sale. Remember, our plan on these foreclosures is generally to avoid purchasing them until they return to market as REO inventory. The exceptions to that rule occur when the mortgage amount is low enough that outbidding the bank at the sheriff’s sale might be a smart play. I’d still practice defensive sheriff’s sale bidding though, which means an interested party should attend the sheriff’s sale prepared to bid in the event that someone else has come to bid as well, otherwise, just watch the property return to the bank with the intent of wailing on that bank later. That’s the smart move. Over zealous buyers that seek marginal advice or none at all are the ones who tend to pay an unnecessary premium at sheriff’s sale.
The good news is that I don’t see any pending foreclosures on the lake right now, and the lake access communities look to be steering clear of any significant troubles. I’ll keep watching this boring market for you so that you don’t have to.
(This foreclosure update is a general analysis of the market, and is not intended to represent every single foreclosure or lis pendens notice affecting the Lake Geneva vacation home market.)