If I were sitting near Wall Street today, wearing my favorite hemp necklace, holding up my sloppy poster adorned with misspelled words of blame, wreaking of pharmaceuticals and pointing to others as the excuse for my own personal ineptitude, I may very well feel differently about foreclosures. I wouldn’t understand foreclosures, but I would, in my most naive thoughts, assume that those who enforce foreclosures are bad and those who are removed from their homes through that foreclosure are victims. This would be the depth of my understanding. But, since I’m sitting in Lake Geneva this morning and I don’t own a hemp necklace, and I shaved this morning and drove in a car powered by fossil fuel that I purchased with money that I actually earned, I think about foreclosures a bit differently. Foreclosures are lame, but through the misfortune or stupidity of others there is opportunity.
The Lake Geneva foreclosure scene isn’t one rife with activity. It isn’t one that affects the broader market much, and it certainly isn’t an epidemic that has crippled our market as it has other vacation home markets. The primary reason for this is that our market is a small volume market, fueled mostly by buyers in strong financial positions. A buyer seeking to purchase a $500k vacation home at Lake Geneva generally doesn’t do so with his or her last, or only, $500k. The same cannot be said of markets like Las Vegas or south Florida, where speculators were moving the markets there with what indeed did turn out to be their last $500k, or at least their last borrowed $500k. The market here has been more stable than those markets, perhaps because of a lack of speculation during the boom, but also because of an inherently sensible group of buyers and sellers. That said, there are exceptions to that rule, and while most were sensible, others were not. It’s those that were not that we have to pay attention to, and those resulting foreclosures, while few, still matter.
In a phenomenon that I still can’t understand, foreclosures persist at the Grand Geneva timeshare units. That’s not the part of the phenomenon that I don’t understand. What I find curious is that these units are being foreclosed on at a fairly alarming rate even as other people line up to buy more of them. This makes no sense to me. If you’re tempted by a time share, perhaps consider going out and buying a brand new car. This will satiate your desire to spend money, and a brand new car will only depreciate slightly faster than a typical timeshare. Stop buying timeshares. I’m begging.
There are other foreclosures too, but they are the ones you’re expecting. A handful of units at Geneva National are either subject of a Lis Pendens notice (default) or are already scheduled for sheriff’s sale. Remember, don’t be afraid of Geneva National’s foreclosures as any development of that magnificent size is going to face a fair share of normal, ongoing foreclosures. The issue with that sort of trend is to watch if the trend escalates, which, for now, it hasn’t. There are other foreclosures at the Abbey Villas which I also expect. Any segment or development lacking liquidity is going to face a foreclosure blip of some size. If desperate sellers can’t sell, there is no other alternative than to strategically default, or hang on for as long as possible in hopes that the market improves. Now for that bad news: the market isn’t improving any time soon. Sorry to bear such bad, if obvious, news.
If low liquidity is a driver of foreclosure, that forces me to watch the South Shore Club. Sales there have been hard to come by for several years, yet the development has absorbed just one foreclosure. There is a fair amount of leverage present in that impressive development, but for now it appears as though the hands holding those notes are strong even in the face of a difficult resale market. The lakefront, the stalwart of our market, continues to dip and dodge and most ignore foreclosure trouble. Today I don’t see anything pending foreclosure on the lakefront in the single family venue. There is a short sale offered in Cedar Point Park in the entry level range of our market, and a bank owned home on the market in Indian Hills. Nothing too exciting.
There are a couple of lakefront condominiums that have flirted with foreclosure, including one currently at Bay Shore. This unit is a one bedroom, and it’s also on the market. It may have a contract on it currently, but public records show it is scheduled for sheriff’s sale. The way this works is that the sheriff’s sale will occur at a specified date in the future, but if the owner can make good on the note by either selling the property and providing a pay off, or providing enough of the arrears funds to cancel the action, this sale won’t occur. We’ll watch that one and I’ll let you know what happens.
While the foreclosure market at Lake Geneva isn’t scintillating, it still bears watching. Without a full understanding of the rate and progression of foreclosures in any given market, it’s impossible to fully understand it. This sort of report isn’t the gospel truth on our market, and there may be actions that I do not yet know about or may have overlooked, but in reviewing Lis Pendens notices and scheduled sheriff’s sales, one can get a solid grasp on our current situation. That situation? Unchanged, but still being monitored by yours truly.