In contrast to my accurate prediction for Geneva National last year, I admit to you this morning that I was dead wrong about my prediction for the lakefront condo market. One year ago I told you that the lakefront condo market would have a good 2019, owing that to the obvious conditions of low interest rates and a robust stock market, but also to the fact that the condo market was still relatively cheap compared to the off-water single family homes. My theory was sound. Suppose a buyer wants to spend $700k or less in our market, and they initially wanted a single family home with a transferable slip. If that buyer cannot find a single family home, he might be tempted to switch ownership models and opt instead for a lakefront condo. Sure the square footage will typically be less than a single family, but there will be huge lake views and likely still a slip, so why not make that move? This is what I thought.
But 2019 proved me wrong, because the single family inventory was tight all year, and sales happened quickly and prices increased, and yet the lakefront condo market didn’t have itself a very good year. Lakefront condo sales had been on the rise, with 8 sales in 2016, 12 in 2017, and 15 in 2018. I saw no reason, aside from a lack of inventory, that the trend wouldn’t continue, and if it did soften, it would only soften on volume, with prices notching higher. But that’s not what happened at all, as the year offered some decent inventory, and yet for all of 2019 just eight lakefront condominiums changed hands. This is a miss.
These sales include two at the Old Boatyard, that small Lake Geneva condominium just south of downtown. I was pleased to work with one of those buyers who were the sort of buyers that I figured would fuel the condo market for 2019. The sort of buyer that wanted to buy residential, but after a lengthy market experiment that produced no suitable inventory, they decided that a condo on the lake was better than another summer in the suburbs. They were right, obviously. There were two sales at Geneva Towers (both $500k) and two sales in Vista Del Lago ($437,500 and $374,500). There were two sales at Bay Shore in Williams Bay, and these two sales bucked the trend of the overall condo market. Both sales ($543k and $545k) closed for significantly more than the two sellers had paid for those units within the last six years. Were the units fabulous? No. The sales surprise me, but I’m pleased for the Bay Shore owners.
Those Bay Shore sales notwithstanding, appreciation was elusive in 2019, which proves that this downturn in volume was not the sort of positive downturn that can result in valuation increases. It was a bad combination of lower volume on stagnant prices, and I don’t think anyone should be particularly pleased about that. Heading into 2020, we have some terrific lakefront inventory in this segment, including two units that I have available at Bay Colony ($729k, two bedroom) and Fontana Shores ($589k, three bedroom). Often, buyers focus on square footage when they’re buying a vacation home, and I can completely and entirely understand that. But to those buyers who think they need more space, I offer an anecdote present in my own personal life:
I like trout fishing. You probably know this. Because of this, I wanted to own a home in an area where I can trout fish. So after some time of looking for a suitable home with no success, I decided to build. My home in Walworth County is around 3800 square feet. Not big, but not small. The home I built by the trout stream is 1500 square feet. Not big. But when I go there, I don’t want for extra space. I don’t bemoan the small bathrooms and the tight living room. That’s because I’m not there to dwell in the space. I’m there to use the space to launch into what it is that I really want to do there: fish. Without the cabin, I wouldn’t be able to fish. And now that I’ve owned it for a couple of years, I can’t imagine living without it. This is my story.
For you, it might be the same, but with Lake Geneva as the focus. If you want to be here, I understand that you want to buy a four bedroom four bath house (or condo). I get it. You need that space for the two weekends per year that you have extra visitors. You can’t live without that space. Or can you? What if you just need a place from which you can launch into a lakefront weekend? You have a big house in the city or suburbs. I’m sure it’s dazzling. But at certain price points, you’re not here to dazzle. You’re here to indulge in the scene, splash in the lake, sail the winds and boat the waves. You’re here, or at least you want to be here, to live a weekend that’s very different from your weekdays. If you want to accomplish that, and your budget doesn’t allow for the footage you think you need, learn from my cabin example. Don’t let perfect be the enemy of good.
Above, my $729k Bay Colony listing. The nicest condo on the lake, period.