It’s true that I suffer from PTSD related to my exposure to the lakefront condo market between the years 2008 and 2018. This decade caused irreparable harm to my opinion of that particular market. I wish I could ignore it, but try as I might I can still see those condominiums sitting on market, piling up Days On Market and bleeding from so many ineffective price reductions. I shudder at the thought of sitting in a lakefront condominium open house, hoping and praying for a buyer to stumble through the door. Alas, that era is over, and if the lakefront market was mending nicely in 2018 it left 2021 fully, entirely, miraculously, healed.
It makes plenty of sense that this segment would be healed, after all. The contagion between our market segments left it no option. If you’re a lakefront buyer seeking a $2.5M lakefront home, or you’re a $1.5M buyer seeking a single family home with a boat slip, this current market leaves you very little to choose from. That buyer could either turn from this market altogether and end up on some other lake in some other state, or they could focus their aim on the product that would give them most of what they want: the lakefront condominium. It should be mentioned here that this market contagion doesn’t work the way lakefront owners would like it to work. If there aren’t any $4M houses for sale, they do not spend $8M. In fact, the buyer will often go the other direction and look under their maximum budget. After all, this is the Midwest and while we have a market where plenty of buyers overshoot their landing out of haste, it’s not the common response like it might be out West.
For the year just ended, the market closed 18 lakefront condominiums. Those included sales in the Fontana Club (2), Bay Colony South (2), Bay Colony (4), Fontana Shores (2), Vista Del Lago (1), Bay Shore (1), Geneva Towers (6). The high sale in the lakefront condo segment was at Geneva Towers with a print at $1.499M, followed closely by my $1.475M sale at the Fontana Club of a double unit on the first floor. The biggest story of the condo market this year was the increase in both volume and price, with seven sales over $1M. The 18 sales is only marginally higher than the 17 recorded in 2020, but both of those totals blow away the seven total transactions during 2019.
Entering 2021 I expected there would be fewer transactions than in 2020. I didn’t think we’d supply the inventory required to keep the market moving forward, but I was wrong. The volume increase in the condo market followed the volume increase in the single family lakefront market, as inventory was quickly absorbed throughout the year. The question for 2022 is what impact will an increase in interest rates and a general feeling that covid is finally something we’re going to live with and not hide from mean for our vacation home market. I expect it’ll mean a decrease in overall transactions, but I guessed that last year at this time and I was proven wrong.
These higher valuations in the condo segment will likely breed more sales at these levels, as most markets here just need one or two comps to justify a particular price range. If a single Bay Colony South condo sells for $1.35M, you can bet that’s all the market needs to justify the same price for another unit. Trends used to matter, but now we just need a hint of backing and buyers will accept it as fact. In this market there is no other choice.
One positive for the lakefront market is in the infusion of fresh money and bright eyed ownership into some of our tired lakefront buildings. There are no architectural awards being handed out in our lakefront condo market, but there are units being renovated en masse right now, and that’s a long term positive for this segment. Nicer units and higher valuations will press condo associations to update their exterior spaces and build amenities, and the overall market benefits from the spiffying of our aged complexes.
The lakefront condo market has had a rough decade, and I, for one, couldn’t be happier to see it thriving. If the market provides well priced inventory at a soft pace, the market should continue to outperform this year, in spite of rising interest rates. If pretty awful lakefront homes can now sell for $3.5M+, the condo market will continue to draw attention.
Above, the beautiful Fontana Club unit I sold last spring.