I admit to being less productive when the weather is bad. In the summer, when there’s a big storm, I can work just fine. In fact, I work a bit better on a rainy day than I do on a sunny one, because my watery distraction is less fun in the rain. In the winter, things are different. When it is snowing with malice, I tend to go about my business until there is no obvious business left to be done, and then I feel the pull of a deep couch and long for the heat thrown my way from a wood fire. When it is brutally cold, the same longing forces its way front and center. Last winter at this time I was just beginning to nail up the first of hundreds (thousands) of boards that would become the walls and ceilings of my new house. It was cold in that house, and the work was fulfilling during the moments when it wasn’t overwhelming. That was last winter, so who can blame me for looking to reap the comfortable spoils of last year’s labor?
Even with these distractions, I was remarkably productive last month. I believe my sales volume from December and January should approach $10MM, which would be a most welcome and thrilling start to this year. The market is hot in many segments, but perhaps most fiery of all is the lakefront market itself. There are buyers, there are offers flying through that big series of tubes. There are pending sales as well, some closing very soon and others just sort of soon. There is activity in this lakefront market, lots of it, and that begs the question: What if January and February hadn’t been the most miserable winter months most of us have ever experienced? Would our volume have been even more significant without those afternoon fire sessions and the late night canceled appointments that came quickly on the heals of another dire weather forecast? I suppose we’re left to imagine what could have been, though what has been is just fine by me.
There are exciting happenings on the lakefront right now. There are as many as five lakefront deals pending sale now, and I’m pleased to mention that I am personally involved in three of those. It should be five, I know. There is a deal pending in the South Shore Club, that of my listing at $1.895MM, and most people know this by now. What you may not know is that there is another deal pending in the SSC at the moment, a private deal of a desirable home at a solid market price. When both of these sales close, the SSC will continue the transformation from a segment routinely taken for granted to one that has undeniable momentum, and that momentum is creating scarcity. Showing activity in the SSC is up as well, and I’d be very surprised if 2014 doesn’t bring two more sales to the SSC, allowing us to end 2014 with a previously unheard of annual tally of four sales.
There is a fresh deal pending on a $4MM offering in Fontana, and an old deal in the Birches still pending sale at $2.15MM. The large vacant lot on Fontana’s Northerly shore listed at $2.95MM is pending sale as well, after a motivated buyer jumped on that immediately after the January list date. My deal on the 5.5 acre property on Southland ($2.475MM) is still pending sale as well. This is the activity, and it’s most welcome. It shows that buyers understand they must brave the snow and the cold of winter if they’d like to delight in the warm sun of summer. The activity is great, the buyer count high, and most of us appear somewhat confident that this ice cover will melt away no later than the fourth of July. (To my literal friends, this is a joke.)
But all is not necessarily well on the lakefront. There are pricing issues that I see, and I’m not excited by the thought of over confident sellers stifling a solid year. There are a few lakefronts that I think will be coming to market over the next week or so, and the rumored prices are quite high when compared to realistic values. I’ll concede that the broad market has risen perhaps 10% from the market lows of 2010-2011, but this simply means that if you bought a lakefront home for $2MM during one of those years, and you bought it right, then the price may be $2.2MM at the moment. You would be forgiven if you asked $2.4MM, to see what buyer may be willing to pay a higher premium, but I see an urge in the market for sellers of $2MM homes to ask $3MM, and of sellers who should list at $2.5MM to ask $3.5MM. This is a dangerous pricing trend that could turn off buyers who are currently willing to award fresh sellers with some reasonable premium.
I say “fresh sellers”, because these are the sellers that have the best shot at surprising the market into paying them a premium. Stale sellers, those of homes or properties that have spent much of their time on the market over recent years will not be able to achieve such a delightful premium. If a property has languished on the market, it’s bound to only attract buyers through price and price alone. That’s why this year will be rocky, because some properties will sell at steep discounts to prior ask, and others will hit the market fresh and command a sales price very near, or possibly at, their asking price. Expect a wide gulf between list and sale prices this year, as aged inventory will have to sell at a discount while new inventory will do no such thing.
Sellers, it’s a great time to hit the market. Buyers, it’s a great time to be in the market. Both groups should be wary, however, as buyers should be seeking proper counsel so they understand the difference between a new property that will sell quickly, and a new property listed at a price that seeks solely to take advantage of the naivete of some (many) buyers. Sellers, price accordingly and buyers will respond with fervor. Buyers, don’t make a big mistake and reward the sellers who are about to cast their big wormy hook right in front of your face.