Lake Geneva Lakefront Market Update

Lake Geneva Lakefront Market Update

Lake Geneva Lakefront Market Update

I spent much of Sunday on the lake. There’s a new boat in the Curry fold, and the boat must be used. Boats are like that. If you don’t use them, they’re no fun. Just like lake houses. You can own one, and the ownership won’t be all that much fun. It’ll be work. But if you use it, then it becomes fun. It’s like money. Having a lot of it is fun, I imagine. But what good is it if you don’t use it? Along that line of thinking, the boat, and that sunshine, and Sunday. And a stop at Gordy’s for lunch and a gawkers tour of the lakefront to see what has changed since last fall.

Like every year, the lake has experienced changes. New builds are underway. Some large, some small, mostly, however, large. Renovations, big, deep, heavy renovations. Some renovations that you drive past on the boat and wonder if the renovation was the right decision. Should the old house with old house rooms and old house stylings have been scraped and rebuilt, rather than rebuilt around what was old? A new house in Loramoor, beautiful. Another new one in the Lindens, beautiful. Some new homes here and others there. The constant on this lake is the scenery. It’s always the same, always green, always lush, always dialed in. The change is the shade of the siding and the roof pitches of the new homes. Each year, the same, yet each year, change.

Earlier this week, a lakefront sold on Walworth Avenue in Williams Bay. This was not my sale. The buyer paid full price for a cottage with 50 feet of frontage, which is now the last domino in a line of five lakefront homes to have sold in the past two years along this particular stretch of lakefront. There are rumors of new construction coming to these skinny, long lots. Tear downs, maybe. Each of those sales closed between $1.1 and $1.5MM, whith just one at the $1.5MM mark and the other four in a clearly defined range between $1.1MM and $1.25MM. If gentrification is coming to this stretch of the lake, we’re about to find out.

The question now for the owners is whether or not this stretch is worthy of the gentrification, and the bigger, market question is whether or not this is a smart decision. I would argue that it’s a good decision if the initial purchase and the initial budget is range-bound. I’m speculating here, but that’s what I’m paid to do. Speculate on the current status of the market. Speculate as to where it’s going. And help buyers and sellers react to the market in an appropriate and intelligent way. That’s why I’m here today to think about the lakefront market, and to think about these sales on Walworth Avenue. There have been too many of them to ignore.

Times were, you wouldn’t want to buy on Walworth Avenue and tear the house down. This had been done in recent years, but it didn’t make a lot of market sense. Now, today, on the heels of five sales in 24 or fewer months, has something changed. Does this now make sense? I would argue that it does, with a big caveat. That caveat is not a market based caveat, but a personal one. If a buyer wants to buy for $1.2MM on this lake, they have very few options. Historically they would need to be in the Lake Geneva Highlands or on Walworth Avenue, with a few other spots dotting certain other sections of the lake. If you’re a $1.2MM buyer, you typically would not have a lot of options, but with ample, steady inventory on Walworth Avenue, it makes sense that these buyers found their way to this specific shore.

If you’re going to tear down a $1.2MM cottage and build a new house for $1MM (the low end of new construction on the lake, in my opinion, even on a small lot), you’ll be $2.2MM into a brand new lakefront house. Admittedly, this cannot be done anywhere else, and if you’re a buyer with eyes on a new house for $2.2MM, this is indeed your only option. Build away, new buyer. But this article isn’t about that buyer, it’s about the buyer that might be able to do better. The buyer who could have spent $2MM on a tear down instead of $1.25MM. This is about the buyer who is going to build a bigger house. A better house. And with all things bigger and better, that also means more expense. This is about the buyer who settled for this location rather than reached for it.

This is about the mistakes that are made by seeking out lower priced land. Don’t forget, it’s only a mistake if a particular buyer has a personal economy that is healthy enough to reach for more. Because for that buyer, reaching higher for the land purchase will always yield a higher top end once the new home is built. If you can do better, why not hope for that improvement? Why not wait to find better land with a higher upside? Why build in a range-bound section of lake when you could build in another location that might have legs to reach to $4MM or beyond? Why be early to a specific shoreline’s gentrification when you can settle in to another shoreline that has already made those strides? Why entertain the risk of one location when another, slightly more expensive, location will all but guarantee a gain at the end of the project? These are the questions that I ask on behalf of my buyers, and these are the questions that every home buyer who is considering building new on Geneva Lake should entertain. Without working through this process, you’re just buying a silly house on a lake without any real idea as to what amount of money you may be throwing away.

The market today is active, we all know this. Even new agents who tell you that they’re lakefront experts in spite of never having any lakefront experience or success can tell you this (and they do, in postcards, weekly). But the market is not without traps, and the easiest trap to avoid is the one that would have you over improve a specific section of shoreline that has yet to prove it is worth the investment. If you’re stumbling around this lakefront market looking for guidance, I’m here to help.

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