Lake Geneva Lakefront Year In Review

Lake Geneva Lakefront Year In Review

Lake Geneva Lakefront Year In Review

I’m writing my year end review a bit later than I’d normally write it, largely owed to a family vacation and that little Glanworth Gardens sale that cast a long, gilded shadow over my January. That’s my simple excuse, but there’s a bigger excuse that I wasn’t intending to reveal until just now. The reality of the market today is that it feels to me like buyers and sellers don’t want to understand the nuance in this market. Buyers want something, anything, and sellers want more than their houses might otherwise be worth. The market is hot, after all, and if we’re painting the market with that sloppy brushstroke, then do the finer details matter? I’ve decided they do. Hot market be damned, there are still things that need to make sense.

The general theme of 2021 was pace. Frantic, breathless, pace. Buyers snatched up most of our inventory, and the properties that sold tell us plenty about the buyers present in the market and their motivation. The properties that didn’t sell tell us more about the market than the properties that did sell, even though market participants rarely think in that contrarian manner. For the year just ended, we sold no fewer than 30 single family lakefront homes. Of those, only two were priced under $2.69M (and one of those had shared frontage/pier). That’s a remarkable floor for our market, and it unfortunately pours some terribly icy water on buyers hoping to find private frontage under $2.7M. It should be noted here that the official numbers for lakefront transactions is going to be somewhat inaccurate, no matter who is reporting the statistic. That’s because there were several off-market transactions, and while I can count the transactions that I facilitated in this manner, I cannot be certain of every detail of what I know to be at least one other private lakefront transaction. For that reason and a few others, these statistics should be deemed reliable but cannot be guaranteed. For the sake of this market review, I’m going to leave out the Yerkes lakefront transaction that I brokered at a value of more than $8M, because that’s institutional land and shouldn’t really be considered as a residential comp. Because it isn’t. Onward to the metrics.

Of the 30 lakefront transactions, at least five were brokered off-market under the one-party direct deal formula. If you’d like to know how I feel about off-market deals, know that I was an agent in all five of those sales. It’s a terrific way for a buyer and seller to get together and strike a deal without some of the hassles associated with traditional market exposure. This angers the real estate powers that be, but it shouldn’t, because real estate transactions can occur in several forms and no single process should be mandated. If the real estate powers dislike off-market transactions so much, they should turn their attention to iBuyers. Now that’s something for the NAR to worry about.

Of the 30 sales, I represented either the buyer or seller in 17 of those. That’s a market share exceeding 56%, which is pretty good, and far and away the greatest market share amongst the players in this market. But alas, I’d prefer the number to be at 100%, so there is still work to do. Of the 30 sales, the vast majority fell between $3M and $6M, proving that while our bread and butter segment of the market has appreciated to a higher threshold, we still print most of our deals in what is actually a fairly modest segment when compared to other elite vacation home markets.

We closed more than 2874 feet of lakefront, which is alarmingly close to the  2882 feet of frontage we traded in 2020, still well up from the 1903 closed in 2019. The metric our market drools over is the price per front foot of lakefront, which I continue to contend is almost meaningless as a standalone statistic. Nevertheless, we finished 2021 with an average of more than $48,541 per front foot. That number reflects a gain of more than 54% over the 2020 average, proving once again that this number is unreliable because our market prints such scant volume that the number can be dramatically skewed by the presence or absence of outlier sales. In 2020, we closed two transactions with large frontage, which pushed our average under the 2019 number. For the year just ended, we only printed two transactions that possessed more than 160 feet of individual frontage, and that’s why our average is way up. If you run into someone trying to justify lakefront value on this number, please slap them for me.

Our price per square foot of land mass for 2021 is based on a transacted total of 31.167 acres, which means every single lakefront home we sold last year could fit inside of the Glanworth Gardens estate. If you’re trying to wrap your head around how big that estate is, this should help. The average price per square foot of land mass registered $102.76, a marked increase from the $67.91 average for 2019, which was the last time I did the math for this item. The price per square foot of the actual residence was up 29% from 2020 to $996.58. These two numbers have both trended consistently higher over the past several years, even while the price per front foot has fluctuated. That’s why the best way to ascertain lakefront value is to apply each of these three values to a subject property and then blend the totals based on what other market appeal the house might have.

In spite of these numbers, the market continues to behave as though they don’t matter. I say they do. I say they must. Will a highly desirable location allow a house to break free of these averages? Sure it will. Will a highly polished house sell for more than the $996 per square foot that an average house in 2021 printed? Of course. But this is the nuance that must be well understood if you’re working towards a proper lakefront valuation. Unfortunately our market shoots first and usually never asks questions later. Sellers ask whatever they feel like asking, and they hope buyers aren’t aware of the math. If you’re a buyer who needs help understanding the lakefront math, I’m here to help. And if you’re a seller who would like help understanding how this math might be applied in valuing your property, there’s no agent more capable of articulating how these numbers impact each and every lakefront home.

For 2022, I expect we’re going to see more of the same. That’s bad news for buyers and possibly good news for sellers. If we look at the homes that were listed in the second half of 2021 and failed to sell, we can see the some buyers are paying attention to the numbers and pushing back against big prices for modest homes with limited upside. I hope the market continues to approach inventory in this manner, but I have a feeling that once the ice melts and the white wood starts finding its way into its summery cribs, all bets are off. This market is complicated, and I’m here to help make it make sense.

Above, Fair Oaks, a lovely lakefront home I sold last summer for $6,475,000

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