Lake Geneva Market Discussion

This year, we’ve closed 14 lakefront homes priced in excess of $4.1M (and at least two more that I’m aware of that aren’t in the MLS and shamefully weren’t closed by me) . If we were in Harbor Country, we’d call that a decade worth of sales, but in Lake Geneva we call that a pretty nice YTD total. Of those 14, my eye counts just four or five of those completed by existing lakefront owners. Typically, we’d populate this price point with move-up buyers, those in-market owners who feel like expanding their footprint, or their bedroom count, or their slip count. This year, we’re flexing our muscles by filling in this upper bracket market segment with new buyers, and that, as you can imagine, is a very, very good thing.

It’s good because it’s easier to fill in this market with existing lakefront or lake access owners. To introduce brand new vacation home owners by way of a $4M+ purchase isn’t something the Midwest does particularly well, or at least it isn’t something that any market that isn’t Lake Geneva doesn’t do well. Or at all. The market here is attracting higher price point new buyers for many practical and lifestyle reasons, but the real temptation lies in knowing that you’re not buying into an illiquid segment. You could buy a $5M home in New Buffalo. Knock yourself out. You and the one other person in the past couple of years who thought that was a good idea can hang out. Buy in other Midwest markets at that level and you’ll find yourself a veritable fish out of water. In Lake Geneva, you’re just a lakefront owner, and if you someday wish to upgrade or downsize, there will be a line of other $5M buyers wishing to own your real estate. The water and the wind and the shoreline and the boats, those things matter, but the real magic here is in our liquidity.

That brings me to my market thought today. I’m surprised there aren’t more move-up buyers in the 14 sales over $4.1M this year. I’m glad there are a load of new buyers in this segment, but the buyer that should be the most active today is the buyer who already owns lakefront. The entry level segment has moved considerably, changing from a typical price range of $1.2-1.8M to a new range of $1.9-$3.5M. Yes, a $3.5M house is now entry level at Lake Geneva. Consider that $3.5M house might have been worth $1.25M in 2011. Now consider that shiny $5.75M house that just came to market. Is it easier for a buyer without a lake house to stroke a $5.75M check, or is it easier for an owner with an instantaneously liquid $3.5M house to stroke an upgrade check for $2.25M? The answer is obvious, but in spite of this incredible opportunity to upgrade we haven’t seen as many buyers making that leap.

That market segment is one thing, but another market segment that is surprising me is the rather liquid $10-15M segment. Lake Geneva typically starts to struggle around $10M, but it sure wouldn’t struggle at that level today. I have plenty of buyers in that range, and yet I’ve been unable to free up inventory for them. In the same way that a $3.5M owner might upgrade to a $5.5M house because it offers that vacation home owner a much better lakefront experience, I would have expected a $10-15M lakefront owner to upgrade to my Pier 61 legacy estate listed at $20M. Did you know we have a lot of really nice lakefront homes that would be worth $10-15M today? Sure you did. But did you know we have perhaps two handfuls of true legacy estates that measure 500+ feet of frontage and 20 acres in depth? You might have, but now consider an owner with a nice home on 150-200′ of frontage might be able to sell that home for $14M, and buy an ultra-rare estate for just 40% more. It’s nice to introduce new owners to the lakefront, but the real trade this year is engineered to benefit the move-up owner.

Of course this discussion has failed to consider the incredible absence of $7-15M lakefront inventory here. Aside from a South Shore Club offering in that range, there’s nothing on market in that segment. It’s pretty hard to tempt owners to upgrade when there’s nothing to offer them. Expect more shiny inventory to present itself as we move into the off-season, and when it does, let’s see if the existing ownership takes the upgrade bait. I’m betting they will, and as they do the market will continue to see this rare liquidity at the very upper end of our market. Why would you ever consider buying a vacation home in a market where your purchase is seen as an outlier? Come to Lake Geneva, where we don’t celebrate the upper bracket as much as we expect it.

About the Author

I'm David Curry. I write this blog to educate and entertain those who subscribe to the theory that Lake Geneva, Wisconsin is indeed the center of the real estate universe. When I started selling real estate 27 years ago I did so of a desire to one day dominate the activity in the Lake Geneva vacation home market. With over $800,000,000 in sales since January of 2010, that goal is within reach. If I can help you with your Lake Geneva real estate needs, please consider me at your service. Thanks for reading.

Leave a Comment