I take no pleasure in the storms that have battered Florida. Not for the storms from the years before this year, not for the storms this year, and certainly not for the storms that will batter next year and the years that follow. But I do take pleasure in the unwinding of a real estate market that so many have been telling me would go up and to the right forever and ever. The reality of the Florida phenomenon is that the market was built on the back of a mass exodus, and any mass exodus cannot last forever. When you combine a softening supply of incoming residents with an increasing supply of inventory and a coming inventory boom when the baby boomers pass away and leave their two bedroom condo in Del Boca Vista to their three children, one of whom is a bike chain repair guy in Missouri, one is a pediatrician in San Diego and the third a retired union airline baggage handler whom no one has heard from in three years. If you think these inherited Florida properties aren’t going to be listed and sold, well, then I guess we don’t exactly agree.
The bloom blowing off of the Florida migration rose is actually bad news for would-be Lake Geneva home buyers. We are starved of inventory at the lake, and a rethinking of Florida retirement plans hasn’t helped. It goes like this: If you were contemplating retirement over the next couple of years and you were willing to be a prisoner to a calendar in an attempt at saving a few dollars in taxes, perhaps you had your eye on a large flood-prone house on the coast. It doesn’t matter which Florida coast, because one floods this year and the other next year. The only certainty is it will indeed flood. If you owned a house at the lake, you might be thinking you’d use that house just a bit less, and maybe you’re thinking you’d sell your home in Lake Forest and buy an in-town in Lincoln Park. In this reshuffling, there’s a chance the lake house, which was worth $5M in 2019 and is now worth $9.5M in 2024, might be on the chopping block. Not because you’re done with the lake, but because you want to simplify your life by buying a large home that will flood out every other year and cause you to spend a week or two in Atlanta while the “rare” annual storm batters your chronically underwater home. Maybe you’d capture a bit of that gain at the lake, capture a gain in Lake Forest (or break even), and upgrade to your own piece of red-tide-paradise. You’ll downsize at the lake and buy that fun place in the city.
That scenario would have given me a piece of lakefront inventory to sell to my buyers. But not now. That scenario is on pause. Or it’s altogether dead. So now you’re rethinking your commitment to picking up the same shell on the same flat beach every morning, and I don’t get to sell that piece of lakefront inventory. In this, the ending of the Florida migration boom is not helping me at the lake. I need that potential inventory, and I need it bad.
The lakefront on Solar that had sat on market since summer of 2023 is under contract. Other lakefronts have offers. In fact, there is only a single property on the lakefront that doesn’t have an offer on it right now. One. I have one piece of lakefront to sell. After a sluggish spring and summer, the market has tightened back up and buyers are unhappy. Owners are ambivalent. Agents are frantic. All of this reminds us that the most important factor when considering pricing of a market is inventory. Nothing else matters. Inventory is king, and today, Lake Geneva ownership is flexing its muscles and telling buyers to pound sand. Not that awful sulfur smelling sand from Florida, but regular Midwest sand.
I expect this situation will change at some point, but I’ve also been wrong all of this year. The market has been trying to soften (more than it actually has), but the constricted supply and a steady flow of new buyers hasn’t allowed that softening. Expect sellers to be hounded by agents begging for their listing (hand written notes!) and expect buyers who have been counting on a softening to come to grips with the reality of this market. While the West struggles with wildfires and a return to office (What do you mean I can’t live in Bumble, Montana and keep my PE job in Chicago?) , and Florida struggles with heat, humidity, snakes, and hurricanes, Lake Geneva will be here, enjoying a crisp fall where the only storm on our horizon is the inevitable first dusting of snow.