If you read my winter edition of Summer Homes For City People, you know that off-market sales accounted for 0.00% of our 2017 lakefront volume. And if you know that, then you also know that in 2022 off-market sales accounted for 57% (or more) of our lakefront sales. There’s a good reason for this, but I’ll leave that to your imagination and only tell you if you ask me directly. I wouldn’t want to give the Chicago agents more of my insights as they seek to make some sense of the market that is occurring almost entirely without their involvement. (MLS Data: Chicago agents YTD Lake Geneva Lakefront Sales: Zero).
I closed an off market lakefront sale in Cedar Point on Oak Birch earlier this year. That one went for just under $4.5M. Last week, I closed another one-party lakefront sale, this one on the South Shore, priced at $3.3M. The $4.5M house had 80+ feet of frontage, and the $3.3M house had 57′. These two sales, along with my pending transaction at 556 Sauk Trail ($3.795M) in Indian Hills further support my theory that this year all lakefront sales at the entry level will likely occur north of $3M. Nuance will dictate whether an entry level property prints at $3M or $3.7M… If you want to feel badly about not buying a lakefront home before 2019, consider in 2015 I struggled to sell entry level lakefronts around $1M. But don’t feel too badly about it, I was right here and I didn’t buy one either.
The upper bracket of our market has plenty of off market movement as well, notably a pending sale on the South Shore at a massive price per foot. I have another handful of deals I’m working on that can’t yet be shared, and I’m sure there are other deals out there as well. There are a couple of active lakefronts at the moment that are being mostly ignored by the market. Do you know why properties might be ignored by a hot market? I won’t tell you, but if I have my car for sale on the side of the road and Kelly Blue Book says it’s worth $20k but I scribble $35k on the window, why hasn’t it sold? Because no one wants my car or because my price is wrong? I’ll let you decide.
I have a pending sale on a Parkway in Cedar Point Park, also off market. That’s a nice little place. I have a vacant lot on the lake available, in case anyone is interested in building on the lake. If you drive around the lake this spring you’ll see massive amounts of construction underway, so it’s rather obvious people do like building here. This is the nature of the market today, and it’s not unique to Lake Geneva. All over the world there are off market deals being struck, and if you really consider the concept of real estate marketing you’ll understand why. If I list a house on the open market and I place advertisements and I have an open house with little cookies and name tags, do you know why I do that? In order to attract buyers. I do everything I can to find a buyer, and historically everyone understood that the goal was to find a buyer quickly and at the highest price. The more open houses I do, the more postcards I mail, the more spam emails I send, the more days that pass, the lower the ultimate sales price. Time erodes value. This should be obvious. So why, with that understood, would a seller subject their property to such a fate if there is a ready, willing, and able buyer presenting them an offer on a silver platter? Want to know why off market deals are so common? This is why.
While off market deals will continue, I would also expect open market inventory to increase. There’s a legacy estate coming to market soon, and when it arrives on market we’ll say Aloha. I thought I was going to list the property, but alas, something else was at play and I didn’t win the listing. We’ve had a pretty robust lakefront market so far this year in spite of another miserable stretch of “spring” weather. A choppy but generally range bound equity market has helped, as have steady, if elevated, interest rates. If we can print large deals with frequency during 42 degree rain showers, imagine how much better the market might be once we finally shed this petulant spring. Here’s to May, and those flowers we’ve been promised.