Lake Geneva Price Cuts

I mentioned this briefly last week, but the topic of fall price reductions at Lake Geneva deserves a bit more commentary. In the past week, there have been several price reductions in our vacation home market, and that trend should and likely will continue throughout the fall months. The theory here is a simple one. Sellers understand they have an expiration date as to their marketability moving forward in 2011. They also understand the fall selling season is one of the more potent, as wise buyers seek to make vacation home arrangements heading into the winter in order to primp and prepare their new residences in time for the spring of 2012. As long as the Mayans are wrong, those new owners will be settled and in the vacation home swing by the time the first Lilac blooms next May. Also, if anyone knows a way that I might enter into a deep and uninterrupted sleep commencing January 2nd and extending through that first Lilac bloom, please email me those instructions.

The price reductions will come, some significant, others trivial. There have been reductions of epic proportions lately, including a lakefront home listed near $2MM that has been cut to just under $1.8MM. A cottage in Glenwood Springs was on the market for $395k and has been brought back on at just $319,900. A home on Lower Loch Vista was already affordable at $374,900 and has been made even more enticing by a $50,000 price cut. Other reductions include my Upper Loch Vista listing to $449k, a Somerset home in Lake Geneva to $725k, and a pending price cut in my Oak Shores association home to $695k. These are sellers seeking to sell, and as I said last week, the way to attract a buyer is not through a free champagne brunch, but a simple price reduction.

Obviously some reductions will be more effective than others, but any reduction is a good reduction at this point in the game. While there is much summer left to be enjoyed (88 and sunny tomorrow), there is also a fall that, while lengthy and leaf crunchingly fun, will wrap far sooner than most of us would hope. If sellers are to be in a position to reap the rewards of a virile fall market, then these reductions are a relative must. I see a fall market that won’t build with considerable inventory as it has in recent years. I expect new listings to come to market, sure, but not huge numbers of them. I can see it in my own business, as I personally do not have a stable of new listings waiting to be unleashed on the open market. If I’m in that boat, I imagine others are as well. Expect fall inventory, but not so much of it that the market stalls as a result.

I see several market segments that will yield tremendous deals this fall. Chief among those is the lakefront market. Entry level homes priced just under $2MM are undoubtedly going to sell in the $1.4MM to $1.55MM range. This will represent extreme value for lakefront buyers in this range. Unfortunately for those buyers actively seeking lakefront in the $1.1MM to $1.3MM range, I don’t expect much of this sort of inventory to hit the market. Simply put, we’re running out of cheap lakefront homes. I know I just called million dollar properties cheap, but such is the Lake Geneva strain of my housing disease. I see one or two lakefronts potentially selling sub $1MM, and while the locations aren’t perfect, the water is still clear and the pier still white, so I’d still consider opportunities in less than ideal locations if the price justifies it.

There are buyers waiting for some untold influx of inventory that they believe will hit the market once summer wanes to a degree that it is no longer recognizable. I think these buyers will find some properties to pick over, and some new listings will represent value and as a result they will sell quickly, but for the most part I see a fairly tame inventory build this fall. Expect price reductions to continue, and take note of those significant moves. A seller hacking a large portion of their asking price in the fall signals one thing to me- those are sellers willing to entertain nearly all offers. And those are the sellers that we should be looking for, together.