Through the words that I write here and the words that I speak there, I have positioned myself as a value guy. This is a blessing to clients who discover and seize rare value on this exclusive lake, but as markets shift this desire to discover mostly, if not only, value, could become a curse. In this way, with this value label, I will likely never sell a home to some chump, I mean buyer, who walks in off the street and wishes to buy the largest, most beautiful, most overpriced home on the lake. This isn’t my thing. I will get the buyer who wants to buy that most beautiful house, but if I suggest that a $9MM home is worth just $6.5MM, it’s doubtful that I’ll be the broker to close that sale. This is how it is to serve the market instead of serving solely the client.
When markets shift, being the value guy can be a little bit tough. Not tough when compared to the guy I saw on a television show last night who was locked up in a Venezuelan prison for three years, but tough nonetheless. When a home sells that has some major objectionable association pier with a couple dozen slips framing my view or parking lot adjacent to it, I will never, ever be the agent to deliver that buyer to that compromised real estate. And so in the weeding through of inventory and the identification of true and lasting value, I find a way to shrink an already small market in the way that some guy from Wisconsin in the mid 80s took small toy cars and made them into Micro Machines.
To be a value hunter when the markets are slow and soft is to be smart and savvy. But when the markets recover, and sales occur with regularity, is it still smart to be the value guy who sees all volume as a positive but who also views many of the sales as the wrong move? The market on Geneva right now is changing. It’s moving from a slow, value driven market to a bit of a free for all. Volume has returned in a huge and meaningful way, and while this volume is good, it is also dampening buyer’s prospects for methodically unearthing forgotten value. In a fast market, the fast buyers end up with the homes and the purposed buyers end up wondering what on earth just happened.
There are at least six lakefront properties on Geneva pending sale today. I expect there are one or two more that are either under contract or close to it. These sales will push our Lake Geneva volume through the roof, or at least higher than it has been since 2007. If the pending lakefront deals all close by September 30th, 2012, we’ll have 15 lakefront sales on the books at that time. YTD 2011 had 12 sales, YTD 2010 had 11 sales, YTD 2009 had 9 sales, YTD 2008 had 10 sales. This is a volume recovery, and it’s well underway at Lake Geneva. While volume is important, it isn’t the entire story.
Agents can be caught up in the rush of sudden volume, and suggest to their clients that they best grab hold of something- of anything- before the market moves on without them. This was what happened in 2003-2007, and to some extent the admonishment was true. Prices were moving so quickly that there wasn’t time for considerate thought, and this is why properties were listed on Thursdays and shown on Fridays and sold on Saturdays. But that’s not how it is today, because what is missed by those in a rush is that the market movement has not been kind to all properties in all price segments. So while many homes sell and volume increases it doesn’t mean that value won’t continue to exist far into the future. Prices, it seems, aren’t moving just yet.
This is why it’s a good time to take a breath. To survey the market, and to realize that even as volume has increased this year prices have remained steady. Certain properties have become cheaper, and buyers have snatched up homes that have had significant price reductions throughout 2012. The market is healing, but now is not the time to abandon caution and jump in with both eyes closed. I’m betting value will exist in this market throughout the waning summer and through fall, and I’m betting that while it’s not time to quicken our pace to an outright run, it is time to walk just a little faster.