I’ve entertained the thought that I should become the Morningstar of real estate. Perhaps instead of selling real estate, I should simply and solely comment on it. I could be an analyst and a pundit and a reactionary patron, content to espouse opinions on the market without actually being part of it. I could stand at arm’s length and pick at the problems, deride the absurd, praise the stalwarts, and level crushing commentary on the failures. It would be fun, this new analyst job. It would allow me to write about sales and about active listings in a way that rules and regulations currently ban me from doing so unabashedly. But, alas, I cannot see a sustainable business model in such an endeavor, so I must write, gently, about the market from my own position, that of a Realtor with two feet planted squarely in the midst of the Lake Geneva vacation home market.
Last week, there were three sales of significance. The week before there was one, and since I haven’t yet commented on that previous sale, the total number in our discussion this morning shall be one plus three. The first of those four sales holds some significance for the lakefront condo market, though that significance isn’t a pleasant sort of significance, rather it is important because of just how dour the deal was. A two bedroom lakefront unit at Geneva Towers closed earlier this month for a buyer pleasing price of $329k. Remember, Geneva Towers ranks low in my pantheon of lakefront condominiums because it isn’t technically lakefront in the way that a unit at Somerset or Bay Colony might be. These units also lack transferable boatslips, an unfortunate handicap in a difficult market. But that’s not the whole story behind this recent sale.
This now sold unit was originally listed in 2010 for $650k. Then, swiftly, it followed a predictable pattern of receding numbers, a trend that mirrors quite closely the approval ratings of our current administration, from that once lofty list price conceding all the way down to the final list of $374k. Any sale is a good sale from a market perspective, as increased activity begets increased activity, and less inventory motivates buyers who would rather have their selections narrowed to a sparse few. But the danger in a transaction like this cannot be overlooked. Sure this seller attracted a buyer, but was it a buyer who was motivated at any cost or simply a buyer who was motivated because of cost? We all know the answer to that leading question.
Three other properties closed last week, all of those being single family homes. First, the lakefront home. When I was a kid, I remember throwing a shovel towards my younger brother and nearly severing one of his little toes. I don’t know if this was actually a near severing accident or if it was merely a scrape that played like a near catastrophe, but either way the site of the shovel throwing escapade was in the backyard of one home at 266 Circle Parkway in Williams Bay. That home, that venerable lakefront with classically striped awnings on the lake side and distinctive stone highlights anchoring a pleasing hillside location, sold last week for $2.25MM, with 152′ of frontage. That echoes the other large lakefront sales this year, 200′ for $3.5MM and 150′ for $2.625MM, and combines to make those who claim validity in an average price per foot look rather foolish (just $16,683 per foot, which isn’t an accurate reflection of lakefront prices today). This sale was a winner, even if the house needed a fairly generous dose of improving. I contend, if I’m wearing my analyst hat, that this home could have sold for less. I was targeting $2MM as the final sales price, which I think would have been a much bigger buy side value. Important to note- this home was originally listed for $3.495MM in 2009.
Around the corner in Cedar Point, a parkway home sold last week as well. This parkway home tells a similar tale of market chasing, having been listed for a 2005 type price of $840k in the spring of 2010 and reaching the final sales price of $650k just last week. The parkway homes were once the darling of the Lake Geneva vacation home market, and at one point in time they appeared to be as desirable as anything else in our market. Properties would hit the market on a Tuesday and be under contract by the following Sunday, and this was the exciting norm for much of the early and mid 2000s. The market turned a bit on the parkway home, as it did on most other properties, and now parkway homes appear stuck in a price segment of our market that generally demands a transferable slip (Cedar Point does not have such slips).
The final sale was in the Loch Vista Club, a Williams Bay association that I hold near and dear, an emotional proximity that results from a childhood of living in that club. This sale, of a smallish cottage at the top of Upper Loch Vista, closed at $375k. The price makes some of the existing inventory look quite attractive, particularly when considering the tremendous proximity to the lake that my own five bedroom listing there owns. That price also makes me wonder why that buyer wouldn’t have, instead, purchased the home on Lower Loch Vista that is now currently listed at just $324,900. Perhaps they didn’t want to deal with any considerable updating, as the lower road home needs some and their chosen target needed little. That sale at $375k was welcome, but I admit to a bit of wonderment as to why that home was ultimately chosen to sell first.
The sales from last week prove the market is on the move, but further drives home the fact that price is motivating buyers far more than any other determining factor. If a price looks cheap, buyers might act. If the price reminds them of 2006, chances are the property won’t sell. Some accuse brokers of intentionally manipulating prices downward for the sake of personal income and market sales volume. In this thinking, brokers are in cahoots to push prices down and destroy value for the sole purpose of personal gain. Those who do so lack understanding that a market trend isn’t dictated by the brokers, it’s dictated by the buyers. If a buyer wants to pay $500k for a property listed at $650k, the broker will typically try to push the buyer up in price in hopes of getting a deal done (rarely do I do this, but we’re talking theoretically here). If the buyer holds firm at her lower number, then ultimately the seller will need to make a very difficult decision. Stay firm and risk losing the buyer, understanding that the next buyer may not materialize for months or years, or concede at the lower price and move on both financially and personally. In 2010, sellers found the motivation to embrace what’s next, and in 2011, they appear to be mostly willing to do the same. Congratulations to the new Lake Geneva vacation home owners. May your walk to the lake be short and your weekends perpetually sunny.