South Shore Club Sale

At any point over the last decade, if you were to have found yourself at Lake Geneva, and you were stumbling around the lake in search of prime real estate, you more than likely drove into the polished entrance of the South Shore Club. If you did not do this, and you were looking for lakefront real estate, you made a big mistake. Regardless, the South Shore Club has been happy to provide standard issue lakefront type inventory for the past decade, and since then there has always been at least one home for sale and at least a handful of vacant parcels. This is your two minute warning that this scenario is bound to change.

Earlier this year, I sold lot 3 in the South Shore Club. Last month, an owner of one built home purchased the lot next to his house, and plans to expand his domain. And then last Friday, I sold lot 18. On Sunday, I received offers on two other lots. This morning, I have a customer interested in another lot. Over the past two months I have received more vacant land inquiries at the South Shore Club than I had in the entire year prior. The South Shore Club, judged purely by the actual closing and offer statistics, has gone from cold to tepid to scalding all in the period of 12 months. Today, there is activity in the Club, and tomorrow, the day may come when there are no longer several lots to pick through. Inventory at the South Shore Club is drying up.

Lot 18 sold last week for $500k. This was a low price, depending on how you look at it, considering this parcel was listed closer to $900k just last year. I look at the price as a momentary value, and buyers should look at this as a sign that the developing partners are serious about clearing the last few bits of remaining vacant lot inventory. I’ve been telling people that this is the case, but now the case is no longer simply a speculative narrative- it’s printed fact. Lots 31 and 32 should be next to sell, and likely at a severely discounted price. Lot 27 remains at $849k, and is by far the nicest of the remaining lots. It affords a pleasant lake view, and towering oaks that gladly shield the afternoon sun. It’s a winner.

The immediate take away from these lower lot sales could be to judge the South Shore Club and perceive these sales to be harbingers for yet lower prices to come. I don’t see this is as the case, as I’m certain that all of these vacant sales are positives for the overall health of the SSC, even at these discounted levels. The bigger drag on an association like this is the presence of unsold inventory. If we print several lower priced lot sales in short order, we’ll have more owners building in the club, which leads to a more active and thriving community. Selling these lots lower now presents no danger for the long term health of the SSC pricing, and does, in fact, speed up the appreciation process. Unsold, empty lots are the enemy of small association progress.

The price modeling that I suggested would become the norm in the club continues to work. The concept of $3-$3.75MM up front, for those exclusive homes that have lakefront settings and views comparable to the most traditional lakefront homes, still works. 1622 Lakeside Lane, listed for $3.395MM falls into that category, and the only surprising thing about this home is the fact that I have yet to sell it, though I certainly expect to sooner rather than later. Pricing from $1.8MM to $2.5MM for homes behind the pool is still intact, and pricing in the $1.5MM to $2MM range for homes on Forest Hill is as well. Throughout the last year, there have now been four built home sales in the Club ($1.8MM, $2.5MM, $3.2MM, and $3.575MM), and three printed lot sales ($360k, $500k, $700k). Add in another two or three lot sales by the end of this year, and we have the makings of one of the hottest vacation home enclaves on Geneva Lake.

And that brings us back to this: Inventory at the South Shore Club has been taken for granted, because taking it for granted has provided benefits for those now buying. However, once vacant land inventory is all sold, and buyers are no longer able to saunter into the SSC and pick off a lot or two for these low prices, I expect demand will increase rapidly. Imagine a day when buyers ask their agents for an offering in the South Shore Club, and there are no vacant lots not only for sale, but in existence. This day is fast approaching, which should shift some motivation onto those buyers out there that like the idea of low priced land in the most exclusive Club going.