South Shore Club Update

During a tenure that spanned the worst April that I can remember, and a third of May that as been better, but not ideal, I have poured $480 dollars worth of gasoline into my fishing boat. Combined with the $110 worth of oil that has been burned in the process of not too many early morning fishing trips and late afternoon boat rides, I have spent nearly $600 on fuel to keep a small fishing boat at least sort of filled with gas. I say that because the gas gauge doesn’t work, so my consumption rate is a mystery to me even now. That painful fuel allowance has led me to frightfully wonder what sort of fuel expenses I may endure during July, you know, when it’s not 47 and raining. But beyond my own voluntary financial handicapping, the copious quantities of gas and the resulting expense leave me dreaming of the South Shore Club.

In the South Shore Club, owners do not have to own their own boat. The SSC maintains a healthy armada of watercraft, each of which is available to any owner at the SSC at any time. Best of all, from my gas-poor line of thinking, the fuel and maintenance are included in the $1650 monthly dues of the club. At first blush, those dues figures seem high. They seem high because they are high. But they’re high because they have to be, and they’re high because owners demand high end entertainment options and Cobalt boats. They’re high, sure, but given my $600 April fuel bill on a 22′ fishing boat, I think those dues are looking more and more reasonable.

I had a nice conversation with a possible client yesterday, and the South Shore Club played a starring role in the dialogue. We discussed the positives of the club, and the negatives, and after doing so, it was clear to me that those positives (free gas) outweigh the negatives to such a degree that the negatives should be ashamed of themselves. So what are these South Shore Club negatives? Aside from the dues, I really can’t think of any. If you’re on the semi-circle, you have slight views of the lake no matter where the house is, but those homes on Forest Hill will not have any views to speak of once the development is 100% built out. I was going to call the semi-circle a horseshoe, but horseshoe reminds of of that casino which in turn reminds me of New Buffalo and their casino which in turn reminds me of why I’m so incredibly thankful that Lake Geneva doesn’t host the blight that is a casino. So beyond the association dues, which are reasonable if you consider what you’re not having to pay for outside of those dues, what are the other negatives? You know, besides the asking prices of most of the homes there.

The positives are intense, with impeccable grounds, gorgeous home designs, a fabulous swimming pool and hot tub (lifeguard too), clubhouse, huge grounds, huge lakefront, and complimentary use of those beautiful, gas hungry boats. And I would be remiss if I didn’t list, as a benefit, the fact that the South Shore Club sits on the hallowed ground where I took drivers education with a bunch of cadets who terrified me. And I also made a layup once in the old gym of the old academy, even though I’m pretty sure my team lost to the cadets. Aside from that, the positives of the club are obvious and plentiful. The club is being built out quickly, with construction of custom homes continuing throughout the market lull of the past three years. The nice thing about this development is that it is 100% built from an infrastructure viewpoint, so there are no new roads needing to be installed or amenities needing to be built. This development is finished with the exception of a large handful of homes needing to be built on some still vacant lots.

But what of the market there? If you were to have glanced at a paper containing the available listings in the SSC during July of 2008, and then you were, through choice or by force, locked away in a far away tower until yesterday, and today, when you awoke and cut your hair and trimmed your disgusting nails, and someone gave you a list of the available properties in the SSC today, you would find comfort in knowing that you haven’t missed much. The South Shore Club is forgiving like that. Aside from the REO that sold last fall, there hasn’t been an MLS sale in the club of a built residence since 2007. I’d argue that the REO wouldn’t have sold had it not been sold at a discounted $1.75MM price. And if I argued that, no matter who my opponent was, even if it was James Carville, I’d win.

There have been vacant land sales, which are important for the association. In order to see true market traction in the SSC, the remaining 8 vacant lots (7 developer owned still) need to be sold. There is one lot that I find captivating, but only because of the price. The lot next to the REO lot that I sold for $300k this spring has been reduced to such a price that the seller is smartly accepting the neighboring comp and positioning his lot to sell in a similar fashion. This lot, with a $350k list, will sell, and it will sell quickly. Once this lot sells, the next “cheapest” lot is $749k, effectively re-establishing the price threshold for the association. A smart buyer would do well to act on this last affordable lot, and quickly.

The existing built inventory in the association might be of high quality, but most of it is sorely overpriced. The overpriced nature of the listings does not mean that a price drop is on the horizon. If several wealthy owners choose to wait for that sole buyer to wander in and pull their $3MM+ trigger, then such is their motivation. I do feel that there will be one sale in the SSC this summer, but I stop short at predicting more than that. I see two quality offerings in the club, and will go on record today, with you and this loud guy sitting near me at Panera as my witnesses, that one of them will be sold by August. And the vacant lot for $350k will be sold within the month. If I’m wrong, I’ll tell you.

Today, my fishing boat needs more gas. If I can find the time, I will paddle out to the boat, taking great care not to fall out of that ridiculously undersized dingy, and I’ll drive the boat to the gas pump. I’ll hand the girl $100 (such is my maximum gas purchase) and she’ll pump 18 or so gallons of gas. My tank will then be at least 18% full. I’ll cast a minnow for a bit, and probably catch nothing, and then I’ll drive back to the buoy, attach the anchor line, and then I’ll again take great lengths not to fall in as I paddle to shore. When my ordeal is done, I’ll think of the South Shore Club, and I’ll let my eyes fall dewy at the thought of free boats and free gas.

SSC Pool photo courtesy Matt Mason Photography.