South Shore Club Update

When this year was young, the South Shore Club was gilded both in copper and slate and stone, but also shrouded in a fairly heavy cloak of uncertainty. In January, changes were made. New representation was brought in (hi), some prices were cut and others were reaffirmed. The price structure was as it had been, but with a few minor adjustments to the built inventory and a 30% reduction on the few remaining unsold developer lots (six in total). The South Shore Club was positioned for a new run at the same market, and in January of this year it was only time that would tell whether or not these changes would bring any meaningful yield.

To have built in the Club over recent years meant to display a fairly significant dose of faith. Faith that the market would reward your efforts, and faith that the same efforts would provide enough of a lifestyle boost to justify the expense. But it also meant faith in the market surrounding you, because the resale drought at the South Shore Club that existed from 2008 through the beginning of 2012 was intense enough to make this summer drought look downright oceanic. The SSC segment was a member of the broader Geneva Lake lakefront real estate market, but as this year began it was very unclear how exactly it fit in.

And then, without much warning, there was a sale. A great big sale. My sale in May of a beautiful home right down on the lakefront end of East Lakeside Lane for $3.575MM set a price point that the rest of the SSC cannot help but honor. This sale, combined with the sale of an REO property in 2010 at the very back of the association near the tennis courts for $1.75MM set a very broad range that the SSC operates within. The sale up front set the high end, the sale in the back set the low end, and it was becoming clear where everyone in between figured into the equation.

With the sale up front at $3.575MM, it was clear that all but one spectacular home in the club would likely sell at that number or below. That one exception, by the way, isn’t on the market. Instead, it’s being used as these homes were intended- each and every weekend by a family who chooses to summer lakeside, in style. With the front sale and the back sale, we needed another sale to further cement the scope of value. And in the spring, another sale did just that. This one was a private sale, near the swimming pool but not so close to is as to be damaged by the proximity, and at $2.5MM this private sale provided the third leg to our SSC platform. $3.575MM up front, $1.75MM in the back, and $2.5MM near the middle. A market that entered 2012 with no clear direction and no clear indication of value had, as of the end of May, found very solid footing.

If that price structure hasn’t been convincing enough, enter now the fourth substantive sale. Over the weekend, I put together a contract on my listing at 1588 Lakeside Lane, the listing that was just reduced to $1.95MM last week. This fourth sale will further cement the structure that I outlined above, and if some sellers and other buyers want to refute the structure, I ask only that they look at the solid sold evidence. I also ask that you look back in my archives as to where I saw the SSC market heading two or more years ago, and you’ll see that the structure as it has been proven today is the same structure I saw developing back then. Value, it seems, has finally been established at the South Shore Club.

These sales and this structure means something to the built homes, yes, but it means so much more to the few remaining unsold lots. To have built on one of the unsold lots before this year was a risk. To build now is to react to a pattern, not to try to envision what that future pattern might look like. The remaining lots, once swimming in a large grassy sea of uncertainty, now make complete and utter sense, but only if your envisioned build falls within these mostly fixed parameters. The remaining lots will likely be sold this year at a price that would allow a new owner to build and be all in for less than their built counterparts, and finding value in a market that finally has a well defined future, well that’s all right by me.