Blog : Entry Level Lakefront

Lake Geneva Lakefront Market Update
David Curry

Lake Geneva Lakefront Market Update

I spent much of Sunday on the lake. There’s a new boat in the Curry fold, and the boat must be used. Boats are like that. If you don’t use them, they’re no fun. Just like lake houses. You can own one, and the ownership won’t be all that much fun. It’ll be work. But if you use it, then it becomes fun. It’s like money. Having a lot of it is fun, I imagine. But what good is it if you don’t use it? Along that line of thinking, the boat, and that sunshine, and Sunday. And a stop at Gordy’s for lunch and a gawkers tour of the lakefront to see what has changed since last fall.

Like every year, the lake has experienced changes. New builds are underway. Some large, some small, mostly, however, large. Renovations, big, deep, heavy renovations. Some renovations that you drive past on the boat and wonder if the renovation was the right decision. Should the old house with old house rooms and old house stylings have been scraped and rebuilt, rather than rebuilt around what was old? A new house in Loramoor, beautiful. Another new one in the Lindens, beautiful. Some new homes here and others there. The constant on this lake is the scenery. It’s always the same, always green, always lush, always dialed in. The change is the shade of the siding and the roof pitches of the new homes. Each year, the same, yet each year, change.

Earlier this week, a lakefront sold on Walworth Avenue in Williams Bay. This was not my sale. The buyer paid full price for a cottage with 50 feet of frontage, which is now the last domino in a line of five lakefront homes to have sold in the past two years along this particular stretch of lakefront. There are rumors of new construction coming to these skinny, long lots. Tear downs, maybe. Each of those sales closed between $1.1 and $1.5MM, whith just one at the $1.5MM mark and the other four in a clearly defined range between $1.1MM and $1.25MM. If gentrification is coming to this stretch of the lake, we’re about to find out.

The question now for the owners is whether or not this stretch is worthy of the gentrification, and the bigger, market question is whether or not this is a smart decision. I would argue that it’s a good decision if the initial purchase and the initial budget is range-bound. I’m speculating here, but that’s what I’m paid to do. Speculate on the current status of the market. Speculate as to where it’s going. And help buyers and sellers react to the market in an appropriate and intelligent way. That’s why I’m here today to think about the lakefront market, and to think about these sales on Walworth Avenue. There have been too many of them to ignore.

Times were, you wouldn’t want to buy on Walworth Avenue and tear the house down. This had been done in recent years, but it didn’t make a lot of market sense. Now, today, on the heels of five sales in 24 or fewer months, has something changed. Does this now make sense? I would argue that it does, with a big caveat. That caveat is not a market based caveat, but a personal one. If a buyer wants to buy for $1.2MM on this lake, they have very few options. Historically they would need to be in the Lake Geneva Highlands or on Walworth Avenue, with a few other spots dotting certain other sections of the lake. If you’re a $1.2MM buyer, you typically would not have a lot of options, but with ample, steady inventory on Walworth Avenue, it makes sense that these buyers found their way to this specific shore.

If you’re going to tear down a $1.2MM cottage and build a new house for $1MM (the low end of new construction on the lake, in my opinion, even on a small lot), you’ll be $2.2MM into a brand new lakefront house. Admittedly, this cannot be done anywhere else, and if you’re a buyer with eyes on a new house for $2.2MM, this is indeed your only option. Build away, new buyer. But this article isn’t about that buyer, it’s about the buyer that might be able to do better. The buyer who could have spent $2MM on a tear down instead of $1.25MM. This is about the buyer who is going to build a bigger house. A better house. And with all things bigger and better, that also means more expense. This is about the buyer who settled for this location rather than reached for it.

This is about the mistakes that are made by seeking out lower priced land. Don’t forget, it’s only a mistake if a particular buyer has a personal economy that is healthy enough to reach for more. Because for that buyer, reaching higher for the land purchase will always yield a higher top end once the new home is built. If you can do better, why not hope for that improvement? Why not wait to find better land with a higher upside? Why build in a range-bound section of lake when you could build in another location that might have legs to reach to $4MM or beyond? Why be early to a specific shoreline’s gentrification when you can settle in to another shoreline that has already made those strides? Why entertain the risk of one location when another, slightly more expensive, location will all but guarantee a gain at the end of the project? These are the questions that I ask on behalf of my buyers, and these are the questions that every home buyer who is considering building new on Geneva Lake should entertain. Without working through this process, you’re just buying a silly house on a lake without any real idea as to what amount of money you may be throwing away.

The market today is active, we all know this. Even new agents who tell you that they’re lakefront experts in spite of never having any lakefront experience or success can tell you this (and they do, in postcards, weekly). But the market is not without traps, and the easiest trap to avoid is the one that would have you over improve a specific section of shoreline that has yet to prove it is worth the investment. If you’re stumbling around this lakefront market looking for guidance, I’m here to help.

2018 Lake Geneva Lakefront Year In Review
David Curry

2018 Lake Geneva Lakefront Year In Review

The year just ended was, by most accounts, a good year. But that’s a silly way to describe something as diverse and unique as a year. That’s like booking a table at Alinea and after four hours and 20 courses you take to your social media account to describe the meal as “good”. That wouldn’t happen, and that’s just a meal. How much more deserving of proper critique and detail is an entire year of our lives? Now that I’ve built this thing up, let’s dumb it back down and talk about the lakefront market in 2018. The year? It was pretty good.

We started 2018 with light inventory, just ten lakefront homes were available at the onset of 2018, and that limited inventory forced me to worry about what the year was going to look like. I knew there were buyers, plenty. I knew we had pending sales to give us a nice start to the new year. And I knew the stock market looked stable on the heals of a Federal tax cut. But what I didn’t know was how much more inventory we’d add, and how firm the buyer’s resilience would be if we didn’t add enough inventory.

That’s what matters, after all. The buyers.  See, a Lake Geneva lakefront buyer is generally only a Lake Geneva lakefront buyer. But that motivated dedication only lasts for so long. If you have a buyer and they can’t find what they’re looking for, they’ll wait, for a while.  They’ll come up to look at a lame new listing, and then they’ll come up again to look at another lame new listing. They’ll stay engaged, because the lakefront life is the life they want to live. But after time, that passion erodes into frustration, and frustrated buyers have a tendency to wander. Why spend so much effort waiting for a perfect lakefront on Geneva when Michigan has a whole state full of average vacation homes?

I know, and you know, and that buyer used to know, that a Lake Geneva lakefront is not like any other lakefront. But desperate times call for desperate measures, and I worried that the desperation of 2018 would lead some buyers astray, and no doubt it did. But the year just ended with 23 lakefront sales (24 with the vacant lot included), including two in the South Shore Club and one in Buena Vista (technically not private frontage). That number is down from the 2017 total, but considering the limited inventory, that number is a terrific total.

In all, we printed 2536 feet of lakefront shoreline, up from the 2017 total, but less than the 2016 total of 2882.  That includes one lakefront vacant lot on the North Shore. We sold just over two million square feet of lakefront land mass, and more than 115,000 square feet worth of living space.  Prices ranged from $11,250,000 for a North Shore estate, to just over $1.1MM for a Walworth Avenue cottage.  For my involvement, I ended 2018 as the number one individual agent in Walworth County yet again (per MLS), with more than $35,000,000 in closed transactions, so that’s nice.

The lakefront loves its price per foot (PPF) measurement, that is, the total value of lakefront sales divided by the total amount of lakefront feet sold, this we all know. You should also know that I don’t love this measurement, as it really only seems to apply to lakefront homes in the 100′ range.  200′ lakefront lots experience compression of the number, in the same way that lots under 100′ tend to overachieve. We ended 2016 with a PPF of $27,193. We ended 2017 at $27,578. And after the activity and bustle of 2018, we finished the year at $27,684. For the buyers who think this market has spiraled upward and out of control, consider those numbers. Does that seem like unsustainable, unwarranted price growth?

For 2018, we’re going to look a bit deeper at the numbers. We know our market was skewed by the $11,250,000 lakefront sale, that of 415 feet of frontage and almost 20 acres. We had an average number of entry level lakefront sales last year, closing four lakefronts under $1.7MM.  The remainder of the lakefronts fell into somewhat familiar price categories. Let’s throw out our outliers at the high and low of the market, and pull our 2018 numbers from the remainder of the lakefront transactions.

With that in mind, our PPF figure for 2018 actually goes up, to $27,994.  If you look at the purest way to measure the accuracy of that number, you needn’t look further than the 100′ vacant lot that sold on North Shore Drive last summer. That 100′ sold for $2,750,000.   That’s easy justification of the average. But there’s more to the lakefront than a basic price per foot tally, there’s also the average price per square foot of the structures themselves, as well as the price per square foot of total land mass. For these two figures, we’re going to keep with our habit of throwing out the high and low 2018 outliers, as well as the South Shore Club sales and the Buena Vista sale, as these are not true lakefront sales (even though the market treats them as though they are).

2017 registered an average housing price per square foot of $560. 2018 pushed that average up to $625. For the overall land mass statistic, we had a 2017 average of $58.09, whereas 2018 just printed a $51.66 average. Does that mean the value of lakefront land actually decreased in 2018? Of course not.  None of these metrics individually tell the story, which is why to judge the performance of our lakefront market you need to figure and consider all of them.

Today, there are just nine lakefront homes for sale on Geneva. If you remove the Fontana home that has shared frontage and a shared pier, and you remove the Trinke property that has a lagoon between the home and the lake, then you’re stuck with just seven true lakefront homes on the market. Of those, the least expensive is listed over three million dollars. Not cool if you’re a buyer. But if you’re a buyer, I have some good news for you in 2019.

The recent tumult of the stock market is a difficult situation for the lakefront market. Rising interest rates don’t bother us very much, but a decline in invested assets does. With this in mind, our stable of confident lakefront owners will find a few who dislike what they see, and those few might offer up some inventory that will appeal to the 2019 buyers.  To be certain, there are plenty of buyers still. The low inventory of 2018 didn’t scare away everyone, though I’m sure there’s some guy sitting at his Michigan vacation home this morning what it is that he’s done. Pray for this man, and his family.

I’m anticipating inventory will increase in January, and you’ll see reduced prices in a few of the 2018 carry-overs. Most sellers don’t care if the market slows, but again, if you’re a buyer, you’re not concerned about most sellers. You’re concerned only about the position of the seller who owns the home you’d like to buy. 2019 is going to provide inventory, and for the buyers who have been waiting, the question will be how the seller prices line up with buyer expectations.

I think buyers will be a bit more shrewd in this new year than they were last year, but I have a bold prediction to make: 2019 is going to be just fine. We’re going to sell lakefront homes. The market is going to provide inventory. We’re going to end 2019 somewhat flat in terms of valuations and volume, but flat is just fine with me. Flat, in fact, is good.

The stock market is going to either go up or go down, but one thing will remain.  People want something more. They want a place that means something to them, and to their families. They want to enjoy their wealth.  We can’t buy more time, and while I’m also sad that my Apple stock has cratered, that isn’t going to keep me from wanting to enjoy my family and enjoy this place. And I’m betting I’m not alone, because what you see below isn’t something you can replicate in the city or the suburbs.

Entry Level Lakefront Market Update
David Curry

Entry Level Lakefront Market Update

I’m not sure if there’s a more interesting segment in our market than the entry level lake access market. While other segments exist because particular homes move in and out of that defined value range, the entry level market is truly the only range for which their is no defined price structure. When times are good, entry level might mean $1.5-2MM. When times were bad, we learned that entry level meant $800k-$1.2MM. If we look over any particular decade in our past, there’s nothing consistent about the pricing of this segment. In that, it’s a curious segment, but beyond that, it’s also our most important lakefront segment.

Yes, yes, we know liquidity at the top end is the most unique attribute of our market. We know our liquidity makes every other vacation market in the Midwest look like a low quality timeshare rental. But still, in spite of that robust upper bracket strength, the entry level market is the market that matters to more people. The goal of vacation home buyers, if the budget affords, is to find lakefront.  Knowing that the entry level market is directly connected to the upper-end off water market, we know that if the entry level market struggles then the off-water market struggles. If the off-water market is strong, then that must mean that not only is the entry level market strong, but it’s light on inventory. These two markets are connected, and 2018 has proved that once again.

This isn’t about the off-water market, even though it is remarkably strong and liquid as a direct result of the low inventory and sales patterns of that entry level lakefront market. This is about the entry level market itself, and what 2018 has done to it, and for it.  This year, there have been four lakefront homes sold between $1.1MM and $1.25MM.  All four of those properties had around 50′ of frontage, and three of the four were on Walworth Avenue in Williams Bay. If you’re familiar, Walworth Avenue is the road to the North of Pier 290. The other sale was in the Elgin Club.

The fact that there have been four sales in this segment isn’t surprising. It is somewhat surprising that the prices, in spite of the spectacular market activity of 2018, have been somewhat stagnant in that tight, low buck range. While the homes that sold were certainly habitable, it wouldn’t be a stretch to suggest that they are all in need of some additional attention. Whether that comes in the from of wide-scale renovations or surface improvements, that is up to the new owners. Will any of these four be scraped to make way for a new home?  No one, except the owners, can answer that question.

Walworth Avenue hasn’t shown any real strength over the mid-million dollar market. There’s a giant newer home on that road, one that represents a significant investment, but is that an individual pursuing what is best for that individual, or is that a market market-minded play? Will Walworth Avenue soon be home to more tear downs, to more new construction? And if so, will that new construction find favor in the market?  I honestly don’t know the answer to my own questions. I’m inclined to suggest that new construction in that location wouldn’t be a wise play. But I know the tight inventory markets on the lakefront between $1.8MM and $2.5MM, so it wouldn’t be crazy to suggest an owner could pursue new construction here, even though the neighborhood hasn’t shown the ability to support it.

There have been a few other happenings in the entry level market this year, notably a pending foreclosure in the Lake Geneva Highlands and a private lakefront sale on Outing Drive. You’ll remember the Outing house, as I had it for sale earlier this year, and another agent had it for sale for a spell as well. The home sold in what appears to be a private sale for a price (as shown in the transfer rolls) of  $1,525,000. That’s a reasonable price for that house. The Highlands lakefront is one that was on market last year and under contract (per MLS), but failed to close. That home is likely valued in the mid $1s, and I’ll be curious to discover if it comes back to market as REO, or if someone takes a stab at it through the sheriff’s sale.

Today, the entry level market is once again void of inventory. The lowest priced home with frontage is over in Trinke’s, a property with the lagoon in front of it, priced at $1.85MM.  The next available lakefront is to the East of there, priced just over $2.2MM. This is a tight market, and a difficult one for would-be lakefront buyers.  What’s interesting here is that the lack of inventory and consistent sales really hasn’t translated into valuation gains in this segment. I’d expect that’ll change if the market stays tight for too much longer. Maybe it won’t change at all until someone breaks the pattern on these entry level streets and builds something new. Something that seems out of place, something that doesn’t make sense. Or at least it’ll feel that way until everyone else does it, too.

 

Lake Geneva Prices
David Curry

Lake Geneva Prices

There’s an interesting bit of information available this morning courtesy a recent lakefront sale. The sale was of an older house on a 90′ lakefront lot in the Birches. The property was fine. The MLS description made no mention of it, but I believe the house may have been a Zook.  Zook homes are a lot like Frank Lloyd Wright homes, in that the sellers care about the pedigree of the architect, but the market doesn’t.  This property was initially listed for $3.5MM back in 2008, and after a series of price reductions and listing pauses, the property mercifully sold this week for $2.3MM.  I didn’t have the listing or the buy side, which is pretty awful for me but worse for the buyer and seller.

The parcel of land was reasonably decent, though I don’t count Maple Lane to be among the best streets on the lake. It’s a fine street with fine homes, but it’s not necessarily a street that has a history of selling for elevated prices. Today isn’t about that parcel, it’s about the market context of this sale.  Brokers are clamoring over potential listings to such an extent that prices are being driven up less by market conditions and more by the breathlessness of agents who are new enough to the business that they have no way to be sure of valuations. It’s not their fault, they’re just chasing dollars.  To understand what this sale means to the market we must first look back at some very recent history.

In 2016 I sold three lakefront homes on Lackey Lane. Of those three, two were modest homes, one of which has since been torn down while the other was renovated. Those two properties that sold at land value printed at $1.9MM and change, for 100′ lots on a really desirable street. Geographically, Lackey and Maple are close, so we’ll consider them to be likely comparables for each other, even though I find Lackey to be far more appealing.  Those two sales printed at around $19,000 per front foot. This isn’t some long ago number, this is 24 months ago. Market conditions today have improved, but market conditions in 2016 were still quite good.

The recent sale on Maple printed at $25,555 per front foot. The overall land mass at Maple was larger than Lackey by two fold, but the market pays little attention to overall mass and focuses instead, perhaps at times incorrectly, on frontage.   The Maple sale closed 34% higher than the 2016 sales on Lackey. Does this mean the lakefront market has appreciated 34% in the past 24 months? Of course not.  Does it mean that some properties have appreciated that much in such a short period of time? Absolutely yes.

In 2016, those Lackey sales were not easy sales. Both properties endured some time on market. Both properties were overlooked, even by smart buyers who were working with me.  Today, the Maple property proves out what I knew then: 100′ vacant lots that are selling at land value are becoming increasingly rare. Just as we’ll someday run out of dumpy lakefront cottages that you might be able to buy for $1.2MM, we’re also running out of 100′ lakefront lots with older, modest homes on them.  This scarcity is driving up prices in both categories, though the entry level market remains rather stagnant compared to the 100′ market. Expect this trend to continue as buyers seek out properties that offer them some upward mobility should they one day decide to build new, or undertake a serious renovation.

2017 Geneva Lakefront Market Review
David Curry

2017 Geneva Lakefront Market Review

Several of our vacation home segments finished 2017 without a particular narrative. They were nice markets that had a nice year. Nothing more, nothing less. No major breakthroughs, no particular oddities. The other markets have been on a roll, and we have no choice but to pat them on the back and tell them they did well. The lakefront market, too, had a nice year. It built on volume and built on price as inventory disappeared. But this is where the lakefront market says goodbye to the other markets and wishes them well. The lakefront market is on to bigger and better things. The lakefront market has a different story to tell.

That story, in case you’re new to this blog or new to the Lake Geneva media mentions, is a dramatic increase in upper bracket sales activity.  This is the story that needs to be told. This is the difference between Lake Geneva and all other Midwestern vacation home markets.  If this sounds like a common refrain coming from this site, that’s because the refrain is historically rare and is worthy of this praise. Consider the prior market peak. That peak was between January of 2007 and January of 2009. During those months the lakefront market on Geneva printed three sales in excess of $4MM. The top sale for that period closed for $4.95MM. Now consider the current market cycle and the sales that have occurred between January 2016 and January 2018. For those 24 months, the lakefront market printed 10 sales in excess of $4MM and three sales over $7MM. The top sale was $9.95MM.  For my part, I represented either the buyer or seller in seven of those ten sales, and each of the top three sales.

Currently we have five more properties pending sale over $4MM and one pending sale over $12MM. This is no longer a market that struggles to provide one or two sales over $4MM annually. That’s the old Lake Geneva, and this is the new Lake Geneva. Increased upper bracket activity, a stronger overall buyer, and a top end that has been completely and thoroughly redefined. While there are questions about the long term strength of this particular segment, I think there is one nagging question that has been answered. Can Lake Geneva provide liquidity to owners who have homes justifiably valued in the $10-15MM range? Yes. A follow up question with more devastating results: Are buyers buying lakefront houses for too much money, in part because they don’t seek qualified counsel in the decision? Also yes.

For the year just ended the lakefront market closed 26 single family properties (MLS). These sales registered $27,578 per front foot, up a bit from the $27, 193 from 2016. In total we sold 2455 front feet on Geneva, down from the 2882 front feet sold in 2016.  I’m finding the traditional price per front foot metric to be increasingly antiquated, even though the market still likes to point to that number as the best and easiest way to identify value.  I’ve started to add in a price per square foot of structure ($560.96) and price per square foot of land ($58.09) so that buyers have additional means by which to understand the value of a particular property.  There is no particular means to measure value, but these three metrics combined with nuanced understanding of desirable locations and attributes can help narrow down the valuation range.

Entry level lakefront traded with some vigor in 2017, and I did find it curious that this segment offered strong value even as the broad market accelerated. Five lakefronts traded under $1.325MM last year, including two under $926k. Those sales represented a nice entry point into this lakefront scene, and I continue to believe that we will find ourselves in a position where the market runs out of sub $1MM homes. These sort of basic cottages only exist on the lake is certain areas, and with each sale these are properties that are typically transformed via renovation or reconstruction. If you’re an entry level lakefront buyer, you’d be wise to move on properties and not miss out on  purchases over small negotiation points and percentages.

The story for 2018 will be inventory. Today, there are just ten Geneva lakefront homes available (private frontage, without offer). If the stock market maintains this incredible level (note, it doesn’t need to keep moving higher, just not correct significantly), Geneva will see another terrific year. Heck, the way buyers are buying in January, maybe we don’t even care about the stock market anymore.  New construction is rampant at the moment, and while the upper end values currently support these builds, it’ll be interesting to see if this upper bracket market hits resistance in the coming years.

For now, expect inventory to remain low, and cary-over sales from 2017 to close during the first quarter 2018.  The market is clamoring for inventory in each segment, including that lofty $6MM+ range. New construction in any price segment will be of interest to current buyers, so long as the parcels match up with the price. That’s a key.  I’m expecting inventory to build over the coming months, as opportunistic sellers see a market rife with activity. Some brokers are telling sellers to name their price, but that’s ridiculous. The market is hot, but buyers and sellers still need to understand basic fundamentals of market valuations.   If you want an agent to tell you every house is the right house, then I’m not your guy. If you want an agent to help guide you through this increasingly active and competitive market, I’m here to help. 

Above, the lakefront at my Loramoor listing. Pending sale at $5,950,000
Geneva Lakefront Market Update
David Curry

Geneva Lakefront Market Update

In real estate, being shameless is quite important. I’ve struggled with this at times, most of the time, really. But I still tell you I’m this and I tell you I’m that, because if I don’t, no one will. But I’ve only developed some shamelessness when there was something to actually be proud of. Too proud, perhaps. The new market has generated so much shamelessness that you’d think everyone was the top agent.  Lakefront Specialist, that’s a common email tag. Lakefront Pro. Some opt for the shorter version, lest they spell specialist wrong. And others still, “The Most Powerful”. This is more like a Master’s Of the Universe theme, but in 2017, all of it has been adopted by my competition. It’s a bit dizzying.

The market appears to me today to be absolutely ladened with buyers. I say appears to me, because it’s impossible to know exactly what buyers are truly active and which buyers are just looking at properties because it’s 2017 and that’s the thing to do. I would guess there are more buyers in the market today than at any single point in the past 20 years. Yes, that’s a serious claim. But it’s likely accurate.  The smart ones are working with me, the others are working with the various and assorted Specialists that have very recently self-assigned that title.

Yet for all of these buyers, the market is still a Wisconsin market. We are still Midwesterners. And so we watch and we wait and we look for the right thing. Contrary to what your Specialist may tell you, the right thing is not always whatever was just listed.  This morning, there are just 22 lakefront homes available for sale on Geneva Lake. This includes the Trinke’s house that’s really just Trinke’s frontage, but we’ll add it in because we’re desperate for inventory.

Beyond those 22, there are others pending sale. A listing on Main Street in Lake Geneva in the mid $2s is soon to close. It should be noted that another lakefront in that area was under contract but has since returned to market. My marvelous listing on Jerseyhurst is under contract with a fall closing scheduled. A listing on the South Shore in the mid $2s is pending. And a small entry level lakefront in Fontana listed at $1.475MM is pending this morning. That’s a decent amount of activity, but it is not commensurate with the buyer activity on the lake.

There are several reasons for this. First, and perhaps most damning, is the absence of reasonable sellers. Note I say reasonable. The market is hot. Everyone knows this.  Even your newly minted Lakefront Specialist knows it. Sellers know it, too, and they’re attempting to capitalize on it. Sellers are listing aggressively, and we cannot blame them. But what we can do is blame them when they receive solid offers within mere percentage points of their bottom line and they choose to walk. This is foolish behavior. Sadly, this is the behavior many sellers have chosen to display. Perhaps the market run will continue long enough to prove them right, but perhaps their 2017 confidence is just a touch too much.

The inventory that deserves your consideration is both the new bits that have been trickling to market, but mostly the aged pieces of our market. If there’s a new lakefront for $3MM, guess what? You’re going to have to go for it quickly or someone else is going to buy it. That’s just the nature of this market. But if there’s a $3.5MM listing that’s been dying on the market for a year or two, isn’t this the sort of property we should be gunning for? I believe the answer is yes. Your Lakefront Specialist is reading this, furiously scribbling down notes, and he/she concurs.

So what comes next? What do we do with the rest of this superfluously soggy summer?  If we’re a buyer, we remain vigilant. We look for new inventory. We align ourselves with the only top agent in this market (spoiler- it’s me). We don’t chase every golf course hushed rumor down the rabbit hole. We don’t reach out to the new Lakefront Specialist. We just watch and we wait and when something looks right we take a run at it.  If we’re a currently listed seller, then we look at this market through a different lens. We consider our position in the market. We reduce if we haven’t had any offers in months, years. We look to position our property in the perfect light, with a hefty consideration for reality. And if we’re a lakefront owner considering selling, this is the easy part. We reach out to Dave Curry.

 

Above, my new Elgin Club lakefront listing. $1.975MM. 

 

Geneva Lakefront Market Update
David Curry

Geneva Lakefront Market Update

This is the weekend we need. This is the weekend we deserve. This is the weekend that starts it all, really. There’s a long standing believe that Memorial Day Weekend is the kick off to summer. That’s nice that people still think that. I don’t. I think what I know, which is summer starts just as soon as the weather warms enough to turn our thoughts to it. A warm weekend in February doesn’t accomplish this. We enjoy the warmth but we know it won’t last. A warm weekend in April, now that’s the start of something. This is the weekend that starts it all. Seventies and sun, here we come.

The low inventory theme continues on the lakefront, though several “new” listings have come to market of late.  Of course most of these aren’t new at all, they’re just recycled inventory from last year that might have a better shot at finding a buyer now. On the lake there are at least six pending contracts, and three of those are deals in which I’m involved. I like that ratio, though 100% would be far more preferable than 50%.

I have a new contract on an entry level lakefront in the Highlands (my buyer, not listing). That’s a fixer upper and it’ll sell for a fixer upper price next month. My Park Drive lakefront with 60′ of level frontage is under contract with an asking price of $1.299MM. That’s a nice little house with a big view of the water. A listing on Constance in Williams Bay is under contract with an asking price in the low $2MMs. That’s a listing that I had a couple years ago but failed to sell. This is for my enduring shame.

The modern in Williams Bay for $3.4MM is still pending sale, as is the new construction on Sidney Smith in the high $3MMs.  New and of note is the pending contract on my listing at 700 South Lakeshore Drive in Lake Geneva. I listed this home last fall and told you that I would sell it. I wasn’t lying. It’s under contract now and will hopefully close this spring. If and when it does, that’ll be my sixth sale over $5MM since 2010.  The thing about being a luxury broker is that everyone can call themselves one, but it’s a lot harder to actually be one.

In spite of some new inventory,  we still have only 19 true lakefront homes (including the South Shore Club) on the market today. That’s remarkably low inventory, and it has left the market wishing for two very different things. Sellers love this environment, and hope it stays for the remainder of this year. Buyers are frustrated by this limited inventory and find themselves in foul moods as a result. I’m somewhere in between, hoping for new inventory but appreciating the environment for what it is today. The danger now is for sellers to not be too emboldened by the situation, and for buyers to not disengage from their searches just because they don’t initially see what they like. Sellers, stay smart, stay rational. Buyers, stay engaged, pour over the aged inventory and look for value while at the same time being ready to pounce on something new and exciting.  Buyers and sellers, work with me, and have a terrific first nice weekend of 2017.

 

Above, sunset at 700 South Lakeshore Drive, Lake Geneva.
New Geneva Lakefront Listing
David Curry

New Geneva Lakefront Listing

The thing about entry level lakefront is that it’s entry level lakefront. It’s not fancy. If it were fancy, it wouldn’t be entry level.  Entry level exists in increasingly fewer locations on Geneva Lake, due largely to the fact that often times buyers of entry level lakefronts transform those once modest, affordable homes, into something entirely different.  If you’re a buyer for an entry level lakefront, this generally means you’re on the hunt for something priced below $1.5MM. In that segment, there are things you can expect but mostly things you shouldn’t expect. Like garages and level frontage. Entry level buyers rarely have a chance to buy those.

W3298 Park Drive in Linn Township isn’t going to win any design competitions. It’s a nice house, with nice enough things, but fancy it is not. There’s a concrete driveway, fresh landscaping, and a beautiful lakeside paver patio. There’s a terrific H-slip pier, traditional and sturdy. There’s some new siding and a newer-ish kitchen and three bedrooms and two baths. There’s plenty to like. But the rare bits are not those bedrooms or the bathrooms or the stack washer/dryer in the hallway closet. The rare bit, if we’re looking for entry level lakefront, is the 60 feet of dead level frontage and the existence of a two car garage. These are, in the context of entry level lakefront homes, among the most rare amenities.

The house should sell rather quickly in this current market. The renovation of this house, should a buyer choose to improve upon what it is today, would be fairly painless. It’s a simple house without a lot of moving parts. The layout is normal, which, if you’ve looked at entry level lakefront homes for some amount of time, you’ll recognize as being unique for its plainness. There are no spiral staircases here. There are no rooms that you’re not sure what to do with. There’s nothing here that doesn’t make sense. It’s just a house with a big garage and a completely level lot, with 60 feet touching Geneva Lake. The views, as an aside, are among the best on this lake. Facing towards the City of Lake Geneva, the lake here is wide and round, lovely.

If you’d like to tour this home, just let me know. But if you do want to see it, you should probably do so sooner rather than later.

Entry Level Geneva Lakefront
David Curry

Entry Level Geneva Lakefront

My body is slowly succumbing to the course of time, to the insistent, constant force that seeks to whittle and pry and break and bruise, to the inevitable process wherein these ashes will find their way back to ashes. It’s sad, really, at such a tender age to be falling apart. I didn’t intend for it to be like this, but this is my first time in this aging process, and I’m no longer in control. I’m just a guy with creaks and cracks, and while others put up a most impressive facade, I’m nothing, really. I feel this way mostly because of my trip last week, a trip that started fine, included some wonderful skiing and the smiling faces of my children, and ended with my ear pressure being locked somewhere around the Vail Summit.

After driving deep into the far away horizon where the Denver International Airport hides, my ear pressure was the same.  Likely comfortable around 10,000 feet, but now I was at 5,000 and the pressure of those 5,000 feet was constant and unavoidable, ringing and pounding and bullying my inner ear. The flight would cure this, I figured.  When I landed at Milwaukee it was obvious then that my previous attempts to calm my worry were in vain. The pressure built,  my right ear finding some form of normalcy at 900 feet, but my left ear still stuck in the mountains. Certainly it wouldn’t last the night, but last it did. And the next day it would subside, obviously. But it didn’t. For sure the following day things would be fine and my 10,000 foot ear would slowly slip down to 900 feet. No. Such. Luck.

And so I write this morning, contemplating who might be my Gaugiun, but also contemplating the state of the entry level lakefront market on Geneva Lake. That market is one that I’d like to call our most interesting, our most confusing, our most obvious. But none of that is true, because all lakefront segments are that way, they are at once easy to understand and overtly complicated. They are nothing at all but everything, easy to dissect and explain until they aren’t. The entry level market, however, has some unique intracacies that are on display today. Notably, is there a top for this particular market?  Is the land worth what the land is worth and then the house might be worth whatever lofty price someone, someday, assigns to it?

Let’s consider a few things first. Not all entry level properties are created equal. A 50′ lakefront lot in Cedar Point Park that might be 300′ deep is not the same as a 50′ lot in the Lake Geneva Highlands that might only be 180′ deep. I could sell a 50′ lot in Cedar Point right now for more than I could sell a 50′ lot in the Highlands. That’s not anything but the obvious and simple truth. That’s because Cedar Point has proven the ability to sell re-built (whether remodeled or new construction) homes far above the cost of the dirt and the Highlands has not. In fact, fantastically improved homes in the Highlands rarely sell in excess of $1.5MM.

Another example of this is on Walworth Avenue in Williams Bay. This street is a nice enough street, with some condominiums and some entry level lakefront homes with very deep lots. Yet for all that depth, the market there has always struggled to sell anything over $1.5MM. In fact, a 100′ lakefront lot sold there for $1.2MM a few years back, at a time when a 50′ lot in the Highlands would have sold for similar dollars. If Walworth Avenue offered you a $1.2MM lakefront house you might think you’ve found something rare and incredible, when in fact, you’ve found something at nearly the top end of that individual market. Why is that the top end? Because you really can’t buy a tear down or supreme fixer upper on Walworth Avenue for $1.2MM and expect you have any margin in your all-in investment.

The same theory applies to most locations on the lake, excepting Glenwood Springs. In Glenwood Springs, the lakefront homes aren’t even true lakefront homes, yet an entry level home will sell for $1.2-$1.5MM and then the buyer may indeed tear it down. Does this make any sense? Well, actually, yes. Homes in Glenwood Springs have sold in excess of $2.5MM, and such a sale is not an anomaly. At the same time, a 50′ lakefront lot in the Highlands or on Walworth Avenue with actual, real, private frontage, would struggle mightily to achieve even $2MM, let alone $2.5MM.

As I was showing lakefront homes yesterday I thought about this market. I thought about the top end. I thought about where these prices might be able to go. And then I realized there’s likely a disconnect between what I think is reasonable and what a few individual buyers might think is reasonable. If I’m buying a tear down in a market that I believe to be capped in the mid $1s, I know that I’d want to have some margin for my effort. I don’t want to spend $1.5MM and a year of my life stressing out over a project that in the end will perhaps be worth $1.5MM. I want to spend $1.3MM to get to the finish line where a $200k equity bonus might be awaiting me. But perhaps that’s just me. And perhaps that’s just this 10,000 foot ear talking.