Blog : Lake Geneva Country Club

Lake Geneva Market Update

Lake Geneva Market Update

This morning there are just 15 lakefront homes for sale on The Lake. It’s the last week of October and our colors have peaked. The boats are leaving. the piers being unbolted. My Superjet is one of the only vestiges of summer than remains, and even that watersled will soon make the icy journey from pier to ramp to garage, soon. The snow is coming, my dad says. There are only fifteen homes for sale and there are two ways to look at this. Both are good. Buyers, be happy. Sellers, same.

The key to any off-season is inventory. The key to in-season is the same. The key to all of Lake Geneva is inventory, which isn’t entirely different from any real estate market anywhere, but here, it seems to matter more. That’s because our market is so small. Powerful, but small. In times good, it’s a small market. In times bad, still small. It’s low volume always, and because of this low volume churn we are heavily dependent on inventory. In season, we need it to grease the bearings. In the off-season, we need less inventory to keep the market performing optimally. This year, we had the inventory when we needed it, and now that the seasons have changed and winter is knocking, we need less of it, and that’s exactly what’s happening.

Summer contracts are closing now. You’ve noticed that I’ve closed a few large deals of late, and you can expect the rest of the market to follow through with their sales, those pieces of property that narrowly slipped through my grasp. The REO on Lakeview just closed for $1.4MM, after first coming to market in the summer at $1.092MM. That sale surprises me, as there were two handfuls of offers and many of them, to my knowledge, were very, very strong. I figured this property would print $1.5MM or better, but that isn’t what happened, which is good, because I would have hated that sale at $1.5MM or better…

The entry level lakefront on Park is pending sale, as is the cottage collaboration on Walworth Avenue in Williams Bay. A home next to the Geneva Inn is under contract, as is one in the Geneva Manor. A new listing near the Lake Geneva Country Club is under contract in the high $3s, which his fine by me, at least if you ask me in public. And lastly, the spec home on 60′ in Williams Bay is under contract with an ask in the high $4s. I would expect that all but the spec home will close in 2019, which will be nice for the market, and nice for those agents.

But this isn’t about what’s happened, this is about what is going to happen from this day forward and through the end of 2019. The market will add some new inventory. It will. It always does. Who would list their home in November or December? Someone who would rather sell into a specific market condition rather than someone who would rather sell into a season. The market is low on inventory, with just 15 lakefront homes for sale (one is Clear Sky with shared frontage, one is Westgate with shared frontage, and one on the Trinke’s Lagoon), and there are still buyers actively searching. Does a smart seller wait to list next spring, as the conventional, tired wisdom would dictate? No.

While the new inventory will elicit an excited response, the aged inventory is, at this time of year, in some trouble. It’s time to pick around the edges at this aged inventory, time to make a few insulting offers. Time to see which sellers really feel like making 2019 the year they sell. Remember, just because inventory is aged that doesn’t make it bad. It might be aged because the seller has been stubborn and rejected offers that they realize only now they should have taken. Let’s work together to find these deals, and let’s make November a month of action. This is all possible assuming I survive the freezing, wet-suit-free, Superjet from pier to launch…

Lake Geneva Lakefront Market Update

Lake Geneva Lakefront Market Update

I read an article yesterday about slowing home sales in the Hamptons. Hamptons’ Homes See Double Digit Price Drop. Sounds terrible, unless you don’t care about the Northeast, which I don’t. In fact, I root against the Northeast as a general practice.  I read the entire article, but I didn’t really need to. The first graph told the story.

 

The softness in pricing was mainly due to an oversupply in the luxury market…The luxury inventory is still expanding, noting that there were 322 active listings during the last quarter, a 22.4% increase from a year ago. ~ Jonathan Miller, Douglas Elliman

Well then, that sort of takes the mystery out of it all, doesn’t it? Why is the market slowing? Oversupply. Why do my shorts get wet when I swim? Because of the water. News sorts like to look at localized headlines like these and paint a national segment with the same brush. Unfortunately, the real world doesn’t work that way.  But the article does bring up an interesting topic, that of supply. If supply is overwhelming the demand, we all know markets have to drop. Why will they drop? Because if there are 322 active listings in one segment, you can bet that at least 30 of those chowder eaters are going to want to sell, and they want to sell now. That puts downward pressure on the list prices, which results in lower sales prices, which results in Mansion Global running an article, which results in David Curry writing another article in the response to the article.

The month of October was again kind to the Lake Geneva upper bracket. Four lakefront homes sold last month, with many others heading under contract.  Today, there are just 17 true lakefront homes available on Geneva Lake (with private frontage). That means we have the opposite problem that afflicts the Hamptonites.  Though this will also cause our volume to shrink, even as our prices remain stable or increase.  The four sales on Geneva from this month are unique, in that three of the four had experienced elongated market time. Did the list prices soften or did the market rise to meet the seller demands? Both, sort of. Kind of.

A Congress Club cottage sold for $1.53MM. That house had been for sale for two years, on and off, and finally sold after a series of price reductions.  The property is not private frontage, rather it shares a wide swath of frontage with the other Congress Club cottages. It’s a unique set up, something that the market finds both appealing and strange.  This particular home sold for a similar number several years ago, effectively putting a cap on the prices in the Congress Club. Do people mind sharing frontage and sharing piers and having to abide by all sorts of rules? Yes. Do they mind as long as the price is mid $1s or lower? No.

Another old cottage, this one with 84′ of private frontage, sold recently. Main Street Lake Geneva is a location that the market didn’t used to find as appealing as it does today. The traffic, the noise, the scene, were mostly left off of buyer’s want lists until this most recent cycle. Now people like the action, they crave the scene, they tolerate the traffic. The house that sold was one that I had for sale a year or two ago. I failed to sell it, for similar dollars. But that wasn’t because I’m not good at selling things, it was just that the market has increased since then and the increase allowed the seller’s number to make some sense to a buyer. The home closed for $2.1MM and change.

In September, I wrote an offer for a client on a lakefront home in Cedar Point Park. The house was okay, not perfect, but okay. Our offer was followed by another offer, and when our reasonable offer was rebuffed, my buyer stepped out and the other buyer bought. $2,775,000 was the closing price for a modest home on the hill in Cedar Point. I thought this to be a high number, but that’s just like, my opinion, man.  This property sold in 2004 for $2,025,000, again in 2009 for $2,575,000, and now in 2017 for $2,775,000.

Lastly, a sale near the Lake Geneva Country Club for $2.85MM. This home had been for sale for what felt like my entire life, though I’m sure that’s not accurate. The house was nice enough, the 125′ of frontage, good enough. But the house was plagued by a location next to the LGCC maintenance building and paddle courts. The market didn’t love these conditions, but as with any lakefront sale, these are each unique and certain buyers prioritize amenities and detriments differently. I’ve sold lots of homes that the broad market didn’t love, but when you find the perfect buyer their perfect house, deals happen. In the context of price per front foot, this sale was the most affordable of the other three private lakefronts to have closed recently, so that’s worth something.

If the market is expected to slow, 3% GDP, all-time index highs, and low inventory aren’t the conditions that will lead to that slowdown. Will the possible elimination of itemized deductions hurt us, as the Crain’s Chicago Business article this week claimed? Maybe, but I don’t think so. Buyers aren’t here because they’re combing over every last dollar. They’re here because they love it, because it means something to them, because it means something to their families. They’re here because they want to be, and they keep coming even when the price of admission is on the rise.

 

Above, my new listing at 434 Oakwood in Fontana. $1.295MM for so much perfection.