Blog : Lake Geneva real estate

Lake Geneva Market Update

Lake Geneva Market Update

The ice is weak. It has been weak all season, since it first formed, just that skim coat at first, then more ice, stronger ice, but still weak. It has proven this time and time again, first with the great car-on-ice-caper of Winterfest Weekend, then again with the unfortunate death of a snowmobiler just two weeks ago. This is ice that cannot be trusted. This is the ice that must melt and leave us alone.

It melted two weekends ago. It melted more last weekend. The wind whipped it open in many spots, and those spots grew and shifted as the massive sheets of ice broke free and floated the way of the wind. The ice this morning is weaker still. It will be gone soon, gone by next week, by next Thursday, to be precise. Then we’ll be free to carry on as though the ice never was, because we never liked it, we never needed it, we never trusted it.

Spring is coming, and it’s coming fast. The days are longer. The nights are shorter. The winter market, once momentarily filled with the sort of fear that accompanies a tumultuous stock market, has soldiered on. Is this market just okay? Just barely hanging in there? Or is it robust, bold, strong and decisive, filled with buyers who seem to know what they want and others who, if given seven suitable choices, couldn’t even agree on dinner? It’s both, all things, both filled with motivation and filled with procrastination. As with all markets, the motivated are reaping the spoils of this market that is, as of this morning, in spite of the weak ice that still clings, alive and well.

This morning there are four properties with lake access pending under $300k. This is never a surprise to me, as it should always be an active, consistent market.  Interest rates are low and this range of buyer always has inventory to pick from. Fixer uppers and finished products alike, the former being in that price range with better locations, the latter being farther from the lake but shinier, prettier, less troubling. From $300k to $1MM, just three properties are pending, one in the Loch Vista Club, one in Country Club Estates, and one to a buyer of mine in Glenwood Springs. This market segment is light on inventory, as buyers are interested in $500-600k homes with slips, they just don’t care much for the limited active inventory.

Over $1MM is where the real action is today. The single family condo home on Wrigley is pending with a $1.1MM ask. I showed that home far too many times to not be the broker with the buyer, but alas, life, like primary season, is unfair. There’s a deal on Forest Rest of an off water home just over $1MM, and the curiously goofy little lakefront in Knollwood is pending in the $1.1Ms. Last week, the Dartmouth Woods lakefront home that I tried so desperately to sell last summer finally closed in the $1.2s, and that buyer did well to join that nice enclave of lakefront homes on the north side of Fontana Bay.

The newer lakefront for $2.125MM that rests in the shadow of Vista Del Lago is under contract, that to a move up buyer from another area property. The Conference Point lakefront with an old red brick house and 200′ of frontage closed last week for $3.2MM, which is now our second lakefront sale at $16k per front foot this year. In case you’re wondering, no, that doesn’t make it a trend. While I love that location on the lake, I don’t know as though I’d be a dirt buyer in the $3s over there. That will make whatever is built on that property the most expensive property for at least a mile in either direction of shoreline, and I’m not convinced I’d want that distinction. If I’m a lakefront buyer, I want to be surrounded by like kind properties. That’s why 1014 South Lakeshore in the $7s makes sense. That’s why my lakefront lot in Loramoor at $2.34MM makes sense. That’s why my beautiful lakefront on Pebble Point for $4.475MM makes sense.  I like to sell properties that make sense.

The Lackey Lane lakefront in the $4.5MMs is still pending to my buyer, and a new deal this week brings a buyer to a high $2s home in the Geneva Manor. That’s a home assessed at $2MM, so it’ll be fun when the reassessment of that property is done by the city, based on the new sales price. I have little else to say about that sale.

I will add that our local market loves it when out of town brokers show up with buyers. They generally buy things that don’t make tons of sense, which is why we love them. If you’re a buyer, read what I just wrote again.

Inventory hasn’t yet built, just in the way that it didn’t really build last year during this typical spring sales period. I expect lakefronts to trickle on to the market over the coming weeks, as I know I have at least three lakefronts coming soon under my brokerage. If you’d like to know about those before everyone else, you should be working with me. It’ll be fun.

Geneva Dreaming

Geneva Dreaming

I haven’t shared this yet, but I nearly won that large lottery back in January. The night before the drawing, my wife and I made no small plans. We would buy a large home on Geneva, which home exactly I cannot tell you out of respect for those homes that we didn’t choose. We would buy a home in the mountains, but not just any mountains, the Canadian Rockies. Why on the Canadian side? Because my wife is Canadian and it’s either I buy a mountain home near trout fishing or I buy a prairie home near Winnipeg. I choose the mountains, if I must choose Canada. Then, a home in warmer climes, but not Florida. I was in Florida last week and while I appreciate what it is and why it exists, I do not plan on owning real estate there for the duration of my life. Turks it would be, where I can fly fish from my own beach, and hunt for spiny lobsters when I tire of casting. I assume they have spiny lobsters there.  The house we picked on that island was in the $20MM range, which was reasonable given our certain winnings. We spent an hour that night picking and planning, and what fun it was. The only thing better than a dream house are dream homes.

The picking of these homes was fun, simple, so easy even an Illinoisan who vacations in Michigan could do it. The next day, when we didn’t win, though we did amass a fine collection of at least two matching numbers out of the small pile of numbers we had purchased, we weren’t upset. We knew the exercise was one of intense futility, but we also knew it was fun to dream, if for an evening. We had, after all, effortlessly picked the location of our dream homes and the homes themselves. We envisioned a snippet of life in those homes, of a summer spent here, and a winter spent wading through the flats of a nameless turquoise bay. The entire process, from start to finish was enjoyable and easy. Dream home shopping is like that, but only when it’s pretend.

A real dream home search when playing out over a real life schedule, is anything but fun. For those who have dreamed of the ability to find that ideal house, when money is no object and when time is as plentiful as these Benjamin’s, the process is fun and carefree, a whimsical dream of fancy.  When the dream house must fit a budget, no matter how dreamy, and the geographic confines of the house makes the choices rather limited, and the kids have hockey two nights a week and STEM class on Saturday, well, this thing isn’t as easy. Nor is it entirely fun. To those who have never looked, you might not know what I’m talking about. To those who have looked, far and wide, down this little lakeside lane and that one, in the Bay first, and then Fontana, and Linn and Geneva, you know what I’m talking about. In fact, you may know so well what it is that I speak of that you’ve pushed this hunt to the background in favor of those things in the foreground.

This is easy to do, when schedules are tight and vision is limited. It’s easy to do when the vacation home is viewed as an unnecessary luxury, as something that exists in the background as a dream that needn’t be fulfilled because it’s just that, a distant dream and we the serious know that distant dreams shouldn’t interfere with the work that must be done today. But is it this way? Is a vacation home just a dream that might be fulfilled when we have superfluous time and excesses of money? Should a vacation home search be only executed when time permits, when the schedule opens for a day, or a few hours, or a week next August? Is this something meaningless, that looks like fun but has no bearing on real life? Is a Lake Geneva vacation home just another something, rather than nearly everything? Does any of this actually matter?

I’d tell you today that it does, and you won’t be surprised that I think that. But why do I think that? Do I think that solely because unless I do my children will starve and I’ll be forced to pull your next espresso shot at your favorite Lake Geneva area coffee shop? Or do I think that because I’ve seen it, because I see the families that come here and commit to this place and I see the way their lives are changed? I’d be lying if I told you it was all of the latter and none of the former, but it’s more of the latter than you might presume.  It’s easy to get to Lake Geneva, to drive on a Friday night that short direction North and some to the West, but it’s not easy to establish that as the routine. It’s easy to wire money when the money is available, it’s easy to receive the keys, and it’s easy to show up on a Fourth of July Weekend whenever everyone with a lake house does the same. But it’s difficult to aggressively pursue the hunt, and it’s difficult to make it to the lake house as often as you know you should, and it’s yes, it’s difficult when you have too much work and not enough time.

In my life, it’s the difficult things that are rewarding. The easy things, the immediate things, the things that have no choice but to be done, those are the things that mean little.  It’s easy to forget about Lake Geneva in the dead of a Midwestern winter, even if the winter is as this one, which feels more like mid March than early February, but forgetting about your summer in the middle of winter is the best way to ruin your summer. Dream homes that only occupy our dreams are easy. Dream homes that require effort of us are hard, but the rewards are endless, the satisfaction palpable.

 

Lake Geneva Negotiations

Lake Geneva Negotiations

I could have negotiated this deal in 10 minutes if you had put me in a room with him. This is what I hear. I hear it often. This is the refrain of those negotiating pros who buy and sell real estate through a broker. When a deal comes together, I hear this. When a deal falls apart, I hear it then, too. I hear it so much I hear it when I close my eyes and I hear it again when I open them.  That one kid heard dead people, I hear this.

Many buyers and sellers feel that the deals could come together if only they had a chance to handle the deal directly. This might often be the case- that the deal would come together in spite of a broker, not because of one. But this assumes that the deal was an easy one to put together, that neither side needing the convincing that can only come from a market backed perspective. This also assumes that both sides are in a hurry to make a deal, which is generally far from the case.  Consider, some of the best deals I’ve put together have come together only as a result of long enduring negotiations. Time might heal most wounds, but it also bridges many negotiations that might have failed if they were on the clock.

In 2010, I negotiated the purchase side of 1014 South Lakeshore Drive, Fontana. That deal started slowly, as many do, and after a few months of negotiations, we had an accepted contract. Then we negotiated throughout the deal, over another three months, and finally closed on the transaction. What a fantastic deal that was. And many more like it have come about the same way- only through buy side patience, as a seller is worn down through a recognition that his or her property is just not quite as desirable as originally thought.

The problem with this, of course, is that 2010 was a year void of an abundance of buyers and 2016, though the year has started ominously with indices in an funk, has an abundance of such vacation home buyers. Long enduring negotiations only work in the absence of a competing bid. Lately, there have been competing bids.

Two weeks ago I was going to show a listing on Bonnie Brae to a buyer of mine. We set up the showing, we were ready to pounce on a property that was purported to be able to be bought right. We ended up canceling our showing, because the property sold earlier that week to a buyer that had just a bit more motivation, or schedule flexibility, than we did.  A year ago this month I negotiated an offer on a lakefront listing I had on Oriole Lane. That humble, odd home, didn’t sell in 2015, but throughout the year my buyer reaffirmed their earlier offer. The sellers didn’t bite.

Then, a couple of weeks ago, a change in seller sentiment, and our deal was ready to be locked. On Friday, we had a deal in principle, on Saturday, the seller took a bid from another buyer.  I had negotiated patiently with a lakefront buyer for exactly 12 months, and when victory was nearly ours, the property sold to another buyer. Sniped, again.

This week, a deal on an off-water home in Glenwood Springs was apparently nearly complete. A buyer of mine who had seen that home in the summer of 2015, inquired of the property. It was available, I told him, but nearly under contract. He jumped, we offered, we have the property under contract and the other buyer, the one who was patiently working the seller to his favor, is on the outside looking in. This is the trouble with negotiating slowly. It leaves open too many variables beyond the negotiator’s control.

Of course, the most important aspect of any negotiation is in sensing the direction of the market and its response to that particular property. That’s not quite as easy as it might sound. In the case of the Oriole Lane property, I wrongly assumed that time was on my side. I assumed that a property that had languished on the open market for years would not sell in the dead of a Wisconsin winter, on the heels of a volatile week in the markets. I was wrong. So today,  a quick admonition. If you like a property, watch it with me, and we’ll work to strangle the seller together (figuratively, of course). If you love a property, buy it, before someone else does.

The Hunt

The Hunt

How I wish I were a doctor. When you’re a doctor and you travel, you get to tell people what you do. You’re a doctor. That’s what you do. It doesn’t matter what sort of doctor, because if you’re a doctor that’s really all that matters. In the same way that if you’re a mechanic and you work on cars, no one cars that you’re a BMW mechanic, with some credintials abbreviated below where your stitched name adorns your company provided shirt. You might as well be a small town garage mechanic where you specialize in tire changing because you’re not any good at anything else, and you don’t own one of those plug in car doctors that they advertise on television and in trade magazines. Doctors are doctors and mechanics are mechanics and Realtors, well, we’re Realtors.

That’s why when I visit an open house in a far away land, I feel obligated to tell the Realtor that I, too, am a Realtor. I don’t want them thinking I’m a doctor, or something otherwise noble, so I tell them early enough and I remind them often. I’m just a Realtor. But I listen when these other Realtors talk, and I try to learn what it’s like to be a consumer, which is why I only tell the host Realtor that I’m also a Realtor after they’ve given me some information. How else can I learn if I don’t subject myself to the Realtor schtick?

And learn I do. I learned on Sunday that there are three distinct markets on this island, three different places where everyone wants to be. I found that I’m skeptical of this direction. I’m skeptical because I don’t know if this Realtor who just so happened to be holding open this house is any good. How could I know? I see their car, I see their sign, I see their face. I see these things but I have no idea if they’re good or not, and so I ask questions and look for clues. One guy I met on Sunday seemed nice, but I wouldn’t ever work with him. One lady seemed nice, but I wouldn’t work with her either. How could I work with someone whom I had just met on a lark because the day was too cold to do anything else but explore houses I have no intention of buying?

It dawned on me today that what a Realtor needs to do is be present. They just, really, have to be there. This is generally enough. But there should be more to this game, more than just showing up and hoping. The more should be the aptitude that only comes with experience. The knowledge that can only be gleaned from the day to day, from the work that must be done. I traveled an island full of open houses, full of Realtors, full of expectations and hopes and whims and I wonder what it’s all about. Is real estate really this unsophisticated? Is this business really still just this?

At the end of day I decided that, yes, that’s exactly what this business is. That’s why success is fleeting, and that’s why someone else who desires to be present longer can, and will, be as successful as someone who knows why they’re present. Skill in real estate is measured by the ability to be present, to be there when the phone rings on floor and to be there when a buyer in a sports car pulls up to tour houses that he only thought about on the drive up.  From my perspective as a veteran of this game, how can I best express to you, to the buyer that I haven’t yet met, that I am in your best interests?

That’s the question of real estate. Some choose to ask and answer the question in full page newspaper ads, with a smiling or pouty face and a promise of glittery success. Some answer it by simply being, by hoping that if they  exist long enough, they’ll find success. Some, like me, hope to prove worth over time, by being discerning in all things, by pointing out the positive and the negative, the good and the bad, no matter who it might offend. By doing that and mixing it with a track record of unrivaled success.  At the end of this and every day, each approach is the right one. Each approach will have some success. Just like the guy at the open house today who will, after some number of more Sunday’s, sell that house to someone who drove onto the island on a whim. This is real estate, and I don’t have to like it.

2015 Abbey Springs Market Review

2015 Abbey Springs Market Review

If we had our druthers, we’d be Abbey Springs. That’s assuming we weren’t we, but we were in fact a large association of homes and condominiums. If that’s who we were, we’d do so very well to be Abbey Springs. We’d laugh at our friends, presumably they’d be other large associations as well, because we, as a large association, wouldn’t consider hanging out with smaller, lesser associations. We’d have our friends, those bloated associations just like us, and we’d sit around and talk about life, about associationy things.  We’d laugh about people who stand up and complain about dues, and we’d laugh about the association presidents who desired, for one reason or many others, to be an association president. We would have fun being this massive association, because if we were Abbey Springs we’d be revered among our peers.

That’s because Abbey Springs just is. It’s just the way it is, the way it’s been, and those ways have found reasonably routine favor with the vacation home buying masses that smartly find their way to Walworth County.  In the way that Geneva National has been sexy at times because of its feast or famine nature, Abbey Springs has just existed.  There was a blip when the association decided to spend trillions (millions) of dollars and update the facilities and grounds. That was a battle and in that there was some sizzle. But otherwise, Abbey Springs is just a 592 unit association on the southern shore of Geneva Lake that plods along without a whole lot of market adversity.

When times were really good, in 2006, Abbey Springs sold 28 total units. Of that mix of single family and condominium properties, just one closed under $200k and four closed over $794k, including one at $1.3MM. That was one heck of a year.  When the market re-set in late 2008, what followed was an adjustment that was necessary and needed. Prices corrected, volume slowed, and what wasn’t well known was how deep and how long this particular correction would endure. While Geneva National muddled along in those rough years, Abbey Springs jus sort of was.  There were 17 sales in 2010, 14 in 2011, 17 in 2012, and 22 in 2013. Abbey Springs, even though prices corrected and volume dropped, fared as well as any large association ever has.

2015 was a very good year for Abbey Springs, but it wasn’t remarkable, nor was it special. It was just a year and Abbey Springs was just Abbey Springs. There were 22 units sold last year, with five of those printing over $500k and seven closing under $200k.  In 2014, there were 20 sales, in 2013, 22. This is a pattern of normalcy at Abbey Springs, and the association should be rather proud of itself for producing such a steady and consistent flow of transactions. Geneva National should be envious of that stability (though Geneva National had a fantastic 2015).

While it’s understood that $300-500k buys a pretty nice condo in Abbey Springs, and that $450k-$900k buys a pretty nice house (including one on Saint Andrews that I sold last fall for $746k), the unique part of Abbey Springs is the lower end segment that thrives. If you came to the lake with $200k to spend on a vacation home, I applaud your sense of purpose. Many in that range would opt for a smaller, lesser lake, where they could buy a similarly small, lesser property. This would be their mistake. Abbey Springs will gladly take your $200k and offer you a small condominium with full access to the unrivaled Abbey Springs amenities, which include, as a reminder, the following: Indoor pool, outdoor pool, restaurants, sand beach, basketball courts, tennis courts, exercise facilities, racquet ball court, game room, in/out service, pier system, and 18 hole golf course.

If you’re looking for a vacation home here, and you’re amenity oriented, there’s nothing like Abbey Springs. The market is sound, the volume predictable, the prices easy to understand. 2016 should be a repeat of 2015, which was a repeat of 2014, which, oddly enough, was a repeat of 2013. Expect around 20 sales here, with stable prices. Low interest rates should encourage buyers, and left over buyers from 2015 should be pleased to find new spring inventory coming to the market this month and the next. If we were Abbey Springs, we’d be awfully proud of ourselves, but we’d try to keep it to ourselves for fear of coming across as too smug.

2015 Geneva Lakefront Market Review

2015 Geneva Lakefront Market Review

The real estate market in 2006 was not yet aware of the trouble that awaited it. I, too, was not aware.  The lakefront market on Geneva was firing on all cylinders, performing well on a high octane mix of low inventory and high enthusiasm. The market was on fire. That year, we sold 19 true lakefront homes on Geneva Lake. That was a nice year, though I admit at the time I was less involved in the lakefront market than I was in the whatever-I-could-sell-market. That’s because I was paying my dues, which gave me the education that I appreciate today. Experience is not gained in times of excess, it’s gained when you’re hungry. 2006, 19 lakefront homes.

In 2015, we sold 33 lakefront homes on Geneva Lake. I say we, because the market did that, though I had a less than starring role in those sales. I wrote lots of offers, fielded many more, but when the dust settled I had only sold four lakefront homes. Only a few select agents can boast that sort of tally for 2015, and I am pleased to be one of them, though I felt better in 2014 when I was the top agent by so many millions that the next closest agent wasn’t close at all. Anyway, the sales.  What a year it was.

It was an unrivaled, record year for sales, sure, but it was also a year where the lakefront market changed. It changed because of new players in the market, players that have told us they’re experts, but haven’t proven it. A rhetorical question this morning: If you take a beat up 1991 Chevy Impala and put it in the shiny showroom of a Porsche dealer, what does the car become?  In real life, we know that Chevy is still a Chevy, but in real estate, a Chevy that is pushed into a Porsche dealer is, inexplicably, advertised as a Porsche.  But it wasn’t only new players who told us of their expertise, it was a year of a new model.

Auctions reared their MUST SELL NOW heads in 2015, and Lake Geneva featured at least three auctions on our hallowed waterfront.  The first was an auction on Geneva Oaks Trail, one of a house worth somewhere under $5MM. The house sold for a number that, once fees were paid, exceeded $5.5MM. On that momentum, two more auctions were scheduled. One auction would be at Stone Manor, the other of a home immediately to the North with a  shared pier. The home sold, the Stone Manor residence did not. Auctions, if you just started paying attention, batted 2 for 3, which, if you batted that over your career, would give you three more votes for the Hall than Ken Griffey Junior received.

But 2 for 3 is deceiving, because sometimes you can dribble the ball off the end of the bat and reach first. Other times, you can squeak one past the third baseman, and I know this because of my handful of career little league hits I count both in my repertoire. The two auction homes sold, sure, but to whom? Where did these elusive lakefront buyers come from? Were they dredged up through the slick ads and drone photography? Were they tempted by the shiny signs that pointed the way?  Of course not. Both buyers were buyers who were already in the market. They were already interested in a lakefront home. They were buyers who likely would have bought no matter the vehicle used to complete the sale. Auctions in 2015 looked exciting, but they were boring, providing more seller risk than is worth the market reward.

One lakefront (pier 511) sold as a For Sale By Owner. This was an interesting decision by this seller, as most sellers of lakefront homes have no interest in fielding phone calls from gawkers and buyers and agents, like, all wishing for some sort of angle.  The property ultimately sold, as it should have because it was pretty interesting in the mid $4s, but it sold via an agent who brought in the buyer.  The seller paid nearly a full commission on this deal, and handled the annoyances of the transaction personally. Did the buyer show up at the property because the buyer found out about the listing in some rare way, through some shiny ad in some large glossy? Don’t be silly. The buyer was another lakefront owner who was playing musical homes, which is, as a point of fact, the favorite game of local Realtors.   The buyer of that home sold his lakefront home to a neighbor.

Of the other 30 homes that sold, most sales made sense, but not all. There was a heavy sale of a house on a cliff in Fontana, north of $5MM. A few other sales here and there were excessive, but most did make sense. A nice price for around 100′ of frontage and a reasonably fair house hovered between $1.95 and $2.65MM all year, and that’s a fine range to win lakefront ownership. 2014 ended with an average price per foot of lakefront nestled at $21,144. 2015 ended at $25,161.  Those here who love to explain how data works would tell you that lakefront prices rose 20%. They’d tell you that it was such a hot year that if you didn’t buy you made a huge mistake! But they’d be wrong on all fronts.

The lakefront market did appreciate in 2015, as it’s likely to do some in 2016, but it didn’t move 20%. It might have moved 5%. Might have. But it didn’t move 20% just because we sold some expensive lakefront homes that skewed our averages higher. Want to know what raw lakefront is worth right now? Somewhere around $22,00 per foot. How can I tell you that, when the average shows a much higher number? Because data only makes sense when you understand the context.

2016 should be more of the same, with moderate price increases but no where near the amount of volume. Prior years had us closer to 20 lakefront homes sold, and I expect we’ll fall somewhere around 22-24 total lakefront sales in 2016. The South Shore Club won’t be there providing loads of liquidity, and the entry level lakefront likely won’t have the heavy inventory that it had last year. We enter the year now with a few lakefronts under contract, including my buyer on the Lackey Lane property listed in the mid $4s, and a buyers on a two small lakefronts in Williams Bay.  There’s a deal on the large tear down in Williams Bay listed in the high $3s (another buyer that would likely have done better to explore the built inventory in the $6-8 range rather than build new).  There will be inventory coming, some of it rare and exciting (better call me if you want to know about them before everyone else does). There will be plenty of sales this year, but sellers should glance again at the market indexes before thinking it’s going to be a repeat of 2015.

 

 

Blood Red Markets

Blood Red Markets

Another January morning. Clear pale blue skies, soft low light, index futures off triple digits. It’s been a trend this week, the skies pale blue and the markets in blood red.  It’s alarming, sure. But what does it all mean for the Lake Geneva real estate market? Will this sell-off escalate to such a level that the vacation home market will grind to a halt?  Or will this sell-off be short lived, another 10% correction that is quickly and efficiently erased over the coming weeks and months?  The reason I type in the mornings is because I don’t know the answer to those questions, but I do know that the red start to 2016 will impact the Lake Geneva market.

When markets are oft green, it’s a good thing for our market. This isn’t a surprise to anyone. To understand the stock market and its impact on our housing market, you must understand that people don’t usually buy vacation homes when they feel broke or uneasy. They buy vacation homes when they feel confident, and fiscal confidence is no higher than during a period of inflated paper wealth. Buyers don’t buy just because they have enough liquid wealth to pull off the weekend-changing vacation home purchase. They buy when they feel better about their finances, not just when their liquid finances are better. It’s emotional, this game, and paper wealth inspires confidence in a  way that a 5% pay raise cannot.

This is why there’s a basic chart on my homepage that shows you the price per foot for lakefront homes, and the early January S&P print for that year. When our housing market is up, it’s predictably up on the heels of an increased index. This is just the way it is, and the historical perspective proves the point. When buyers feel good about their position in life, they buy. When they feel uncertain, they stand pat.  This isn’t always a smart idea, as the only economy that really matters is your personal economy. In 2011, when the housing market was feeling an intense amount of pain and uncertainly was everywhere, I sold a lot of lakefront homes. Why? Well, silly, because the buyers felt their own personal economy justified such a life-improving purchase. That’s why.

The benefit of an early red start to this year is a benefit that buyers will feel. Any seller paying attention should see these worrisome signs and adjust their bull thinking. If an autumn 2015 seller thought his $2.5MM house was worth $3MM, perhaps a few days of bloody red ink will make her think it’s really only worth $2.75MM. It’s still high, of course, but it’s not as high. January is the month where Lake Geneva adds much of its spring inventory, which makes prices this month exceptionally important.  If all the numbers come out too high, that’ll set the tone for a slow spring season, excepting the irrational buyers that might work with other brokers who cheerlead them into submission.  If the listing numbers come out a bit more subdued as a result of this rough start to the year, our spring housing market will be the beneficiary.

Mortgage applications for the last two weeks of December fell dramatically. Housing bears will look at this and say “see, I told you, the housing market is weak and couldn’t even withstand a teensy, tiny rate increase”. This is absurd.  In 2014, I was blessed with $37MM in sales. What a tremendous year that was. In 2015, I was blessed with only $19MM in sales.  Does this mean my business is crumbling because I sold only a little more than half of my previous year total? Of course not, it just means in 2014 I put lots of buyers in lakefront homes, and I entered 2015 with a bunch of happy homeowners who were no longer hunger house hunters.  The last two weeks of December was slow for mortgage brokers because the first two weeks (ahead of the rate increase) were so busy. When a car dealer puts a sale on for the last week of June, do you think the first week of July is particularly busy?

The New Game

The New Game

There’s something changing in the Lake Geneva real estate market. The change is mostly involving the lakefront market, but there’s little doubt that this change will make its way through the different segments, eventually engulfing everything, everyone.  The change is subtle to the casual onlookers, but it’s game changing for the players in the market, both buyers, sellers, and agents, alike. When something is described as game-changing, that usually reflects positive change. Like, this new phone/device/tablet/thing is game changing! But in this case, it’s game changing in the way that it makes losers out of us all.

The new rules of real estate are not at all like the old rules. The old rules involved some decorum, some particular process that was generally respected by those in the business. Real estate has always been cutthroat, as is most commission based business where the barrier to entry is the skill that is a continuous but methodical pulse. The business will never cease to be that way. Even as Redfin, Opendoor, and others have tried to change the old commission method with new technology, it’s obvious now that the model preferred by the consumer and agents alike is the old format of commission for results.

In this hunt for results, the new model has taken sellers and agents to extreme levels. Sellers, under the old model, would interview the agents that they thought gave them the best chance at selling. Sometimes, this agent was their sister’s hairdresser, or the lady who they know from the PTA. This wasn’t generally the best way to find an agent, but it worked and it worked for decades, for generations. Today, sellers in competitive markets interview agents, but mum is no longer the word.

Sellers interview, then sellers play hard to get. This is fun for the seller. The result of playing hard to get is a bidding process by the agents who know of the property.  The first time in the door, for that initial meeting, the agent told the seller the home was worth $3MM. The agent knew it would be easier to sell at $2.65MM, but she came in high, because the business is important. The seller fields these initial numbers, then goes quiet. Then, after some quiet, he tells the agents that he’d consider selling if he was able to get $3.4MM. The agents think, ponder, call back. They have someone interested.

Because they always have someone interested. I have someone interested, usually. At $3.4MM it’s no longer any representative of market value, but it’s a price and it’s a lakefront and that’s the game.  Agents looking to make a name for themselves, or further a name they already own, will pounce at the opportunity to list high and sell, maybe someday much, much later.  But the seller won’t list, and so the calls resume, and the agents tell the seller that it’s time to sell, for $3.5MM, maybe. Or perhaps it’s $3.6MM that will make this deal happen. The negotiations are between the seller and the agent, and in a market that some incorrectly perceive to be torrid, the price is always driven higher.

Without committing to an agent, the seller thinks he has many agents working for him, when in fact, the agents are working only for themselves. If they have a buyer, one that might think $3.5MM is a reasonable ransom for a $2.65MM house, they’ll bring the buyer to the door. They’ll show the house, and they’ll try like crazy to tell the buyer it’s the right house at the right time, because hurry! If they don’t buy it someone else will. This is the refrain of the ignorant, unless it is employed only when the case dictates such a sensationalized phrase. If your agent tells you this every time, you need a new agent.

The seller is at a disadvantage in this scenario, because he truly has no one representing his best interests in the sales process. He is flying blind, and by the time he does ultimately list, the bloom is off the rose and the market has already heard of his property, and they’ve already dismissed it as being overpriced, ugly, and bad. The traditional model would have better served this seller, if he had only chosen an agent, listed the home, and marketed effectively without first crying wolf at those artificially, agent-inflated numbers.

While the seller is making a mistake, because he thinks, erroneously, that he’ll be saving money, it truly is the buyer who is making the worst decision here. Buyers put their trust in agents, and the idea is that the agent is serving the buyer’s best interests in all of their advice. I effort daily to follow this, and I’ve talked myself out of far more deals than I’ve ever talked anyone into. But if the agent has the goal of selling the house quickly and quietly, before the market can even know of the property, has the buyer been receiving the sort of objective information that she should be entitled to? Highly doubtful. But this is the new game, and the new game isn’t engineered to serve the buyer or the seller, it’s engineered to serve the agent. In that, there should be concern, because the game has changed and it’s changed at the expense of the consumer.

For now, this: Merry Christmas. I’ll be back on this small keyboard on Monday, though I’ll be working this weekend should you require some assistance. Ideally, you won’t require assistance on Christmas Eve or Christmas Day, but Boxing Day is an embarrassing Canadian Holiday and I take pleasure in working while Canadians rest.

Lakefront Sales Update

Lakefront Sales Update

As I recall, there is a tiki hut bar at the Angler’s Cove Condominiums in Marco Island, Florida. I don’t know as though I ever went there for any purpose, but I do recall the tiki hut. There’s another tiki hut, this one on Geneva Lake, this one not open to the public. It’s a very nice tiki hut, as far as tiki huts go. It’s large and it’s by the water, and it belongs to the property that I just sold last week. $2.65MM for 2.75 acres of wooded Bonnie Brae property, with 100+ feet of level frontage. This was a nice sale, as the house, pool, and storage barn were all included with the tiki hut purchase. It’s a nice sale for the market, as it removes a piece of aged inventory from the MLS, and prints it at a price that both a buyer and a seller can be pleased with.

There were other sales last week as well. One on Birch Walnut, that of a parkway home in Cedar Point Park. Those parkway homes are interesting creations, and not all are created equal. Some are very near the water, others very near the road. Some are large and new, others small and old. There’s very little consistency on the parkway, except the luxury that is a giant swath of grass that leads from your lakeside door all the way to the water. This uninterrupted parkway is rare in our market, and buyers have, time and time again, rewarded sellers who own these interesting properties. This sale was at $850k, and while the property had a very slight lake view and no boatslip, it’s a nice sale because of that parkway.

 

A small lakefront home in the Highlands sold for $1.305MM last week. That home tells a good market story, one that sellers and buyers alike should pay attention to. That property last sold in May of 2008 for $1.764MM. That would have represented the peak time for the last cycle, and that shows us that entry level lakefront is still, for the most part, 20-30% off the prior highs. Contrast that with the $3MM+ market, which is currently, by my eye, operating at prices that might be within 10% of the peak, and in some cases, already higher than peak valuations. The entry level lakefront market cannot catch a break, and while this sale at $1.305MM is a nice sale for a small property with limited frontage and a hillside location, it likely doesn’t feel so good for the owner who just lost $500k (after fees, assume) on the experience. Pier 511 sold last week as well, this one priced in the mid $4s, though the transfer price reflected a $4.1MM print, likely on account of personal property being excluded from the real estate transfer.

After many fall closings, the market is beginning its late fall slow down. There are only a handful of properties pending sale around the lake, including a new contract on a parkway home in Cedar Point pending with a $1.15MM ask. The vacant lot in the 700 Club is pending sale. The large lakefront in Fontana listed at $4.3MM is pending as well, and we’ll expect that will close in the coming week or so. I’m expecting a sale price just under $4, so we’ll see if that hunch is correct. I’ve heard a rumor of an off-market sale of a marquee Snake Road property in the upper stratosphere of our value ranges, so we’ll be sure to watch that to see if the rumor is true. I see some exciting new inventory coming to market, but it’ll be at the upper ends of the market here. Large lakefront properties have never had such a good year as this one, and the activity in the market should bolster some sellers of $5MM+ homes that think it might be the right time to attempt a sale.

Lakefront inventory is slow now, with barely 30 true lakefront homes on the open market. Expect this number to stay low through the new year, though plenty of lakefront listings will be available via pocket-listings, assuming you know the right agent (ahem). Now is the time to try to work on aged inventory, picking off value that the market has overlooked. Sellers generally find a last puff of motivation this time of year, and savvy buyers would be wise to get active right now. It doesn’t feel like the right time to pursue a summer home purchase, but it is.

Lake House Shopping List

Lake House Shopping List

I’ve seen things no one should ever have to see. I live like you, just wishing to make it through my day without conflict and strife, to make it from this day to the next in perfect peace. Yet I, unlike you, drive around all day to make my living, and in this driving I see things that I wish I didn’t. Just two days ago I saw a semi-truck with a fully loaded trailer. On that trailer there were no fewer than five brand new pontoon boats, each wrapped in pontoon plastic, each heading to a new owner. It was as terrifying and troubling as you’d guess, and the image is one that even now, some two days later, I cannot shake.
This time of year, when I drive around this lake, I see interesting things. I see puzzling things and frightening things. As the leaves fall, homeowners do their best to rid their lawns of the leaves. Some wait for all of the leaves to drop, then they have companies come and sweep them into giant piles where they will be sucked up by giant truck based vacuum cleaners. Others rake and rake, but the rake is a futile tool on a large enough lawn where so many Maples loom overhead. But the rake is preferred compared to the other thing I see: The Electric Blower.

Thankfully, most of the things I see can be fixed through some good advice and some preparedness. Pontoons can be sold to people who live far from here, where they will be delivered to lakes where they are not relegated to the shadows. Electric blowers can be destroyed and thrown in the garbage. Perhaps the electric blower phenomenon is not something spawned of preference; perhaps it’s just that people don’t know any different. That’s why I feel it my duty to provide you with this short list. It’s a list of things any lake house needs. With the Holiday season rapidly approaching, and without further ado, that list of must-haves:

GAS POWERED BLOWER. This has to do with the electric blower problem. Electric blowers are horrible. As a child in the mid 1980s, all of my “remote-control” toys were corded. We still called them remote control cars or trucks, but they were just toys with a wire attached to a controller. If you wandered down some street today and saw a child playing with a cord-controlled toy, you’d immediately stop and pause. You’d take up donations from neighbors and rush to the store to buy this neglected child a proper remote controlled car. Electric blowers are like this. We don’t walk around house talking on our corded phone anymore, so why should we walk around the yard with a corded blower? We shouldn’t. It’s a ridiculous concept and those who use a blower like this should be ashamed. A proper Echo gas blower is only $149, so go buy one. The backpack version is superior, but that’s more involved and if you’re currently using an electric blower at your lake house you should choose the $149 model first, so you can ease into this modern world of internal combustion engines.

AN AXE. We can spell this either way, ax or axe, so I’ll alternate now to show flexibility. A proper ax is different from any old axe. We need one of these at a lake house for many reasons. What if Nanna gets locked in a room and there’s no time to wait for the locksmith? Axe. What if there’s a small rodent running around the house and there’s no time to wait for the exterminator? Ax. What if you want to chop some wood because you’re incredible? Axe. Very little beats chopping wood during the late fall and winter, as there’s something remarkably therapeutic about chopping wood, carrying that chopped wood into the house, then burning that wood to keep warm. Best Made Co has great axes, but any wood handled axe with some heft will do. Just make sure it’s a full sized ax and not some silly hatchet.

CELL PHONE DRYING BAG. Last week, my wife lost her cell phone. She lost it after walking to the end of our driveway to retrieve the mail. She looked everywhere. Everywhere! The phone was not found. Days passed, the phone was not found. I joined the hunt, and the phone was not found. It had to be somewhere, but it was nowhere. On Sunday I mowed my lawn, and narrowly avoided hitting something shiny. It was her phone, and it spent four days on that lawn. It rained all day one of those days, and the phone was likely destroyed. Thinking quickly, I removed the case and the battery and stashed it in a container of rice. The phone, a day later, worked just fine. Don’t use rice, use a proper kit because it’s cool and shows you’re prepared for the likelihood of a cell phone ending up in the lake. EVAP bags are cool, and you should have a handful of them at your lake house at all times. Your guests will thank you.

Of course this isn’t the most thorough list, but it is a list that will help your lake house be a better place. It’ll help you be a better person. It’ll help your lawn look better in the fall, your stack of firewood look taller in the winter, and your phone dry faster in the summer.

November Again

November Again

We all engage in it. A very common mistake. It’s not a mistake like it would be to pay someone to tattoo barbed wire around our biceps, but it’s a mistake nonetheless. I write to you from this desk every other day, and I write to you as if I know the entire lake. As if I know every nook and cranny and every point and bay and every gravel road and paved street. I write like I know, as it comes to Geneva, it all. You listen, you read, and you, too, explore. You think about the lake and you think about what it is and how it looks and you think that you know it all too, and if not all of it, well then certainly most of it. The truth today is that none of us know the lake as well as we think. It’s a big lake. Our minds are small.

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And this is why November is so important. In December, we can get to know the lake. The lake is still then, the activity gone excepting a few brave fishermen that drag lures slowly through the depths, the piers out and the lake a glassy reflection of everything we think it should be. We can explore then. We can hike the shore path and legally trespass through front lawns and peek behind houses and see things that we didn’t know were there. We could do these things in December, but December has but one fatal flaw. It can be very cold in December. Like freezing cold. Like Manitoba cold. If you’ve never been there, trust me on this one, it’s a cold you don’t ever want. December is to exploring what bicycles are to fishing, carbon fiber frame or not.

November on the other hand, November is a month where even a soft guy like me can do some exploring. November isn’t like October and it’s nothing like December, but it’s so much better than August if you’re looking to actually accomplish something. August is a show. It’s busy here then, the lake is busy and pretty and between pretty boats and pretty girls and pretty big fish it’s nearly impossible to focus on the lake. November is free from distraction. There’s nothing going on, and no fisherman in a Lund could ever distract someone from their goal if their goal is to discover what they cannot see during summer.

A goal of mine here, on this site, and in my every day work is to educate. Any agent can be reactionary and make fancy fonted proclamations, but is that some sort of valuable advice? I don’t think it is. I think it’s lame. So while I educate here and educate if you’ll take a ride in my car with me around the lake, there is an education that I cannot give you. That education is one of personal preference. If you’re going to buy a car, it’s nice to know what Dan Neil thinks of that particular car. The gas mileage is sort of important. The size of the engine matters some. But what really matters is how the color looks under the sun and how it takes a corner. Personal preference is what matters far beyond the nuts and bolts, and even though I’d love to shape your preferences for you this is something I cannot do. In order to understand this market and this lake, you must explore.

Vacationing here during August for a week is not the time to explore. That’s a time to be captivated. There isn’t must subjectivity to a summer day at the lake. It’s impossible to resist it. And with this, people give in and they buy a house on a Saturday that they first learned about on a Tuesday. To be a buyer in August is to act quickly and sometimes irrationally, but to be a November leaf kicker and a December buyer? Well that’s pure genius.

So for now it’s November. It’s time to explore. It’s time to learn about little bays and small points that you never knew existed because in August they were masked with piers and shiny objects. On a gray day in November, with some boots and gloves on, you can learn more about the lake in a three hour walk than you every could during a 7 day summer vacation. If you’re here doing this work it’s obvious you already like the lake. The goal here, on this blog and on that shore path, is to find what you love. Whether that’s an association home or a stretch of the lake that fits your eye, now is precisely the time to find that spot.Nove