Blog : Lakefront Market Update

Lake Geneva Lakefront Market Update

Lake Geneva Lakefront Market Update

Certain times, there’s nothing more to say. Like when you’ve eaten a most delicious dinner. You can say it was a delicious dinner. You can take a picture of it and post it to your favorite social media account. But beyond that, is there really anything else you can add? You could, two weeks later, tell someone about it. That would be nice, but you would have to acknowledge that no one really cares. That was your dinner. It was good, but there’s nothing more to say.

The Lake Geneva lakefront market is hot. It’s obvious. It’s unavoidable. It’s uniform. Entry level homes are hot. Massive lakefront estates are hot. Buyers are buying things. Correction: they’re buying every thing. The lakefront is hot, and sometimes that’s all you can say.

But that’s if we’re not us, and we’re not intelligent and curious. We want to know exactly what’s pending and what’s not. We want to know why. What are the drivers of this market surge? Is it as simple as the stock market valuation? If we strike a deal with China, will more people buy more lake houses? If we don’t, will they disappear? If the Dow returns 11% will things be wonderful this year, or if it returns 16% will things be that much better? Will low interest rates on mortgages spur more activity this fall, even if we don’t strike a deal with China and the Dow drops because of the tension? Because of the fear? Will JB continue to confuse barely-millionaires with inherited-money-billionaires? If he does, will the market stall? These are the questions on my mind, and on your mind, and on the mind of our remarkable lakefront market.

But first, the run. As of this morning, there are no fewer than 11 lakefront homes pending sale. That’s an astounding number. As impressive as the volume is, more impressive to me is the range of the market activity. The REO in the Highlands is pending with an asking price of $1.092MM. That was the property that came to market and fielded a bevy of offers before finally settling under contract. I expect that sale will be perhaps 40-60% higher than the asking price, but that’s purely speculation on my part. The activity generated by that foreclosure was quite impressive, but alas, one house means only one buyer. The overflow from that bidding war more than likely fueled other sales, as buyers, once committed to the lake via a hard offer, rarely pull back and sit on the sidelines waiting for another year to roll by. Some of those buyers, spurned by the foreclosure, went shopping.

My listing at 246 Circle is under contract ($1.975MM), as is my listing next door at 250 Circle ($2.825MM). Those are very different homes in a very similar location, but both are solid buys that make complete and total market sense. Farther north, a spec home in Cedar Point. This one on just 62′ of frontage, with an asking price near $4.8MM. That home is under contract. I repeat, that home is under contract. Did you know the market loves new construction? Then again, I love a good Butterfingers Concrete Mixer, and my love for this caloric bomb is downright tepid compared to the love some buyers have for new lakefront construction.

Wrapping around Williams Bay to Walworth Avenue, the string of cottages has another pending sale, this one at $1.895MM with a few cottages and large pier on a skinny lakefront lot. Whatever’s in the water on Walworth Avenue, it must be delicious, because change is coming to that section of lakefront. Would I want to invest my money in change there? No I wouldn’t, but that’s just me and I’m just a kid from Williams Bay (with 23 years of full time Williams Bay based real estate sales under my belt and nearly $300MM in closed transactions in the past 9 years…).

In Fontana, my new listing on Sauk is under contract with a $1.99MM ask. That’s a vintage cottage with some modern updates in a rare setting. There’s a large pier with shore station, garage, ample parking, and terrific square footage. Compare that to typical offerings in Glenwood that lack parking, lack shore stations, and you’ll understand why it’s under contract. I have another one-party listing pending sale in Fontana, but you’ll have to wait until that one closes to learn more about it. Needless to say, it’s a stellar transaction.

Pushing East, my listing on Basswood is still under contract ($8.495MM). Expect that one to close this fall, and when it closes, it’ll become the highest print for 2019. There’s one other private offering I know of that may break the sales price, but that won’t be in the MLS, so it won’t be something we can discuss here. The other listing on Basswood (not mine, $4.79MM) is under contract as well. Buyers love Basswood. They always have, and they always will, especially as old homes are sold and new homes are built.

On the Lake Geneva side, the home to the West of the Geneva Inn is under contract ($2.195MM), as is the log-ish home on the hill near Vista Del Lago ($4.25MM). The log home has a fantastic pool, which has been a significant driver of interest for that home. I know I’ve shown it in the past, and each buyer is initially drawn to the pool and fabulous westerly view.

That’s the current market, and that’s the hottest I’ve ever seen the lakefront in my 23 years of work here. For my take, I have been blessed with more than $31MM in pending transactions this summer, including contracts on five of the pending lakefronts. It’s been a busy season (which is why this blog has been a bit dry over the past month), and the activity has me looking forward to a slower paced fall. Still, expect this market to continue humming along, as low interest rates, lofty equity valuations, and a continued trend where Illinois residents are not reinvesting into Illinois real estate and are, instead, taking those hard earned dollars out of state to vacation home markets around the country. If you were of that ilk, and you were looking for a vacation home market to drop a few dollars in, wouldn’t it be nice if there was a nearby market with amazing liquidity and world class amenities?

Geneva Lakefront Market Update

Geneva Lakefront Market Update

The curious thing about Lake Geneva is that the market would potentially be fine even if another new customer never followed his roads to our roads and purchased a lakefront house.  No new buyers, no problem. Never, ever, a new buyer who needs figure out our scene in order to buy it. If no one ever came here again, we’d still have a market.

That’s obviously not entirely true, but at times it sure does seem like we needn’t another new buyer. We have enough, and they’re the people who are already here. One of my favorite transactions to assist in is the buyer who is new to Geneva Lake looking to capture something ideal. That buyer, someone with no prior experience here, hasn’t yet been confined to his developed tastes. He’s a blank slate, a clean canvas, and that buyer can look at this market without geographic bias. That’s a terrific sort of buyer, one that I highly value.

But that’s not the traditional buyer here. That buyer exists, of course, but that buyer isn’t what keeps this market humming. What keeps this market on the move is the lakefront ownership group. Those 600 or so discerning lakefront owners; that’s our market. One year they might wish for a big estate, with 800 hydrangeas and no fewer than 375 rose bushes. But three years later they may long  for the simplicity of a lakeside cottage, still with a slate roof, of course, but a cottage nonetheless. A pure lake experience, tidy and controlled. Who could tend to 800 hydrangeas?

Yesterday, a new sale on this Great Lake. The last time Clear Sky Lodge sold it was my listing as I represented Bank of America in the liquidation of that valuable asset that they came to own by way of court proceedings. That sale in 2012 was for $3,700,000.  Clear Sky sold again yesterday, this time without my involvement, which has put me in a sullen mood for such a lovely Friday.  The price? $5,715,000.

That’s a lot of money for this old log house, but I won’t say it wasn’t worth it. The house is rare and intensely magnificent. The location desirable, the views sublime, the logs super loggy. I like this sale for the market, but it’s a bit of a loss leader. The appreciation from 2012 of more than 50% isn’t reflective in the broad market. Some homes have appreciated this much, others have not. This is why it’s difficult to take individual sales and suppose that they are meaningful to the broader market segment.

If you’re sad that you missed out on this house, I have the next best thing available at Clear Sky Lodge, with tennis court, swimming pool, canopied slip, and beautiful privacy listed at $2.99MM…

The trend of lakefront owners swapping homes is nothing new. It’s a common theme here, but it appears to be on the rise. When the markets were bad I encouraged would-be-sellers to sell low and buyer lower. I argued it was, in fact, a better situation than it would be to sell high and buyer higher. Very few people listened, but those that did have found the new market to be rewarding.

The key for the lakefront market now remains inventory. We need more of it. Ready made inventory, easy houses with large lots. Others with small lots. We need all of it. If you’re a buyer on the hunt, let’s hunt together. If you’re a seller considering a move, you know who to call. (It’s me. Call me. Or Email, that’ll be easier. Text is fine, too.) 

Lake Geneva Prices

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.

Geneva Lakefront Market Update

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.