Blog : Market Nuances

Lake Geneva Price Per Foot

Lake Geneva Price Per Foot

There’s a problem with our market. A long standing problem, one that has been established by people who thought, at the time, that they were helping. It was the Realtors that initiated this problem, through well-intentioned averaging, and once the problem took hold into the psyche of the Lake Geneva real estate market, it quickly became deeply and thoroughly entrenched. The concept is the Price Per Foot, and if I had to tell you how many times over my 23 year career I’ve been asked where that magical number was currently residing, I couldn’t, for the life of me, come up with the tally. It’s a number everyone wants to know. Everyone needs to know. It’s a number that tells us whether or not the market is hot, whether it’s appreciating, whether it’s time to sell or time to buy. And the number, unfortunately for the followers of this religion, is almost always misleading. It turns out the most commonly cited number for lakefront value on Geneva Lake is, as a point of fact, irrelevant.

The reason for its irrelevance isn’t always understood. It’s not that the number isn’t a nice number to think about when you’re valuing, whether on the buy side or the sell side, a lakefront home. It is. It’s meaningful, but it’s not everything. That’s because in order to interpret the number with any real accuracy there needs to be a hefty dose of market knowledge added to the formula. Yet, when deals are being negotiated the price per foot barges into the negotiation, especially if that magical number advances your particular case. If the seller wants $30k a foot, you’ll happily and aggressively remind him that the average is $28,700 per foot. If you have the listing and the buyer wants to pay you $24k a foot, you’ll remind her that the price is, in actuality, much, much higher. This is how the game works, but the game is flawed.

And it’s too bad, really. Because it’s not the fault of the seller, or the fault of the buyer, it’s the fault of the long standing market tendency to hold this number up as the true market indicator. At this point, there’s nothing we can do about this tendency. It’s become part of the market, in good times and in bad, and for that we are all worse off. That’s because the magical number fails to take into account the single most important thing in the game of real estate: Location. We pretend to understand location, but we don’t. We pretend to understand how valuable it is to the market, but we don’t. We pretend that the entirety of Geneva Lake consists of equal and consistent shoreline, but it isn’t. The lakefront is nuanced, sometimes in such a subtle manner that the true definition of value is entirely subjective. But the lakefront is also blunt, a heavy hammer taken to different ideas and locations in such a way that there an be no mistaking a quality location for an inferior one. The market is both things, and yet this pesky price per foot insists on blending the good with the bad to come up with an indicator of value.

A lakefront property on Basswood recently sold. The price for 150′ of level frontage? Right around $30,000 per foot. There are several other large-ish lakefront properties for sale, including one on the South Shore of the lake that is listed closer to $10,000 per foot. Does this mean the lakefront is worth $30,000 per foot? Not really. Does it mean the lakefront is worth $10,000 per foot? Nope. Does it mean, as the longstanding measurement would dictate, that the lakefront is worth $20,000 per foot? Not even close.

What it means is that level feet on Basswood are worth more than sloped feet somewhere else. It means a street that’s capable of holding value up to and perhaps beyond $12,000,000 is going to command a higher dirt price than a street that might be hamstrung around $6,000,000. This shouldn’t be hard to understand, but throughout the myriad negotiations that I’ll captain this year I will continually and consistently run into either buyers or sellers who fail to grasp this most basic concept. The lakefront is not uniform. And as such, the pricing cannot be, either.

Next time you’re buying or selling Lake Geneva, use the Price Per Foot to your advantage. But know that it’s generally nothing more than one of three or four indicators that point to the value of a specific property. Also know that if you’re buying on Valley Park, where recent sale printed for around $16,000 per front foot or you’re buying in Indian Hills, where a recent sale went closer to $50,000 per front foot, both properties could represent a value, or both could be overpriced. The only way to know? Understand the market by working with an agent that understands it better than you do. (that’s me)