My newest pending lakefront contract, 389 North Lakeshore Drive, Fontana. It’s a great house on a great lot in a highly desirable location. I’m excited to bring a new family to the lakefront, and to help them make their weekends count. If you’re in the market to buy or sell in the upper bracket on Geneva Lake, there’s no question that I should be your agent.
What is a healthy real estate market? Is it a market with plenty of inventory so that every buyer has an opportunity to buy whatever it is that they want? This would be the generally accepted position of most. Yes, we should have inventory for all, available at all times, with low interest rates and sunny skies. Also, hopping, happy white bunnies.
The problem is that it is impossible for a market to exist that pleases buyers and sellers equally. Even if you’re a seller and then an immediate buyer, you don’t have things exactly the way you’d like them. Unless you’re selling something into a hot segment and buying something in a slow segment, you’re likely selling high and buying high. When the markets were bad, sellers were selling low and then buying low. As I was advising then, this felt terrible but was, in fact, really quite smart. The trick then was simply to sell low and buy lower, just as the trick today is to sell high and buy less high. I admit the clunky phrasing will never catch on.
Today the market is active in all segments. Unlike the initial improvement we saw from 2012 through 2015, where certain segments were left out in the cold even as others advanced, today the entire market is humming. There are 19 lake access homes priced under $400k at the moment. Of those, 8 are under contract. There are homes with slips priced between $400k and $900k pending sale, and even our off-lake $1MM-$1.5MM range is churning out volume. There are two pending sales in that category, one in Lake Geneva priced in the $1.3MM range and one in Fontana priced near $1.5MM. This is the range, in case you forgot, that has been struggling over the past 18 months. Today it is fluid and potentially as liquid as any other individual market surrounding the lake.
The entry level market on Geneva is still giving up some inventory, with two lakefronts priced under $1.5MM. Beyond that there is a pending lakefront in Lake Geneva priced at $2.195MM (my listing), and a recent sale in that same category of a house in Williams Bay on the north shore of Fontana Bay. That property closed for $2.125MM. I had that home for sale a couple of years ago and failed to sell it. The house didn’t bow to the market, the market came up to that house. Around the other side of Fontana, a house that had been for sale off and on for years has gone under contract with an asking price of $4.65MM. That’s a nice property in a nice location. It makes sense that it sold quickly this time around.
In our upper bracket ranges, I have a new deal on a lakefront priced at $7.95MM. That’s the biggest story of the last 24 months- the improved liquidity at our market’s very top end. We used to sell a lakefront over $5MM every other year. Now we can sell five or more per year. When this sale closes that will make six sales over $5MM between June 2016 and June 2017. Of those six, I’ll have closed five of them, leaving little doubt as to which agent best understands the highly nuanced upper bracket here. This increased liquidity is good for the lake, but it will have a cap. Over $8MM the numbers get a bit more sticky, and we still haven’t ever printed a transfer at $10MM or over. Expect this to be tested this year, both with some of the current inventory and with new inventory that’ll likely leak to market over the coming months.
So is this a buyer’s market or a seller’s market? Is the market healthy? Well yes, it’s healthy. It’s active and it’s dynamic. But as for who’s in control of this whole thing, that depends on specific properties. You can sell into a hot segment right now and buy into a cooler segment. That is still possible, and that’s the best possible outcome for those seeking to upgrade or downgrade without leaving these shores. The trick now is for buyers to remain patient (and seek out the proper guidance, from me), and for sellers to resist the urge to indulge in overconfidence. Either way, if inventory remains low we might have a slower summer than any of us want.
Perception is an interesting thing. For instance, when I’m in front of a mirror with no one around me, I think that things are looking pretty good. When I hang out with certain friends who are more un-fit than I am, I feel pretty good about this, too. But then when I spend time with friends who are extremely fit I think that I shouldn’t spend so much time out in public. Depending on where I am and who I’m around, things just seem different. The market is like this, without all the shame. If you took a boat ride around the lake this weekend, as I suspect you’ll do, you might think you’re noticing lots of lakefront homes for sale. In fact, you’ll see many with my name on them and you’ll think to yourself that this cannot be good. You’ll think it’s good for me, but then you’ll think that it must also be bad for me, because of so much unsold inventory and so many sellers leaking patience like the back left tire in my fishing truck that has not one, but two screws stuck into it.
But just like my solo mirror perception, your perception of the lake would be wrong. Dead wrong. In fact, there are just 23 single family homes for sale on the lake, including one in the South Shore Club. There are others, homes that aren’t quite lakefront but feel like lakefront- the chief example being my listing for $1.295MM on South Lakeshore Drive. There’s a Congress Club listing playing like lakefront, and a new listing on Sybil that I didn’t think would be valued quite so high (no slip for $1.295MM). But the lakefront itself, it’s limited. There are two lakefront lots available, my listing in Loramoor that you’re only going to be able to resist for so long, and a big property on Black Point.
The activity on the lake has been spotty this year, but that should be expected given the low inventory. There are the three lakefronts that I sold in June, and now there are two more than I have fresh contracts on. The large lakefront property known as Pikewood on North Lakeshore Drive ($4.295MM) is under contract now, as is my beautiful listing at 1014 South Lakeshore Drive ($7.95MM). Of course fresh contracts are not sold properties, but it’s a pretty important step in the closing process. There’s another new contract on a large lakefront property in Fontana that isn’t currently on market. If you look at these sales, it proves there is liquidity in the upper reaches of our market, if only you’ll be patient enough for it to arrive.
There’s another new contract, that on a new listing in Geneva Bay Estates for $2.85MM. I showed this home last week, and while it was a nice home it wouldn’t have blown your mind. It went under contract so quickly in part because of the market’s newfound desire to be close to town. Downtown Lake Geneva used to be a poison of sorts, and now it’s as a bowl of sweet honey set outside on a hot summer day and we, the bees. New inventory should be coming to market in the coming weeks, not because I have any secret insider way of knowing this (I do), but because it’s bound to happen. Sellers will notice this lack of inventory and if they’re considering a move up or down in this market, they’ll look for opportunities. Speaking of moving up, there’s a new listing at $16.45MM on Snake Road. What a beautiful property this is, but beautiful alone doesn’t convince someone to part with $16MM (I’m assuming a slight discount off ask). I’ll be very interested to see if the market can produce a buyer in this strata. I’m guessing it won’t happen.
For now, enjoy the weekend. Be safe. Don’t tow your kids on tubs during the middle of the day on Saturday, Sunday, and Monday. Just don’t do it. If you go out for the fireworks, don’t boat drunk. If you light fireworks, don’t blow off part of your hand. That’s a terrible way to celebrate our Independence.