If I spent every breath telling you that the lakefront market is hot, would you always believe me? If, when things were really bad, I told you that things were really good, would I lose credibility? If when we were standing under a bright sunny sky, I told you it was cloudy, but I told you that with such nervous enthusiasm that you, too, thought it was cloudy, would I have been right? I’m asking because it’s difficult for me to understand buyer behavior sometimes, and I’m curious as to how certain buyers believe certain agents when the certain refrain is always the same.
I think a steady refrain that seeks to identify market conditions as always being the same is nothing more than an insult to your intelligence. More than that, it’s an insult to my intelligence, which I value quite highly. That’s why I’ll tell you when the market is bad, when a segment is bad, and I’ll tell you when a segment is good. Today, there are good segments, just as there are bad segments. I’ve been telling you the entry level lakefront market is currently a poorly performing segment, and yet the advice has fallen on mostly deaf ears. Today, there’s another segment that’s heating up, and it’s not the one you’d expect.
Historically, the Geneva lakefront market prints one sale over $5MM every year. This has not always been true, of course, due to the inflationary demands of real estate pricing, but it’s generally true. There was one sale over $5MM this year, that of a house off Snake Road. That sale was really a trade, and you’d likely be wrong if you assumed that home would have sold to the open market in lieu of the trade deal. That property sold for a reasonable number, but it neither helped a market argument or hurt one, it was just a sale of a house on Snake Road.
There’s a fresh new contract on a lakefront home over $5MM, though the number is not known, and neither is the list price. It’s an off-market property that will soon come to market, with that little yellow C indicating there is a pending contract. It’ll come to market because no agent in the history of the world would ever keep a sale in that strata quiet. It’ll be broadcast for everyone to see, and it’ll be touted as a great success, which it is. Assuming this sale prints in 2015, that will be two Geneva lakefront closings over $5MM in the same calendar year, which is the first time that’s happened since the advent of time.
To add some weight to this discussion, I’m expecting we’ll print an additional two sales over $5MM this year, leaving us with four transactions in 2015 that exceed that benchmark. This is a bold prediction, and it may very well be wrong, but I see more buyers in that $5MM range now than I’ve seen in forever, and I think there will be some new inventory that sells and maybe one of the existing inventory that sells (1014 South Lakeshore, duh).
I’ve often wondered, both privately and here on these pages, if the market can easily sustain an active $5-8MM lakefront segment. If the newer homes, those built in the last decade, come to market with prices that reflect the owner’s all-in-number, will they attract buyers? Even though the lakefront has never shown a particular ability to absorb properties in that price range, I think there is a market in that range just waiting to be tapped. If new builds seek to obtain $9MM+, as several current offerings are attempting, that segment will likely never catch on with any consistency. For every ten buyers that will spend $5MM, is there one that will spend $10MM? Note the absence of the word “can”.
Just as the entry level market lags, the upper bracket will experience a terrific 2015. The mid-market, those homes priced $2MM to $4MM is also active, with two lakefronts pending in that segment and one off-water outlier pending in the low $2s. If you’re a buyer in the $5MM+ range, perhaps you’d be wise to work with the only agent with a pattern of success in this segment. Since 2000, there have been four lakefront sales over $5MM, and I’ve brokered two of them. Let’s find value together, whether that value is found by stealing a $1.2MM lakefront that should be $1.4MM, or by securing a $5MM house that couldn’t be replicated for the purchase price.
Above, 1014 South Lakeshore’s remarkable bunk room.