September may be working overtime to prove me wrong when it comes to the weather, but it’s preforming beautifully as it relates to the Lake Geneva real estate market. This month appears to be the most active sales month since June for our market here, which is in keeping with the fine tradition of a productive fall selling season. I wrote last week about the lakefront activity that seems to be increasing each week, and today there is cause for a much maligned segment of our market to celebrate. The upper end lake access market, those homes priced from $700k to $1MM, has experienced a mini sales burst that proves more to me about the strength of the market than the lakefront sales ever do.
The entry level lake access market has been moving slowly, but steadily, throughout 2010. The lakefront market has moved much in the same manner. The lake access segment priced around $500k has been particularly active this year, with sales at the Harvard Club, Lake Geneva Club, and most recently, Belvidere Park (all my sales, with the exception of one of the two Lake Geneva Club sales). With most individual markets within the lake access scheme enjoying at least some liquidity this year, the upper end lake access market has been largely left out in the cold. Or as was the case, out in the sweltering heat. That was the case most of the year, with only a single lake access sale selling between $700k and $900k. That sale, a fine home in the Lindens that included both a pool and a transferable boat slip, closed at $800k. Until last week, this was a very lonely sale.
I’ve been saying for the past two years that the lake access market at this upper end has to drop in price before it will experience any significant rebound in liquidity. My reasoning is, as always, that when the lakefront market drops in price, the other price ranges must drop commensurate, like dominoes on a wooden coffee table. The problem has been that in spite of softening in the lakefront prices, the higher end market has remained stubbornly, well, high. This lack of flexibility in this price range reduced a once thriving segment of our market to nothing more than an after thought. A picture collage on a wall of some long abandoned bedroom from The Road would have received more viewing activity. There should be a quick note here- I do think the entry level lakefront market has dropped as far as it will go. Perhaps there will be 5% moves yet, but much of the entry level lakefront market that should sell in the $1.2MM to $1.35MM price range has probably declined in price (as much as 30% now) as low as the owners will permit it to go. What’s that? You don’t think sellers dictate prices? Have you been to Lake Geneva lately?
Over the past week, two higher end lake access homes closed in the low to mid $700k’s. One, a large home in Knollwood that has been a bit of a vacation home hostel over the past decade, closed for $745k after an initial list price of $895k earlier this year. The other, a home in Geneva Manor that I didn’t care for at this price, closed at $725k after an initial list of $850k. More importantly than what these homes did have- private quality lakerights- is what they didn’t have. Neither home had a slip. Moreover, neither home had a particularly unique design or elevated fit and finish that might otherwise lure a buyer into purchasing a home like these. The reality is that both of these homes were nice enough (Knollwood was much, much nicer), but neither were particular deals by my count, nor were they unique. If I’m buying a lake access home in this price range I’m either going to get a slip, a view, both, or an architecturally exciting house. Even so, the sales show activity has returned to a market that has until now been relegated to second class status.
There are more buyers in this upper end lake access market today than there have been in recent years. I’m personally negotiating a contract on my very unique and very interesting Hunt Club Lane listing, and I know of several more buyers with budgets of $700k to $900k that are active in the market now. I still think that the prices on 97% of the homes in this price range are too high, and think that as we get closer to my magical strike point of November and early December, we’ll see quite a bit of flexibility in the negotiating tactics of the sellers in this range. I have a theory that involves this price range and the November elections, but I’ll keep that theory to myself until next week. It’s a theory I base on nothing factual, so the subjective nature of it will require me to present an eloquent, if nonsensical, defense.
(Note- just today another property showed up as pending in the MLS. This one is a ranch in Loramoor listed at $1.35MM. Don’t ask what I think about it…)