I spent much of Sunday on the lake. There’s a new boat in the Curry fold, and the boat must be used. Boats are like that. If you don’t use them, they’re no fun. Just like lake houses. You can own one, and the ownership won’t be all that much fun. It’ll be work. But if you use it, then it becomes fun. It’s like money. Having a lot of it is fun, I imagine. But what good is it if you don’t use it? Along that line of thinking, the boat, and that sunshine, and Sunday. And a stop at Gordy’s for lunch and a gawkers tour of the lakefront to see what has changed since last fall.
Like every year, the lake has experienced changes. New builds are underway. Some large, some small, mostly, however, large. Renovations, big, deep, heavy renovations. Some renovations that you drive past on the boat and wonder if the renovation was the right decision. Should the old house with old house rooms and old house stylings have been scraped and rebuilt, rather than rebuilt around what was old? A new house in Loramoor, beautiful. Another new one in the Lindens, beautiful. Some new homes here and others there. The constant on this lake is the scenery. It’s always the same, always green, always lush, always dialed in. The change is the shade of the siding and the roof pitches of the new homes. Each year, the same, yet each year, change.
Earlier this week, a lakefront sold on Walworth Avenue in Williams Bay. This was not my sale. The buyer paid full price for a cottage with 50 feet of frontage, which is now the last domino in a line of five lakefront homes to have sold in the past two years along this particular stretch of lakefront. There are rumors of new construction coming to these skinny, long lots. Tear downs, maybe. Each of those sales closed between $1.1 and $1.5MM, whith just one at the $1.5MM mark and the other four in a clearly defined range between $1.1MM and $1.25MM. If gentrification is coming to this stretch of the lake, we’re about to find out.
The question now for the owners is whether or not this stretch is worthy of the gentrification, and the bigger, market question is whether or not this is a smart decision. I would argue that it’s a good decision if the initial purchase and the initial budget is range-bound. I’m speculating here, but that’s what I’m paid to do. Speculate on the current status of the market. Speculate as to where it’s going. And help buyers and sellers react to the market in an appropriate and intelligent way. That’s why I’m here today to think about the lakefront market, and to think about these sales on Walworth Avenue. There have been too many of them to ignore.
Times were, you wouldn’t want to buy on Walworth Avenue and tear the house down. This had been done in recent years, but it didn’t make a lot of market sense. Now, today, on the heels of five sales in 24 or fewer months, has something changed. Does this now make sense? I would argue that it does, with a big caveat. That caveat is not a market based caveat, but a personal one. If a buyer wants to buy for $1.2MM on this lake, they have very few options. Historically they would need to be in the Lake Geneva Highlands or on Walworth Avenue, with a few other spots dotting certain other sections of the lake. If you’re a $1.2MM buyer, you typically would not have a lot of options, but with ample, steady inventory on Walworth Avenue, it makes sense that these buyers found their way to this specific shore.
If you’re going to tear down a $1.2MM cottage and build a new house for $1MM (the low end of new construction on the lake, in my opinion, even on a small lot), you’ll be $2.2MM into a brand new lakefront house. Admittedly, this cannot be done anywhere else, and if you’re a buyer with eyes on a new house for $2.2MM, this is indeed your only option. Build away, new buyer. But this article isn’t about that buyer, it’s about the buyer that might be able to do better. The buyer who could have spent $2MM on a tear down instead of $1.25MM. This is about the buyer who is going to build a bigger house. A better house. And with all things bigger and better, that also means more expense. This is about the buyer who settled for this location rather than reached for it.
This is about the mistakes that are made by seeking out lower priced land. Don’t forget, it’s only a mistake if a particular buyer has a personal economy that is healthy enough to reach for more. Because for that buyer, reaching higher for the land purchase will always yield a higher top end once the new home is built. If you can do better, why not hope for that improvement? Why not wait to find better land with a higher upside? Why build in a range-bound section of lake when you could build in another location that might have legs to reach to $4MM or beyond? Why be early to a specific shoreline’s gentrification when you can settle in to another shoreline that has already made those strides? Why entertain the risk of one location when another, slightly more expensive, location will all but guarantee a gain at the end of the project? These are the questions that I ask on behalf of my buyers, and these are the questions that every home buyer who is considering building new on Geneva Lake should entertain. Without working through this process, you’re just buying a silly house on a lake without any real idea as to what amount of money you may be throwing away.
The market today is active, we all know this. Even new agents who tell you that they’re lakefront experts in spite of never having any lakefront experience or success can tell you this (and they do, in postcards, weekly). But the market is not without traps, and the easiest trap to avoid is the one that would have you over improve a specific section of shoreline that has yet to prove it is worth the investment. If you’re stumbling around this lakefront market looking for guidance, I’m here to help.
It pains me to write about the market on this blog. During the earlier times of these writings, I could write and write and only some buyers and sellers would pay attention. Now I write and write and other agents pull my insights and commentary and adopt them as their own. My selfishness objects to this. But there’s no way to combat it, unfortunately, aside from a fatal paywall. No, this information might be my proprietary blend, formulated only after decades at this helm and distilled by the fire of many market cycles, but once I write it it’s free. Other agents who find their market insights from this blog, you’re welcome for what follows.
To understand this market, you must understand the macro functions of a generic real estate market. First and foremost to that understanding is the awareness that people, en masse, do not buy or sell based on personal circumstances, or their personal economy. They buy based on confidence and they sell based on fear. There is nothing else. In 2008 a homebuyer on Geneva Lake bought a lakefront house on the exact day the market topped. In 2011 he sold it on the exact day the market bottomed. His personal finances between those dates changed very little. The only thing that changed was his perception of the market, and that perception started with confidence and ended in fear. All other commentary related to the movement of markets is nuance.
This is why corn-field subdivisions in 2006 sold with violent fervor and then died with a silent dirge in 2012. This is why those same cornfields are selling now at a furious pace, for prices that far exceed any market top of 2007. $500k for a cornfield ranch? Sure! Why does this buyer buy for $500k now when she could have bought for $340k in 2012? Has her income increased commensurate? We know that interest rates have risen since then, so that isn’t the catalyst. We know that the job market in greater Walworth County isn’t welcoming Google or Facebook anytime soon. So why the rush now in the heat of competition when there was only silence back when value was literally everywhere? Confidence and fear.
Now that you understand this, consider the 2019 buyer. This is not a uniform buyer, by the way. There are three sorts of buyers in the market this morning, the morning of my birthday. Our first buyer is the scared buyer. This is the buyer who was afraid to buy in 2006 because the market was too hot. He was afraid to buy in 2012 because the market was too cold. And he’s afraid to buy now because he feels that it is, once again, too hot. This is what market cycles do, they go from hot to cold, repeatedly, with various stops along the way. This buyer doesn’t like 2019. He wishes it was 2014. He wished, in 2014, that it was 2012. In 2012, he was terrified. This is a buyer who fails to understand real estate and its purpose, and instead wishes to time the market with the hope of immediate and lasting gains. This is the buyer who wouldn’t buy Apple at $8 because IBM.
The other buyer is the feverish buyer. This is the frantic buyer. The buyer who is so whipped up by her own confidence and by the confidence of her cheerleading agent that she has no choice but to buy. Bad house in a bad location for a bad price? SOLD! This buyer can’t wait. Won’t wait. To suggest that better inventory might be coming next week is to suggest pause, and pause will not be tolerated. This buyer is motivated by confidence, by personal economy, by haste. I want to hate this buyer, because this generally isn’t the smart of sophisticated buyer that chooses to work with me, but in reality, I understand this buyer. This is a buyer that knows summer is coming, and that buyer wants to spend it in a better place. That buyer wants this scene so badly she’s willing to rush into it to secure it. This buyer skews markets. This buyer prints albatrosses. This buyer is what every open-house holding agent prays for. Walk this way, young lady.
And then there is the other sort of 2019 buyer. This buyer understands that the market is hot. He understands that prices are higher than they were two years ago. He understands that 2012 was a good time to buy, but he wasn’t in the market then. But this is a buyer who is neither terrified of the future, nor will he sloppily rush to secure it. This is a buyer who understands, even in this cycle of low inventory and high competition, that value still exists. It is still out there. It is present, even this morning, with limited inventory and incredible buyer activity. There are cracks and there are properties that find their way into them. Deals will be had, or maybe they won’t.
To each of these buyers I would suggest the market is indeed hot. Not as hot as the fanatic buyer would suggest and not as dangerous as the regretful buyer would insist. This market is hot. Undoubtedly hot. To buy in 2019 is to entertain some sort of premium. The cycle is getting old, but is it spent? I do not think it is. There is a market trend that is presenting routinely and blatantly, and that trend has everything to do with the state of Illinois. Not the State, mind you, but the state. The pending income tax and constant property tax increases are not a good thing for our market. To suggest that they are is insane. But is a diminished Illinois bad for Lake Geneva? Is an Illinois that has yet to see a tax increase that it isn’t willing to consider a fatal prospect for the vacation home market that lives and dies with the residents of this great state? The answer, it seems, is no.
Would I prefer Illinois to grow and expand and usher in an era of prosperity, free of the shackles of politicians who find office by fostering resentment between classes? Of course. That would be ideal. But in spite of the current tax climate, Lake Geneva is thriving. Why? Well, it’s because of that negative climate. See, times were, a junior associate might live in Lakeview with his new bride. They’d enjoy their time there, but as they matured and as their incomes grew, they’d look for the upgrade. They’d look to Winnetka, maybe, or Lincoln Park. They’d look to move from that condo and to a single family. Or they’d look to find a bigger residence on a higher floor. Something better. Then, after they made that move and their personal economies continued to grow, they’d move again. A few years later. Or maybe a decade later, still, they’d move. Upward and onward, to something better. In case you weren’t aware, in real estate, something better is generally more expensive. The cycle would continue until the time came to downsize, and retire to a winter spent in Naples.
Today, I see the cycle changing. Buyers see the illiquid suburban manse and they want nothing to do with it. They see the pending property tax burden and they do not want to embrace it. But they are still growing financially and they still long for something else. So instead of purchasing that next house, that bigger condominium, that adjacent unit, they’re taking their housing dollars out of state. They’re still earning at a fabulous clip, but they’re not wanting to reinvest into the Illinois problem. Why go long in illiquid real estate that may or may not be taxed at a rapidly accelerating rate? That’s the question, and they’re answering it by bringing those unspent housing dollars to Lake Geneva. They’re investing them in market where the return will likely be financial but will also be personal. They’re investing in their families. In themselves. They’re keeping their housing footprint reasonable in Illinois and they’re expanding it here. Want to know why our market is thriving in spite of Illinois? This is why.
I expect the trend to continue into the foreseeable future. The cycle will ultimately pause, and at that point we’ll re-ignite the cycle where fear breeds fear, and the weaker hands will be flushed. But until then, and again after that ultimate, some-day-softening what happens? Lake Geneva thrives.
PS. Do I think full time residents are going to leave Illinois for Wisconsin? No, I don’t. If you own a house in Crystal Lake and you pay $10k in property taxes on your $300k home, let’s suppose you rightfully hate that and want to move to Wisconsin. In Lake Geneva, that $300k home will have a $7k tax bill. Your kids are in soccer and you commute to Schaumburg every day for work. Will you uproot your family and your life to save $3k per year? The answer should be, and will be, no. If you said yes, then you’re not thinking clearly.
I brought a new property to market a week or so ago, and if you’re looking for a vacation home with transferable boat slip, then you’re in luck. As you hopefully know, certain price ranges come with certain expectations. For instance, a lakefront home priced at $1.4MM doesn’t need to have a garage to be desirable, but a lakefront home priced at $4MM probably should have one. In the same way, a lake access home with a slip priced in the $600s will generally be marked by what it doesn’t have, as much as by what it does have. These homes are often known by their tight yards, lack of garages, lack of remarkable proximity to the water, and overall condition. In short, they’re usually small cottages that leave all but the most motivated buyers unenthusiastic.
N1525 Oak Shores is in, you’ve already guessed it, Oak Shores. This is the boulevard association along that South Shore stretch that also features The Lake Geneva Club, Shore Haven, and Sybil Lane. This Oak Shores home not only has a transferable slip, but it has a large lot with spacious, level front lawn. It has loads of parking via two driveways and an attached garage. And inside the home, it has something else that most of these association homes won’t have: space. This is a four bedroom, three bath home with more than 2700 square feet of above-grade living space. It might need a bit of cosmetic updating, but this is a property you should consider. $649k and it’s yours.
Around the lake, activity abounds. I have a new contract on my Bay Colony condominium listing, you know, the one that everyone knows is likely the nicest standard condo on the lake ($799k). I have a new contract on the $495k condo offering in the Old Boatyard Condominiums, a small association that you likely only know about if you’ve lived there or also lived there. Other lake access activity is through the roof, as buyers are showing a particular fondness for wildly overpaying for off-water homes without slips…
Speaking of overpaying, there’s an interesting angle in the market this year that warrants discussion. The market is, without any doubt, hot. It’s hotter than it was in 2018. And 2018 was hotter than 2017. You could play that game going back all of the way to 2013, in case you’re bored. Because the market is so active, buyers are doing lots of really dumb things. They’re proving that they value immediate fulfillment above lasting value, and they’re once again back to buying homes For Sale By Owner because they think they’re somehow getting a deal by avoiding a dreaded real estate agent. I’ve heard of several off-market FSBO deals this winter and spring, and every deal I’ve heard about has sold for far over the actual market value. This is tremendous for the sellers, but incredibly terrible for the buyers. Do you, a random buyer, think you know this market better than me? If you answered yes, I implore you to buy a For Sale By Owner. You’ll do great! If you’re a buyer who is also smart enough to know that the answer is a resounding No, then why aren’t we working together? Beware the For Sale By Owner. It’s often listed that way because the agents told the owner that the property was worth $X, but the seller wants it to be worth $X + 20%. And you’re going to be the buyer who waltzes up and pays that premium, all because you think you know the market? For deep and lasting shame.
For now, it’s raining at the lake, and I have an office fire burning. But the snow has melted and the rain is warming the soil and soon it’ll be morel season. After that comes lilac season and after that comes Memorial Day. It might be miserable now, but blink a few times and it’ll be summer. As we prepare for that glorious condition, don’t forget that your choice in agent representation matters. Don’t forget that a For Sale By Owner isn’t automatically a deal. Don’t forget that this market has only one top agent (as considered by total individual agent sales from 2010-present, highest average sales price 2010-present). And don’t forget his name is still David Curry.
There are certain ways that certain houses charm their way into our pocketbooks. It might be a floor plan. A quirky corner where a staircase shouldn’t necessarily be, but is, and because it is, it’s somehow perfect. Or a set of finishes, the tile in the first floor bathroom. The light fixtures. The trim work, elaborate and fussy or simple and calming. Whatever the case, whatever the house, there might be something there. Something that makes the house better than the others.
Last week, I sold 389 North Lakeshore Drive in Fontana for $6,950,000. This is an important sale for our market, to display once again the dominant characteristic of our lakefront market: liquidity in the upper bracket. That’s our eleventh sale over $5.8MM since 2010, and I’ve been pleased to represent either the buyer or seller in seven of those eleven sales. This is the fifth sale over $6.9MM since 2016, and I’ve closed four of those five sales, as well. Consider now that our MLS, which covers much of the state, but not all of it, shows that outside of the Lake Geneva market, there hasn’t been a single residential sale over $6.9MM in the remainder of the state of Wisconsin over that same tenure. If you want to look at a market with a vibrant top end, you needn’t look any further than Geneva Lake. And if you’re looking for representation at that top end, I can’t imagine you’d want to work with anyone not named David Curry.
This house didn’t sell because of my masterful sales job. It sold because it was the right style house, finished with the right materials, located on a very desirable stretch of Fontana shoreline. Some sales make you wonder about the when and why, the how, really. But this sale doesn’t require any deeper or nuanced line of thought. It’s just a pretty house on a pretty lot in turn key condition and because of that, I sold it. Beginning, middle, and end of story.
For the seller who chose me to represent this fine property, a sincere note of appreciation. And to the buyer who allowed me to work with them to make sense of our upper bracket market, I thank you. Your weekends are never going to be the same.
It’s tax day. There’s snow on the ground. If we look at those two conditions we could all agree that things are terrible. Except out West, they’d all be so happy with some freshie on the ground, but they’ve all lost their minds, a condition publicly proclaimed with little more than a flat brim hat. And I suppose except around here, too, because recent elections show that people love taxes. Crave taxes! They vote for them time and time again. For the children, they say. Yes, things could be terrible today if they weren’t so absurd.
But what was I trying to talk about? That’s right, the lakefront market. Last Friday I sold my listing on Park Drive on the South Shore. That’s a nice little sale for our market, at $2.1MM, a reasonable number for both buyer and seller. The sale came in at $26,582 per front foot, which is behind the 2018 average but close enough. And about that average, $27,994 for 2018. Does this mean this sale on Park was some outstanding value relative to the 2018 average? No, it doesn’t really mean that. Does it mean that the lakefront market has softened, as evidenced by this sale on Park? No, it doesn’t mean that, either. Further, this year there have been 18 YTD lakefront and lake access sales, up from 14 for YTD 2018, down from 25 YTD 2017. Does this mean the market is better than last year but worse than it was in 2017? Don’t be ridiculous.
That’s the problem with the metrics of real estate in a small volume market. They don’t really matter. Sure, there are places and properties where they matter, like a 100′ vacant lot with reasonably level frontage. That sort of property might be worth $2.5MM today. Why shouldn’t it be worth $2,799,400? After all, that’s what the data tells us it should be worth. The reason is simple. Each sale on Geneva is a unique situation, with no two parcels (excepting rare instances where platted lots are identical on a specific section of a specific roadway) being the same. That’s why the data is less a blending of the market’s uneven edges and more a collection of anecdote. What’s 100 feet of frontage worth? Somewhere between $2,000,000 and $3,000,000. Is that good enough?
I suppose I know the answer. It isn’t good enough. That’s why your choice in representation, be it sell or buy side, matters so much here. If you’re bopping around Phoenix and you’re just dying for a three bedroom cinder block ranch with a stone yard and a kidney shaped pool, you’re in luck. Zillow might sell you that house. Or Opendoor, or the real estate agent who works in the station next to your aunt in the Great Clips on Rattlesnake Way. You know, the one around the corner from Parched Parkway. But these are desert jokes, and they’re ridiculous, just like the thought that you need special care when you’re buying a ranch in Phoenix.
This isn’t Phoenix. It isn’t Naperville, either. It’s a dynamic market where numbers don’t always justify value, and where value isn’t always justified by comps. It’s a market where a $2MM house with 60 feet of frontage can be wildly overpriced, where another $2MM house with 60 feet of frontage, a half mile away, can be a screaming value. I used to sit at this desk and see this market as you see it. As other agents still see it. With a smirk that was a blended emotion of bemusement and confusion. Today I see it differently. It’s clear to me. And if you want it to be clear to you, we should be working together.
It’s April. That means the year is young, but it’s not exactly new anymore. The ice left us over the weekend, and now it’s just soft water and sunshine as far as the eye can see. But that’s not entirely true, because it’s time for those April showers, the kind that are supposed to bring May flowers, but instead, often, only bring angst. It’s the in-between, not winter but not yet spring, and summer? Not even close.
The market, man, the market. Just a few short months ago I was concerned about it. Because that’s what I do, I fret. I want to keep the market momentum moving forward, and if I was put in charge of this market, more so than I already am, I could keep it going for a long, long time. Like Bernanke or Yellen, I’d be able to give the market what it needs, and tell it what it wants to hear. Still, in early January I was concerned about 2019. Today, just three months later I’m still concerned, but the concern has shifted.
When the year was young, I worried that the December stock market melt would negatively impact our markets. I worried that the recent Federal tax reform would hurt our vacation home market. And before I knew the specifics of his asinine proposal, I worried that JB’s envy driven tax plan would hurt us. Hate the man who has more than you, that’s the way that pitch went, and I worried.
But then the market melted back up, and buyers showed no signs of letting up. Contracts flew. Even as this winter threw snow and sub-zero temperatures at us, contracts were written. Buyers, rather than being spooked by any sort of December equity selloff and the rhetoric of a populist governor, pushed forward with their goals. Those goals, by the way, are mostly singular: Enjoy life, while it’s still here to be enjoyed. And if that enjoyment hinges, as we know it does, on spending weekends in a different place where the beautiful people instinctively flock like the salmon of Capistrano, then so be it.
Today, I see nothing but activity. The market is strong in every aspect imaginable. The upper end of the lakefront flexing its muscles with the pending sale at 389 North Lakeshore Drive ($7.395M). The middle market showing strength with recent offers in the South Shore Club and elsewhere. The entry level lakefront remaining devoid of inventory, excepting my pending lakefront on Park Drive ($2.195M). But beyond the lakefront, the activity is even more significant.
Pending sales are everywhere, homes with slips, homes without slips. Lake access homes that might have been barely $400k a few years ago now pending over $600k. There is activity, ample, generous, sometimes confusing, activity. Abbey Springs is on fire, with 19 available homes and condominiums and at least nine of those under contract. At Abbey Hill, four available units and two of those are pending sale. In another big turn around, there is only one available unit at the Abbey Villas. If you look back several years, you’ll read me lamenting the state of the market there. Lament no longer.
The lakefront condo market is effectively locked down, with just three available condo units as of this morning. The best among those is my $799k Bay Colony listing, but you already knew that. The picture is above, in case you forgot how great it was. There are pending sales at Bay Colony and Vista Del Lago, and a recently closed condo at the Old Boatyard around $800k.
You can see, whatever worries I had in January have been eased with this wild dose of market activity. But don’t think I’m not without worry, because I’ll always find something to worry about. It’s called creative anxiety, in case you didn’t know. Now my worry is placed back on the side of inventory. If we don’t keep stoking this fire, it might burn itself out. The best medicine for our market now is a steady supply of inventory, and with the things I’m currently working on, I think we’re going to be able to feed that need as well. Which will force me to worry about other, more important things, like how on earth I’m going to lose 30 pounds before summer.
It’s spring break, and everyone is gone. To the mountains. To the beach. To a different place with its own brand of monotony. In the mountains, it’s snowing again. Powder Day, the flat-brimming locals shout. But it’s more of a lazy shout, if there is such a thing. On the beach, more shells. Here’s one that looks like my dog, says some old lady, as she tucks it into her sack full of other shells that also look like her dog. It’s another place this week for many, a break from the monotony of our early spring, to enjoy the monotony of another place.
But while everyone is playing and traveling, I know that there’s something serious on the horizon. Memorial Day Weekend. It’s nine weeks from this Friday. It’s not going to be a normal Friday, that’s for sure. It’ll be you, your office, your co-workers, and there will be a decidedly pronounced difference in attitudes on that day. Some will have an energy, a desire, optimism. Others will behave the same way they did the week before and the week before. For some, that Friday matters. For others, it means only the turning of a calendar, from one season to another, unofficially.
The decision whether or not that Friday matters is yours, and yours alone. The market today is humming with activity, and while I particularly enjoy the activity on the lakefront, each segment of our market is bustling. There is no segment left behind this spring, each price range and housing category finding buyers and fielding offers. You needn’t be robustly rich to enjoy a weekend at the lake. So long as a $90k condo in Geneva National is in your range, you’re in play.
There are pending sales throughout our market, no matter if it’s a $198k cottage in Country Club Estates, or a lakefront estate on the North Shore of Fontana for $7.395MM. The best news for our spring market is that inventory is increasing, albeit slowly. New inventory in any category is a positive, as this market features considerable in-trading amongst vacation home owners. A new lakefront for $3.5MM is good, because it very well may free up a new listing of a $700k cottage with a boatslip. That boat slip property will be great to list, because an owner of a condo at Vista Del Lago might be looking to switch over to a single family vacation home. Any inventory is good inventory, as it lubricates the gears that churn this market forward.
For now, you have a decision to make. If you’re sitting in your office thinking about summer, this is fine. But if those summer thoughts lead you only to a Saturday rooftop dinner and a Sunday morning brunch line, then you’re not thinking as clearly as I had hoped. Dream of summer. Dream of that Friday, nine weeks from this one, but make the decision to make this summer different. I’m here to help, if only you’ll let me.
Above, the divine porch at 434 Oakwood in Fontana. Just sold last week for $1,150,000.
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.
I fished for a few hours last week. Me, the stream and the snow, deep and white, still soft, still clean, and the trout. It wasn’t a big stream, and I didn’t place much concern on the catch, but the sky was clear and the water, too, so I trudged through the knee deep snow and to the pool that ages of water had carved into and beneath that limestone bank. A solitary bald eagle sat in a nearby pine and kept en eye on my effort. I enjoyed that morning. I caught a few trout. It was a beautiful winter day in March, and that day is nothing like this day. Today, I’m ready for the melt.
The market, likewise, has spent this winter ready for spring. But unlike the icy hold on our landscape, the market thawed a long time ago. There’s a question as to whether it ever froze. It’s easy to sit back on a morning like this and feel the malaise of a late winter day. The ice and snow, clouds and wind. It’s all too much. But we aren’t long for it. Soon enough it’ll be spring and then summer and you’ll be sitting at your desk wondering why you let the malaise of March bring you down when you should have found the motivation of March, which is far more rewarding.
Around the lake today there is activity. Ample activity. A nonsensical tax bill proposed by The Billionaire Governor Next Door (that bill that supposes a hard working family earning one million dollars per year owes the same debt to society as a billionaire who made his money through the hard work of inheritance) is a headwind for our market, there’s no sugarcoating that. But in spite of this, the market persists. Activity is rampant in all market segments, from condominiums in Geneva National (at least ten under contract currently), to lakefront homes on Geneva. There is no let down here, just an unavoidable march towards summer, marshaled by those participants who feel like making this summer the best summer of their lives.
The lakefront condo market has had itself a nice little winter, with a rare pending sale over $1MM in Bay Colony, and another pending sale over $800k in Lake Geneva. The real tragedy here is that my Bay Colony unit, that one that’s so nice it’s almost difficult to comprehend, is still available. At $799k it’s being offered far below owner cost, and if you were looking to spend this summer lakeside in luxury, you couldn’t do it for less. Of course you could go to some other lake, but I know you’re smarter than that.
The lake access market is moving nicely, with twelve properties priced from $198k to $1.295MM currently under contract. Included in that list is my fine listing in Glenwood Springs, which remains the nicest off-water cottage I’ve ever seen. While this off-water activity is nice, the real action is once again found on the lakefront. My listing on Park Drive ($2.195MM) went under contract last week, as did another lakefront in Glenwood Springs in the high twos. A property in Shore Haven ($2.949MM) hit the market two weeks ago and was quickly purchased by another lakefront owner, as the trend of musical lakefront homes continues. It’s like musical chairs, but without the music or the chairs.
To round things out, the top end of the market received a nice jolt over the weekend with the fresh contract on my lakefront listing at 389 North Lakeshore Drive in Fontana. Newer construction in a desirable location is rarely offered on this lake, (note the desirable location part), so it shouldn’t be a surprise to see this lakefront ($7.385MM) find a buyer. If you’re wondering how important it is to offer your home to the market in turn key condition, I’ll point to this sale and give you a hint: it’s very important.
The lakefront market added four new lakefronts in the past month and three of those sold immediately. I’m expecting lakefront inventory to increase in the coming month, which isn’t especially profound. The market will continue to move as the calendar turns, and if we’re experiencing this sort of activity now, can you imagine how much better it’ll be when the ice gives us our big, blue lake back?
Here we are again. In February. The snow is still flying, but we know what we know. Summer is coming soon. With that in mind, buyers are looking forward to maybe, potentially, perhaps, spending this summer in a different place. In this place. Our place. Many are waiting. Hoping. But January is spent and February is aging and the wait continues.
Inventory was a concern heading into this new year, but I was more concerned about the stock market. Concerned about stability. The December market slide has reversed course, leaving my worries to the singular: Inventory. This wouldn’t necessarily be the case at this time of any given year, but this year, this morning, it’s all about the inventory.
Year to date we’ve technically added three lakefronts to the mix. But that’s just a technicality, as those three lakefronts were all available last year, and have only now come back to market after spending the holidays on pause. For all of the inventory concerns I had at the end of 2017, the first 42 days of 2018 brought eight new lakefronts to market, and several of those were indeed new offerings. 2019, you’re letting us down.
And what of the buyer activity this year? What’s the theme in our market at this very moment? Showings, by my eye, seem to be quite high given the difficult weather that we’ve experienced over the last several weeks. Contracts are relatively low, but that’s purely a function of limited inventory. Expect contracts to pick up in February and March as buyers either pounce on new inventory, or realize their options for 2019 are going to remain limited and turn to the existing inventory to scratch their summery itch.
For my part, I’m working on some new bits and pieces of inventory that you’ll know about soon. I’m also starting to work on the 10th issue of Summer Homes For City People, which will hopefully be available Memorial Day Weekend. If you’re in the mood to buy or sell Lake Geneva this year, I hope you’ll let me know.
It’s January. Time for snow storms that aren’t really actually snow storms, and lakefront price reductions. Inventory will build over the coming 30 days, and price reductions won’t be uncommon for existing inventory. That’s why I just reduced the price of 389 North Lakeshore Drive in Fontana $500,000. It’s $7.395MM now, and if you had been hemming and hawing over this place, it’s time to come take a look. The driveway is plowed.
There are few market segments that I find as curious as Geneva National. Under no other particular context does one association make up its own market segment, but here we are, knocking at these gates. The fact that this large association functions as its own market is something that vexes those who live and play there. Why can’t a buyer just be on the hunt for a Lake Geneva area condominium priced under $500k? Why must a buyer seek out Geneva National specifically if they wish to buy one of those condominiums? Why does a homebuyer who purchases a vinyl corn-field tudor for $500k neglect to first consider his options inside Geneva National? Does that buyer know that Geneva National is nicer, and objectively better?
For the year just ended there were 81 total MLS sales. Those sales ranged from small condominiums priced under $100k, to beautiful newer homes priced over $1MM (two sold over $1MM last year). As we sit just inside the parameters of 2019, there are only 36 available homes and condominiums (ten more properties are under contract), including two properties listed incorrectly in the MLS as single family homes (these are technically all condominiums). The fact that an agent listed two homes as single family might be a sloppy mistake, or it might just drive home the point I made in the opening paragraph. If you want to sell Geneva National’s single family homes, are you better off pretending they’re not inside Geneva National?
I think the answer is no. Or at least it should be no. Geneva National is back, and it really is better than ever. Sure, there are still homeowners residing inside these brick and cedar behemoths that were built prior to 2006, those with dated finishes that the owners don’t think are dated. Sure, there are still lots that can be bought for the price of a high mileage used Corolla. But the market has mended, and the volume from 2018 is a sure sign that things are back to stable. While I enjoy seeing lots of sub-$200k volume, the true measure of Geneva National is in how it deals with its expensive inventory. Continued high volume years would be nice, but that’s not necessary to continue the momentum that GN has successfully built over recent years.
Over the last six years, Geneva National has averaged 2 sales over $700k each year. 2017 printed just one sale at that level. 2018 closed four sales over $700k, and that might be as good of a sign as any for this embattled association. Sell the higher end inventory and you’ll give buyers confidence to move up in price. You’ll give vacant land buyers confidence that their new build makes some market sense. And you’ll give current owners confidence to update those awful 2003 bathrooms. Broad market activity is terrific, but the real positive out of Geneva National in 2018 was an increase in upper bracket liquidity.
To understand how far Geneva National has come, you need only look back to 2012. That year was likely the bottom of the last market cycle, and during that dark year Geneva National closed just 35 single family and condominium properties. For each of the last two years, GN has closed over 80 such properties. Current inventory is low, but there are several high dollar properties on the market today that will test the continued momentum of this large association. Will buyers at the high end appreciate the country club atmosphere, complete with new pools and tennis, to such a degree that they’ll provide liquidity over $1MM? Or will those higher value buyers continue to opt for the lakeside lifestyle that the Lake Geneva lakefront and lake access market provides? Only time will tell, but if I was a betting man, I wouldn’t bet against Geneva National in 2019.
When we entered 2018, we knew we had some inventory problems. This was widespread throughout the vacation home market, from entry level cottages to lakefront estates. What we also knew was that buyers rarely find the patience to stand back and wait for the perfect piece of inventory, instead they tend to wait for a bit, and then default to the next best thing. If you were looking for a lake access home with boat slip last year, you know how difficult the hunt was. The good news is that we can now test our theories: If there weren’t ample offerings with slips, then the market should have shifted towards condominiums as buyers looked for similar attributes and price points in a different ownership model.
The good thing for 2018 is that our model held up. Low inventory in the single family lake access market propelled sales of lakefront condominiums to a multi-year high. During 2018 we closed 15 total lakefront condominiums, up from 12 in 2017 and eight in 2016. If we look deeper into the trend, we know that buyers have shown an increased desire to be walking distance to downtown Lake Geneva. If they want a slip and want to be close to downtown and they have a typical condominium budget of less than $800k, then Vista Del Lago should have had a stellar year. Guess what? It did.
There were seven sales in Vista for 2018, priced from $355k to $580k. I personally sold two four bedroom units (the largest in the complex) for $520k and $515k, respectively. Those sales were off-market, as buyers looked for inventory that didn’t exist, and their smart agents contacted me to find out what might have been available privately (you should do the same). Vista has had some tumult over the past decade, but the best possible thing for any association that’s on the rebound is volume. Vista, congratulations on 2018.
Around the lake we had two sales at Geneva Towers, both lower priced sales sub-$400k. There were no sales at Somerset, Harbor Watch or East Bank, those three higher value condominiums on the eastern shore. Working around towards Williams Bay, Bay Colony closed two units at $565k and $530k, and there weren’t any sales at Bay Shore or Bay Colony South. Fontana Shores, that brick condo north of Gordy’s, closed two units. A two bedroom for $494k and a one bedroom for $405k. At the Fontana Club, over in Glenwood Springs, there were two sales, though the sales were of the same double unit. The combined unit (that I had sold previously) sold in early 2018 for $685k. Then the owners renovated it, and put it back for sale in the fall. It closed late in the year for $835k, likely representing a meaningful loss for the seller.
It’s fun when a market allows you to prove a theory, and in 2018, the mid-range vacation home market did just that. Some buyers, if faced with a lack of inventory in their target segment, will reach up. That’s common here. In fact, I can’t tell you how many buyers I’ve worked with started with a a target of $500k and ended up spending $900k. Lake Geneva can do that to a person. But what’s more likely, is for a buyer to look around at his desired price range, and in the absence of inventory, she’ll look away from single family homes and to the lakefront condominium. Prices have lagged in the lakefront condo market even as the single family homes have appreciated. That creates some value, and when you combine value with inventory, you have the makings of a terrific year.
Above, my amazing offering at Bay Colony, $799k
The year just ended was, by most accounts, a good year. But that’s a silly way to describe something as diverse and unique as a year. That’s like booking a table at Alinea and after four hours and 20 courses you take to your social media account to describe the meal as “good”. That wouldn’t happen, and that’s just a meal. How much more deserving of proper critique and detail is an entire year of our lives? Now that I’ve built this thing up, let’s dumb it back down and talk about the lakefront market in 2018. The year? It was pretty good.
We started 2018 with light inventory, just ten lakefront homes were available at the onset of 2018, and that limited inventory forced me to worry about what the year was going to look like. I knew there were buyers, plenty. I knew we had pending sales to give us a nice start to the new year. And I knew the stock market looked stable on the heals of a Federal tax cut. But what I didn’t know was how much more inventory we’d add, and how firm the buyer’s resilience would be if we didn’t add enough inventory.
That’s what matters, after all. The buyers. See, a Lake Geneva lakefront buyer is generally only a Lake Geneva lakefront buyer. But that motivated dedication only lasts for so long. If you have a buyer and they can’t find what they’re looking for, they’ll wait, for a while. They’ll come up to look at a lame new listing, and then they’ll come up again to look at another lame new listing. They’ll stay engaged, because the lakefront life is the life they want to live. But after time, that passion erodes into frustration, and frustrated buyers have a tendency to wander. Why spend so much effort waiting for a perfect lakefront on Geneva when Michigan has a whole state full of average vacation homes?
I know, and you know, and that buyer used to know, that a Lake Geneva lakefront is not like any other lakefront. But desperate times call for desperate measures, and I worried that the desperation of 2018 would lead some buyers astray, and no doubt it did. But the year just ended with 23 lakefront sales (24 with the vacant lot included), including two in the South Shore Club and one in Buena Vista (technically not private frontage). That number is down from the 2017 total, but considering the limited inventory, that number is a terrific total.
In all, we printed 2536 feet of lakefront shoreline, up from the 2017 total, but less than the 2016 total of 2882. That includes one lakefront vacant lot on the North Shore. We sold just over two million square feet of lakefront land mass, and more than 115,000 square feet worth of living space. Prices ranged from $11,250,000 for a North Shore estate, to just over $1.1MM for a Walworth Avenue cottage. For my involvement, I ended 2018 as the number one individual agent in Walworth County yet again (per MLS), with more than $35,000,000 in closed transactions, so that’s nice.
The lakefront loves its price per foot (PPF) measurement, that is, the total value of lakefront sales divided by the total amount of lakefront feet sold, this we all know. You should also know that I don’t love this measurement, as it really only seems to apply to lakefront homes in the 100′ range. 200′ lakefront lots experience compression of the number, in the same way that lots under 100′ tend to overachieve. We ended 2016 with a PPF of $27,193. We ended 2017 at $27,578. And after the activity and bustle of 2018, we finished the year at $27,684. For the buyers who think this market has spiraled upward and out of control, consider those numbers. Does that seem like unsustainable, unwarranted price growth?
For 2018, we’re going to look a bit deeper at the numbers. We know our market was skewed by the $11,250,000 lakefront sale, that of 415 feet of frontage and almost 20 acres. We had an average number of entry level lakefront sales last year, closing four lakefronts under $1.7MM. The remainder of the lakefronts fell into somewhat familiar price categories. Let’s throw out our outliers at the high and low of the market, and pull our 2018 numbers from the remainder of the lakefront transactions.
With that in mind, our PPF figure for 2018 actually goes up, to $27,994. If you look at the purest way to measure the accuracy of that number, you needn’t look further than the 100′ vacant lot that sold on North Shore Drive last summer. That 100′ sold for $2,750,000. That’s easy justification of the average. But there’s more to the lakefront than a basic price per foot tally, there’s also the average price per square foot of the structures themselves, as well as the price per square foot of total land mass. For these two figures, we’re going to keep with our habit of throwing out the high and low 2018 outliers, as well as the South Shore Club sales and the Buena Vista sale, as these are not true lakefront sales (even though the market treats them as though they are).
2017 registered an average housing price per square foot of $560. 2018 pushed that average up to $625. For the overall land mass statistic, we had a 2017 average of $58.09, whereas 2018 just printed a $51.66 average. Does that mean the value of lakefront land actually decreased in 2018? Of course not. None of these metrics individually tell the story, which is why to judge the performance of our lakefront market you need to figure and consider all of them.
Today, there are just nine lakefront homes for sale on Geneva. If you remove the Fontana home that has shared frontage and a shared pier, and you remove the Trinke property that has a lagoon between the home and the lake, then you’re stuck with just seven true lakefront homes on the market. Of those, the least expensive is listed over three million dollars. Not cool if you’re a buyer. But if you’re a buyer, I have some good news for you in 2019.
The recent tumult of the stock market is a difficult situation for the lakefront market. Rising interest rates don’t bother us very much, but a decline in invested assets does. With this in mind, our stable of confident lakefront owners will find a few who dislike what they see, and those few might offer up some inventory that will appeal to the 2019 buyers. To be certain, there are plenty of buyers still. The low inventory of 2018 didn’t scare away everyone, though I’m sure there’s some guy sitting at his Michigan vacation home this morning what it is that he’s done. Pray for this man, and his family.
I’m anticipating inventory will increase in January, and you’ll see reduced prices in a few of the 2018 carry-overs. Most sellers don’t care if the market slows, but again, if you’re a buyer, you’re not concerned about most sellers. You’re concerned only about the position of the seller who owns the home you’d like to buy. 2019 is going to provide inventory, and for the buyers who have been waiting, the question will be how the seller prices line up with buyer expectations.
I think buyers will be a bit more shrewd in this new year than they were last year, but I have a bold prediction to make: 2019 is going to be just fine. We’re going to sell lakefront homes. The market is going to provide inventory. We’re going to end 2019 somewhat flat in terms of valuations and volume, but flat is just fine with me. Flat, in fact, is good.
The stock market is going to either go up or go down, but one thing will remain. People want something more. They want a place that means something to them, and to their families. They want to enjoy their wealth. We can’t buy more time, and while I’m also sad that my Apple stock has cratered, that isn’t going to keep me from wanting to enjoy my family and enjoy this place. And I’m betting I’m not alone, because what you see below isn’t something you can replicate in the city or the suburbs.
In real estate, you either win sometimes or you lose sometimes. There is no such thing as winning or losing. You’re winning, a bit. Losing, a bit. Both, often, at the same time. That’s because you don’t have one boss, or two, you have dozens. Or more. They come and they go, they’re not your boss forever, usually. This is why I can be both hero and villain on the same day. In successive phone calls. Winning and losing, in the same breath. The goal of the real estate agent is to win a couple more times than you lose. To chalk up a few on the good side, to offset all of the ones on the bad. In 2018, I won quite a few, and it’ll mark my ninth straight year of winning more than I’ve lost. But don’t be confused, I’ve definitely lost.
In my case, those losses look like the homes that I haven’t been able to sell-yet. They’re the inventory pieces that didn’t quite work out- yet. They’re the sellers who have likely grown tired of me, but not quite completely tired of me- yet. With that in mind, here’s a run down on the scant few pieces of personal inventory that I haven’t been able to sell-yet.
If you’re looking for a condo on the lake, there’s really no better idea than this Bay Colony unit. It’s on the ground floor, which matters, a lot. You have a private outside entrance, so you don’t need to schlep your groceries through a common entrance and down a common hallway that may or may not smell like re-heated brats and mustard. The unit is fabulous. Obviously, tremendously, unavoidably fabulous. It’s easy to own, easy to use, and as luxurious as any hotel suite, assuming you’re staying at the suite with two bedrooms, two baths, a boat slip, lake views. Reduced to $799k, far below replacement cost.
If you’re searching for a lake house, but need a bit more flexibility than the condo can offer, then this property in Glenwood Springs is for you. This isn’t just some cottage by the lake. It’s the nicest cottage by the lake you’ve ever seen. Fully and outstandingly dialed, this Fontana retreat is finished to the highest standard. Four bedrooms, four baths, private pier (with shore station), lake views, and appointments that you just can’t find in this market in this price range. $1.295MM and your weekends will never, ever, be the same.
You won’t be surprised to learn that horses aren’t really my thing. And equestrian properties West of Walworth aren’t usually my thing, either. But this property was too interesting for me to turn down. 250+ acres. Woods, prairie, pasture, crops, river and hills. Swimming pool, tennis court, two guest houses. Stables and indoor riding arena, offices and more. This is a world class equestrian facility, yes, but you needn’t be a horse lover to find interest in this property. It’s a sportsman’s paradise, and it offers a rare assortment of features that you’d be hard pressed to find anywhere else in this market. $2.499MM
My newest listing, 389 North Lakeshore Drive in Fontana, hasn’t sold yet, either. But it will sell. Why is that? Well, because it sits on a most lovely piece of lakefront right in the heart of Fontana, and the house itself is one that you’d be hard pressed to replicate for the sales price. The lake loves new construction. It craves new construction. And it also features a host of owners who have spent fortunes in the hunt of that new construction. Why would you entertain the aggravation and time-drain of a new build when you can buy this nearly-new home and move right in? That’s right, you wouldn’t. $7.895MM
Speaking of new construction, my magnificent estate on Basswood is still, as of this moment, unsold. That’s a shame, really. We’ve done the hard work of reducing this price to the point where it now makes sense for an upper bracket buyer. 214′ of level Basswood frontage. Swimming pool, guest house, immaculate grounds. This home was built in the early 1990s and could be used immediately by a new family, much in the way that the current family has used, and loved, this unique property. Or you could buy it and renovate and when the last window treatment has been hung you could be all in for far less than it would have cost to build new, and in far less time. $8.495MM.
Bluff Lane is a nice little dead end street on the south shore of the lake. In spite of its small nature, this street has been a near constant source of inventory for our market over the last several years. My listing at N1939 Bluff has been for sale since the middle of 2017, first with another broker and then with me. It was a nice house, offering the sorts of things that most similarly priced houses in the 2018 market just can’t offer. In that, the house was complete. Five bedrooms, three finished levels, 70+ feet of frontage, a huge pier, perfectly landscaped grounds and a two car garage. I closed this listing last Friday for $1,950,000, but like all sales, there’s a bit of a lesson here.
When the property was first introduced to the market in the spring of 2017, the price was $2,295,000. That seemed a fair target for a house that offers so much by way of living space and amenities. The market was interested, but after several months the property failed to sell. There was at least one offer during that listing, maybe more. Then, I took over for the prior broker and put my angle on the listing. Another offer, but no dice. The price was adjusted downward in small increments. Then, this fall, another offer. A contract. But that deal failed to close. Finally, a new offer from a new buyer who saw the value in this property, but only at a price that made sense to him.
After 16 months of marketing effort, the property sold for $1.95MM. That’s no unique surprise, since several of the other offers that were received settled in a similar range. Try as we did, we weren’t able to get that sales price to $2MM. That was the goal, after all, to make or beat that benchmark. In spite of this goal, the property just wasn’t able to push a sales price to that $2MM level. Was it the house? Was it the interest rates? Was it the stock market? Was it the street?
Nope. It wasn’t any of those things. It was simply the reality of a property seeking to sell for $2.195MM. To understand why this property struggled, you must understand the typical buyer and the different price levels that separate groups of buyers. There are buyers that will pay $1.9MM for a house. Lots of those sorts of buyers, actually, each one successful enough in their regular life to pursue this vacation life. But a $1.9MM buyer is often a buyer who would love to spend $1.7MM or less. A $1.9MM buyer is often a $1.5MM buyer who found a bit more motivation to take on a bit more risk.
On the north side of $2MM, there are very few $2.1MM buyers. There are upper $2s buyers, those who might feel comfortable at $2.4MM but would reach to $2.9MM for the right house at the right time in the right location. But there are very rarely buyers who place a hard cap on their search at $2.1MM. In understanding the demographics and the price categories that most buyers align within, we can make more sense of the Bluff Lane sale.
Was it worth $2.2MM? Sure it was. But a $2.2MM buyer is often a $2.5MM buyer, and if they spend a little more they often find a property that more closely resembles their weekend dream. When the dust settled and the property closed, it closed as it likely should have. For $1.95MM, to a buyer who found his way to the lakefront at a price that made market sense for both buyer and seller. To the seller who allowed me to represent this fine lakefront home, I’m grateful.
The lake access market at Lake Geneva is not difficult to understand. In order to find this understanding, one simply needs to be open to the facts. In the instance of real estate, the facts are limited to sold comps. This is the only fact that exists in this business. Current value? Opinion. Future value? Opinion. Sold listings? Fact. If you’re open to the facts, then you must embrace the sold comps. If we’re looking at lake access markets, then the first comps to look at are inside of the association itself. If the immediate association cannot provide us those comps, then we’ll have to look at the broad market. In that there is an issue, because comparing associations? Opinion.
Last week, there were two lake access sales that caught my attention. One was important because I represented the buyer. The other was important because it just so happened to close for the same price, on the same side of the lake, during the same week. If there were ever two comps to be examined, these are those. The sale that I closed was in Shore Haven, this of a home that I have sold in the past. In fact, I sold it just last year for $675k when that seller was in the process of upgrading to lakefront. The home is nice, with some meaningful upgrades, a very desirable, large transferable boat slip, and terrific proximity to the water. This time around, I brought in the buyer, and the home was listed on a Friday and by Sunday we had it under contract. Did I enjoy negotiating only $5k off of a $720k list? No I did not. But the market, man. The market.
The other sale was in The Highlands, or the Lake Geneva Highlands, that association just to the East of Black Point. The Highlands has been gentrifying quickly over the past decade, and more so over the past few years. It’s a nice enough association and one of the few remaining on the lakefront where a lakefront home can reasonably be expected to trade under $1.5MM. The home in the Highlands was a cottage style home with limited parking, a scattered tree lake view, and a transferable boat slip. It was updated, quite cute, and in that desirable location just one home from the lake. In this description, you can tell that the Highlands home was closer to the lake than the Shore Haven home, and the view was much better. The homes were both of average size, though Shore Haven had a garage and parking while the Highlands home was more challenged on this front.
That’s the background, and here is how the market works in each association. In the Highlands, there have been five MLS sales per MLS of off-water, non-lakefront homes that have closed over $470k and under $587,500. Per the MLS, the highest sale for a home not located on the lake or on the lakefront parkway, was $587,500. The fact that five homes have all sold in this tight window proves the primary market range for a Highlands home located off-water. The home that just sold closed for $715k, and now that it’s sold we can all agree that it was worth exactly what someone paid for it. But in the context of the market, that sale price set a new upper end in the Highlands.
Looking back to Shore Haven, we see in the MLS has printed 10 off-water sales priced over $500k. Of those, all but one was over $624k, with the most expensive sale being at $1MM, and five over $800k. The sale that I just closed for $715k, looks to fit right into the middle of the Shore Haven range, especially when considering proximity to the lake and size/location of the boat slip. Was I deeply in love with $715k for this Shore Haven home? Not really. But did it make a load of market sense, particularly during this period of tight inventory and high buyer demand? You bet it did.
Both sales were fine for our market, but now you have a slightly opened window into the way that I view these lake access associations. Every association is unique, every association is nuanced. Some are capable of printing high numbers that make little sense, and others are range bound, now and perhaps forever. These two sales showcase the fall 2018 lake access market, and I think they both prove something important. Our market loves boat slips. It loves proximity. It loves a view. And sometimes it looks at historical sales patterns and determines they don’t matter very much. To the buyer who just allowed me to represent his family in their Shore Haven purchase, a sincere thank you.
Over the past few years, there have been some Bonnie Brae sales. Priced between $1.6MM and $3.8MM, these sales have all made market sense. The street is nice, the North Shore location desirable, the approach along idyllic Snake Road hard to beat. Of these sales, three in total, each property that sold has since been transformed by the new owner. One of the homes that sold was torn down to make way for a splendid new lakefront retreat. Another was significantly renovated and expanded, so much so that you’d be forgiven if you thought the current structure was built recently from scratch. The other home that sold has been improved, updated, cleaned and polished. Lakefront owners like to improve their homes, this much we know.
This week I closed my newest lakefront sale on Bonnie Brae, for $3,800,000. This one of wide frontage and delicious, dark, deciduous depth. The home was the renovated and remade Ryerson boathouse, one of the last few remaining on this lake, and likely the only one that stands on a large estate sized parcel of land. You can read about it here, and watch the video below. It was a great house, and it was no wonder that it sold shortly after coming to market in late September. Certain sales befuddle and certain sales confirm what it is that we already understand. This sale was obvious. Beautiful dirt with a charming, historical home, all at the end of Bonnie Brae, which finds its way along Snake Road. What’s not to like?
For me, I remain appreciative and grateful to those clients and customers who choose me to represent their fine vacation homes. This market is loaded with competition. Every agent is the best, the newest, the most amazing. I’m just here in Williams Bay, sitting at this desk that’s really just a few long oak boards bound together by glue and screws. I’m thankful for the chance to assist all of my clients, and this seller was no exception. To the seller, a sincere and lasting thank you. To the buyer, who now gets to experience this place from the front row, congratulations.
There’s a thing about my dad that you wouldn’t otherwise know. He’s a quitter. Sure, he’s been married for a long time to my mother, and yes, he taught school in the same building for several decades, but don’t let that deceive you into thinking there’s some steadfastness here. He quits. He starts something and then when it’s started he’s worried about the ending. He leaves for vacation thinking about the drive home. He naps on a Tuesday because he’s worried about having to stay up until 8:30 pm four days later. He starts things and then he stops them. He’s worried, alright.
But none of these worries, and none of this quitting are quite as pronounced in July as they are in October. He will enjoy certain things, for certain periods of time. He’ll enjoy a swim now and then, though this is less than it once was and less than it should be. He’ll enjoy a boat ride, every great once in a while, which is also less than it once was and less than it should be. But mostly, he’ll enjoy July just fine. It’s Labor Day when things change, or the week before that holiday weekend starts. September, the month we know to be one the finest months ever included in a calendar, this is not a month for him. Anticipation builds to a crushing weight, and while the rest of us are frolicking in the midst of a late summer glow, my dad is worried.
September fades to October, and the colors dim before they force out one last dying display. We like it when this happens. But my dad doesn’t. This display is a head fake, and he knows it. He’s in this for the long haul, and he’s been here before. It’ll be winter soon. He can smell it in the air and feel it on his old skin. October is nothing but warm, colorful winter. While others think of a trip to the lake or a trip to the cabin, he thinks only of that pier and those boats and why hasn’t the pier guy come yet? It’s October 10th, it’s 70 degrees, and winter is coming soon. There’s nothing else to worry about. Nothing else to think about. Winter. Soon. Repeat. Gaze at the fall colors all you want, youngsters.
When October ends, things get serious. Real serious. The boats the pier, the buoys and the ramp. The things that he worried about in July and thought about in August, and stressed over in September and nearly died over in October, some of them are still there. Still in view. Still in the water. That water that somehow hasn’t turned to ice yet. But it will, soon. Water always turns to ice here, and he knows it. He can sense it. You know what happens when you don’t get your pier out in time? The ice comes and takes your pier away to the depths. He saw it happen once. Never again. Not on his watch. Winter is coming and he needs to get ready.
But he can control the boats, and so they’re already out. Tucked away in their barns where they spend most of their days. The pier, that’s still there. Still bothering his view and interrupting his winter thoughts with a stubborn summery holdover. But the one thing that really drives him to insanity is my little jetski. Yamaha’s Superjet, to be precise. It’s his white whale. The thorn in his side. His nemesis. And I know this. Which is why I leave it in the water as long as humanly possible. Long after he thinks it should have been out. Long after everyone else thinks it should have been out. Long after the water has chilled to a level that humans should never experience against their skin. That’s why I wait, and that’s why this week I was left with no choice. I pulled the superjet.
I don’t pull it like you pull yours. I don’t call the company and have then deliver it to a heated storage unit. I wait until it’s November and my dad has nearly lost what’s left of his mind, and then I put on my swim shorts and I strap on the life vest and I coax that cold little engine to life. Then I drive it, near the piers and close to shore, inside the summertime buoys that have no control over my November path. And to the launch. The ride is cold. The ride is wet. To fall is to die, because this isn’t some sit down waverunner with seating for four. This is a water jet, built for those of us who were kids in the 1980s. My feet lost feeling, allowing me to only notice the cuts left by the mussels and the rocks once I returned to the heated indoors. The ride is difficult, but I wouldn’t have it any other way. It’s the last piece of summer, and I hang onto it as long as anyone ever has. Sure, it’s only to bother my dad, but it’s worth it.
After some good old fashioned pot stirring on Monday, it’s time to get back to the business at hand. Specifically, the business of the lakefront market. A few weeks ago I listed a home on Cedar Point, right up next to the tippy top. Like all listings, the work to secure and bring that property to market had been done over the prior six or more months. Now, at this date in late September or early October, the work would show its result. A new listing, $2,595,000 on the outward facing corner of Cedar Point. Photos were scheduled for this property, but the weather was dark and dour and I am not one to impose a false blue sky above one of my listings. Nor am I the sort that would paint our Midwestern water with a Caribbean brush. Because of the weather and my photographer’s schedule, the listing would be held back for a couple of days. Just a couple.
When you’re dealing with lakefront homes, a couple days is often the difference between an available home and a sold home. In the case of 254 Circle Parkway, I ended up selling the home on the very day I brought it to market. A showing, an offer, a contract. A closing at full price less than a month later. That’s how this business works every once in a while, and in the case of this Cedar Point home, the right buyer was made aware of the property and that buyer didn’t hesitate. Many buyers view this market as one homogenous mass. A home over here is the same as a home over there. A view to the South is just like a view to the North. These buyers have it easy, because geographic preference is meaningless. If you can choose to be a sort of buyer, choose to be this sort of buyer.
But for others, location is everything. It’s the neighborhood they grew up in. It’s the neighborhood they admired, always from afar. It’s the street where grandpa had his cottage, the basic one without fancy that meant everything to that family so many years ago. When you’re a buyer in this market and you are face to face with a buyer who has geographic bias, you should admit your defeat and move towards the next listing. The one that might be here or it might be over there, but it doesn’t matter to you, remember?
With my recent lakefront sale, I’m happy for the seller whom I represented and the buyer I assisted in accomplishing what I believe was a lifelong goal. In the end, a Cedar Point home with five bedrooms and a dynamite boathouse sold to a family with Cedar Point ambitions. In the world of real estate, where much of it is cutthroat, this was a sale that should have happened, and I’m appreciative to the buyer and seller for letting me connect the dots.
When you’re part of an industry that puts significant focus on calendar year performance, you tend to look up in late October and realize you’ve run out of time. In the same way, I have a theory that I gladly share with dinner guests and random acquaintances, but this theory has to do with life and not real estate. The two, no matter what your agent says, are not the same. My theory supposes that when a man, or a woman, is in their late 30s, they are no longer about to be something. They are no longer going to do something. They are no longer on their way to some different goal. In your late 30s, when you look in the mirror, you likely are what you are. Some people find this depressing. I find it oddly comforting. When the 2018 real estate market looked itself in the mirror this morning it wasn’t about to be something different. At this late date, 2018 is what it’s going to be.
But what has 2018 been, exactly? When the year began, I was worried. Worried about the stability of the stock market, worried about inventory, and slightly worried about interest rates. If the first two caused were gaping knife wounds of worry, the last one was a paper cut, and not one of those finger tip ones, either. If sellers wouldn’t sell into this market, then buyers would slowly lose patience, and they’d either jump ship and run with their tail between their legs to Michigan or some other terrible place, or they’d just hunker down in whatever it was that they already owned and wait for the inventory to arrive. At this point in 2018, the inventory did arrive, but it didn’t exactly satisfy the masses of buyers.
Still, inventory presented and then inventory sold. Some aged inventory sold as well, and it this late date in 2018 we’ve closed 20 lakefront homes with three more under contract as of this morning. The only three lakefront homes under contract (per MLS) are all my listings, which is nice. For context on that lakefront performance, consider YTD 2017 we had closed 24 lakefront homes. Does that mean the market has slipped? Of course not. It just means 2017 offered more inventory to choose from. The better context is to look back to 2012, the year that marked the low point in our recent cycle. YTD 2012 we had closed just 16 lakefront homes, and that had little to do with inventory and everything to do with worry.
The broad vacation home market, those homes with lake access with typical pricing between $200k and $1.7MM, has had itself a solid year as well. Inventory deficiencies plague this segment as well, but in spite of that concern we’ve managed to close 58 lake access homes in 2018. An additional 12 are under contract as of this morning per MLS. The condo market is fairly similarly well, with 31 YTD sales of condominiums possessing lake access to Geneva. This is a vague measurement, as it includes some bits of inventory that I wouldn’t normally consider when adding up these totals (like dockominiums, etc), but it matters if we’re just assessing the overall volume performance of the segment. YTD 2017 printed 34 sales, and YTD 2012 had closed 30. Keep in mind, this is including Abbey Springs and others, so it isn’t a pure measure of the lakefront condo market performance.
Speaking of that lakefront condo market, it’s moving quite nicely at the moment. There are two lakefront condominiums under contract as of this morning, leaving just 8 true lakefront condo units on market. As we steam towards the end of 2018, expect to see some sellers following the move of my Bay Colony seller, as price reductions hope to tempt buyers towards a few pieces of overlooked inventory. My Bay Colony listing, by the way, is now $799k, with a slip and likely the most high end interior space of any condominium on Geneva lake, excepting Stone Manor, of course.
Expect inventory to remain low through the end of the year, but don’t be surprised to see some new bits and pieces come to market over the next 30 days. Price reductions should increase over the coming two or three weeks, and the market will wind down by printing much of the remaining pending sales. 2018 has been a good year, and looks to leave us staring at 2019 with an eye on the stock market, and the hope for new inventory.
Above, my Bay Colony offering. $799k for so much lakeside luxury.
After a market downturn occurs, we must set our aim towards the goal of complete and thorough recovery. If that goal is to return a specific market segment to full health, then there are several steps that must be followed. There is no shortcut to this health, and you cannot out-volume a market issue any more effectively than I can out-lift my horrible, no good diet. If the market was bad and we wish the market to be good, then the steps must be followed.
The first step is to weed out any weak hands. Financially troubled owners have a tendency to drag on a market, negating any market gains with the constant, worrisome threat of foreclosure. If volume is printing but prices are still falling, this is generally acceptable, and will, over some period of time, work out in favor of the ownership. But if there are pieces of weak ownership that have the ongoing possibility of some form of distressed sale, this creates market drag that volume alone cannot overcome. This scenario occurred in the South Shore Club in the early years of this current decade, and the only way the SSC moved forward was by eliminating those trouble spots, which unfortunately only occurs after an owner has lost their home to the bank.
With the weak spots identified and fixed, then we need volume. Plenty of volume. We need sales in all price sectors within that segment. Some prices will be low, and we cannot be too concerned about this. If an average price in the segment is $500k, and over a particular duration there are two sales around $400k for every sale around $500k, that’s not a big deal. It’ll feel awful, but remember, the goal is not immediate health but rather a path towards it. It’s painful to watch low sales print when you know they’re creating an issue for those who wish for higher sales, but I never said this path was going to be fun.
With the weak owners flushed and the volume on the rise, the third step is bright spots of higher valuations. A sale here and there over the expected average of the segment. If we’re in this $500k range, then we’ll need to see some sales print higher- $525k, $550k. There will still be lower sales, sure, but the momentum is achieved by raising the expected ceiling. Higher sales beget higher sales, and all it takes is one or two of these sales to move a market higher.
Step four is the strengthening of volume. We need more sales. More and more sales. New listings, shorter Days On Market. Movement, that’s what we need now. Liquidity is important to both establish the market pattern and introduce new, energized ownership to a segment. The reason new owners matter is because they tend to make improvements. Remodel the kitchen, update the bathrooms. New appliances, new tile, new paint. This shows a potential buyer that they’re surrounded by neighbors who value what it is that they own. Increased volume is vital to return a market to health.
The last step is a tightening of inventory. True price gains cannot be realized if there is ample, sufficient inventory. We need limited inventory, tight conditions. We need buyers asking about product in that particular segment, be it a specific association, condominium, or price range. Without this last, crucial step, a market cannot return to full health. If you doubt these steps, consider each and every step has occurred in sequence within the South Shore Club over the past eight years. The good news for the local condominium market is that Vista Del Lago appears to be following the same, successful path.
Last week, I closed on another four bedroom unit at Vista Del Lago. I sold one in May for $520k, and I sold this recent one for $515k. Both sales represent meaningful volume for this association, and both sales prove that Vista is on the path towards full health. If you’re a condo buyer on Geneva, you generally have options with two bedrooms. Some association have three bedroom units, and some have four bedrooms. But the four bedroom condominiums tend to be pricey, located in higher-end associations like East Bank. Vista offers four bedroom units for $520k, and as long as families want a view of the lake, a slip, and a place to sleep, Vista will have a market. Speaking of the market, there are only three available units at Vista this morning, and none of those are four bedroom units. Vista isn’t yet finished with this plan, but as you can see, it’s well on its way.
I’m not sure if there’s a more interesting segment in our market than the entry level lake access market. While other segments exist because particular homes move in and out of that defined value range, the entry level market is truly the only range for which their is no defined price structure. When times are good, entry level might mean $1.5-2MM. When times were bad, we learned that entry level meant $800k-$1.2MM. If we look over any particular decade in our past, there’s nothing consistent about the pricing of this segment. In that, it’s a curious segment, but beyond that, it’s also our most important lakefront segment.
Yes, yes, we know liquidity at the top end is the most unique attribute of our market. We know our liquidity makes every other vacation market in the Midwest look like a low quality timeshare rental. But still, in spite of that robust upper bracket strength, the entry level market is the market that matters to more people. The goal of vacation home buyers, if the budget affords, is to find lakefront. Knowing that the entry level market is directly connected to the upper-end off water market, we know that if the entry level market struggles then the off-water market struggles. If the off-water market is strong, then that must mean that not only is the entry level market strong, but it’s light on inventory. These two markets are connected, and 2018 has proved that once again.
This isn’t about the off-water market, even though it is remarkably strong and liquid as a direct result of the low inventory and sales patterns of that entry level lakefront market. This is about the entry level market itself, and what 2018 has done to it, and for it. This year, there have been four lakefront homes sold between $1.1MM and $1.25MM. All four of those properties had around 50′ of frontage, and three of the four were on Walworth Avenue in Williams Bay. If you’re familiar, Walworth Avenue is the road to the North of Pier 290. The other sale was in the Elgin Club.
The fact that there have been four sales in this segment isn’t surprising. It is somewhat surprising that the prices, in spite of the spectacular market activity of 2018, have been somewhat stagnant in that tight, low buck range. While the homes that sold were certainly habitable, it wouldn’t be a stretch to suggest that they are all in need of some additional attention. Whether that comes in the from of wide-scale renovations or surface improvements, that is up to the new owners. Will any of these four be scraped to make way for a new home? No one, except the owners, can answer that question.
Walworth Avenue hasn’t shown any real strength over the mid-million dollar market. There’s a giant newer home on that road, one that represents a significant investment, but is that an individual pursuing what is best for that individual, or is that a market market-minded play? Will Walworth Avenue soon be home to more tear downs, to more new construction? And if so, will that new construction find favor in the market? I honestly don’t know the answer to my own questions. I’m inclined to suggest that new construction in that location wouldn’t be a wise play. But I know the tight inventory markets on the lakefront between $1.8MM and $2.5MM, so it wouldn’t be crazy to suggest an owner could pursue new construction here, even though the neighborhood hasn’t shown the ability to support it.
There have been a few other happenings in the entry level market this year, notably a pending foreclosure in the Lake Geneva Highlands and a private lakefront sale on Outing Drive. You’ll remember the Outing house, as I had it for sale earlier this year, and another agent had it for sale for a spell as well. The home sold in what appears to be a private sale for a price (as shown in the transfer rolls) of $1,525,000. That’s a reasonable price for that house. The Highlands lakefront is one that was on market last year and under contract (per MLS), but failed to close. That home is likely valued in the mid $1s, and I’ll be curious to discover if it comes back to market as REO, or if someone takes a stab at it through the sheriff’s sale.
Today, the entry level market is once again void of inventory. The lowest priced home with frontage is over in Trinke’s, a property with the lagoon in front of it, priced at $1.85MM. The next available lakefront is to the East of there, priced just over $2.2MM. This is a tight market, and a difficult one for would-be lakefront buyers. What’s interesting here is that the lack of inventory and consistent sales really hasn’t translated into valuation gains in this segment. I’d expect that’ll change if the market stays tight for too much longer. Maybe it won’t change at all until someone breaks the pattern on these entry level streets and builds something new. Something that seems out of place, something that doesn’t make sense. Or at least it’ll feel that way until everyone else does it, too.
One of the many benefits of this strong vacation home market is that I get to test my theories on a daily basis. These theories were first penned when the market was in rough shape, which was just a few years ago in reality but so much farther away in the minds of 2018 buyers. The theory relating to the off-water lake access market over $1MM was simple. If lakefront homes were plentiful in the $1-2MM range, then off-water homes in same range would suffer. Why buy off water when the same price put you in the front row? In the same way, if $1-2MM lakefront homes were scarce, then off-water homes in the range would attract buyers. Lake Geneva real estate can be quite simple.
Simple as it may be, the theory was difficult for many off-water sellers to understand. During those dark years, most off-water homes that sought to capture a $1-1.5MM sales price ultimately languished on the market and fell victim to the price erosion that is a hallmark of lengthy market exposure. Most of those homes ended up selling, but rather than finding buyers in that $1MM+ range, most of these homes sold between $900k and $1MM. Buyers rejoiced, sellers wept.
Over time the entry level lakefront inventory dried up, leaving available only true cottages on small lots in modest settings. As that inventory shrunk, buyers turned their attention to the off-water homes that meant something. A slip, a view, a pool, some privacy. Maybe a combination of all of those. In the fall of 2016, I printed the sale in Loramoor for $1.625MM. Then another sale in Glenwood Springs for $1.1MM. Then, in 2017, a super high priced print with no slip in Oakwood Estates north of $1.2MM. In 2017, another in Maytag Estates in the same range. Then a sale in Fontana north of $1.3MM. The market was moving, and buyers were once again looking for off-water properties simply because the on-water options were so scarce.
Last month, a new offering in this range. This one on Southland, or Black Point, as the tax records would show. $1.699MM for a few acres of wooded bliss, some terrain, a pool and a slip, a large home with pedigree, outbuildings and more. This was a property that the market rarely offers, mostly because it has no true rival. There are locations where off water homes will sell upwards and north of $2MM, but those associations are rare and historically light on inventory. The Lindens, Black Point, The 700 Club, Loramoor, Glen Fern. These are the rare associations, made that way by decades of low inventory and highly polished homes. These are the associations that matter to this segment, and this particular home was among the most rare inside even unique settings.
That’s why a buyer whom I was pleased to represent jumped. We closed on the house last week for full price, which is nothing to be ashamed of. In this context, full price was required, and full price was still less than the seller had paid for the home in the fall of 2011 when the market was in awful condition. To further prove the strength of this off-water market, consider the home that would come to market just a few weeks ago in the 700 Club. That home hit the MLS at $1.495MM and promptly received multiple offers before finally settling at a contracted price that is rumored to be far over the ask. The market doesn’t always love off-water homes over $1.5MM, but if you give the market something unique in a highly desirable setting, the buyers will find it.
To this buyer who let me guide them through this curious segment of our vacation home market, I thank you. There’s an opportunity at this property to transform it into something without equal in our market, and I’m hopeful that the end reality matches your unique and exciting vision.
In the morning I wake up, clean up, dress up (down), drink the espresso that my wife kindly makes me, take my kids to school, and go to my office. I do this five days a week. On the other two days, I skip the part where I drop the kids off at school. When I get to the office, I turn on the lights, sit down at this desk, and check the MLS. I check the new listings and the sold listings, the reduced listings, too. I think about what to write about. I think about the weather and the scenery, the lake and the sky. I think about the trees and the tinge of whatever color might be deepening or fading. I think about the lakefront market, the lake access market, the vacation home segments in their pieces and as a whole. And then, when I sit back and consider everything I just say, “man, people are paying lots of money for really basic subdivision houses.”
Most days, I ignore those primary market thoughts, and write instead about lakefronts and the sort of real estate that interests me and my clients. But today, the primary market interests me, because this trend is established and it’s serious and I can no longer ignore it. The primary market is hot, all segments, all prices, so long as we’re talking about less than $400k. Some of the primary neighborhoods are selling for more than $400k, but not with particular regularity. Those primary home subdivisions that I wrote about with fervor a few years ago have come to life, and buyers appear to be content to purchase their own version of vinyl perfection.
When I wrote about the state of the primary market, the subdivisions were mostly idle. Some construction, but not much. In the three years that have followed, the construction market has boomed. New homes are being built with frightening speed, slapped up in a matter of a couple months. Efficiency, claims the builder. Haste and synthetic materials, counters this Realtor. But still, the market is hot and I’m curious to see what, if anything, today’s buyers have learned from the past market cycle. That cycle, in case you forgot, was especially hard on neighborhoods for the simple reason that platted neighborhoods tend to function as their own specific market. If there are four comps on the road you happen to live on and all of the homes were built to a similar standard at a similar time, you can bet your value will be seriously impacted by the sales of those nearby homes.
To check on the market, let’s look at a few random, recent new home sales in the new home subdivisions on the west end of the village of Williams Bay. I won’t identify the owners or the addresses, but let’s look at sale price ranges and mortgages pulled to gauge the strength of this homebuyer. That strength is important simply because the market isn’t going to appreciate forever (too bad, OpenDoor), and once the market stalls, those with the smallest percentage of equity are the most likely to face difficulty. The first sale was well over $400k- a price threshold very rarely surpassed in the primary market. A check of the mortgage reveals the buyer only financed around 80% of the purchase. Good for them, and good for this subdivision.
Down the road, another sale. This one also over $400k, this one to a buyer who appear to have financed around 85% of the purchase. Another winning data point for this subdivision, as another strong buyer has entered the fold. The next sale was a bit under $400k, and that buyer looks to have put less than 4% down. Another sale in a different subdivision, this one in the lower $300k range, this one to a buyer who put around 5% down. Another sale, this one just over $300k, the new owner putting around 4% down. There are other examples, some with 20% down, others with less, but the concept here is simple. If you’re buying into a hot subdivision, paying hot subdivision 2018 prices, and your neighbors are, perhaps 40-50% of the time buying their homes with less than 5% down, is this is a solid model for sustainable values if we head into a down cycle within the next 4-6 years?
Personally, I don’t think it is. That’s why I wish primary home buyers would exercise caution as they rush to these newly drywalled homes. I understand the desire to be in a new home, but I’d rather be in an older home in an existing neighborhood than be surrounded by a constant cloud of low-money-down-construction-dust. An interesting side-note from my market studies of 2015 and 2016 is the desirability of subdivisions that are close to schools. If kids can walk/bike, or otherwise easily get to a school, the subdivision tends to be fairly hot. If the subdivision is outside of town, without a nearby city center or grade school, the subdivision is still somewhat stagnant. If you’re a primary buyer considering a new home priced $450k and under, please be cautious. I say that fully knowing caution doesn’t play a role in a hot market, no matter how badly I wish it would.
It’s a curious thing to watch buyers as they watch the market, and the houses that exist inside of that market. Buyers are attracted to various things, to shiny, for sure. They like marble and they like glitz, and even the most staunch defenders of Location First cannot help but be dazzled and drawn by the varying shapes and sizes of housing perfection that exist here. But beyond those things, there are locations that speak to buyers in different ways. One buyer might find a location to be busy, dense. One buyer sees that scene and they decry their lost privacy, their potential involvement with their neighbors, their exposure. And yet another buyer comes to that same scene and feels at home. They feel at peace with those same surroundings. They thrive off of the activity, the proximity, the scene. To each his own is just a saying, until you come to these shores, at which point it becomes a most steadfast rule.
This week I closed 274 Sylvan in Buena Vista for $2,775,000. The house was special not just because it shared that glamor of sparkly hardwood and expensive appliances. It was a vintage home made to live like a modern one, but still filled with the original touches that made it feel rooted on that shore. Buena Vista isn’t an association for everyone, but that’s only because there wouldn’t be enough houses to go around. There are tennis courts, an ample lakefront park and pier system, and then these scant few lakefront houses. A dozen, perhaps. These few lakefronts on this Northwest shore of Fontana Bay offer a classic lake experience combined with dynamite views of the lake and an easy stroll to Fontana’s lakefront scene.
To speak to the unique nature of this now sold offering, consider the last MLS sale to come to market here was this same house, when I sold it in the spring of 2011. Who can know when the next Buena Vista lakefront will come to market? Like every lakefront sale on this lake, once a property is under contract or sold there are numerous buyers who wish they had bought it, and this home had its fair share of regret filled buyers. That’s because it wasn’t just an old cottage on the lake. It was an old cottage with a recent addition and important updates, but it still oozed that vintage appeal. That appeal isn’t easy to find on this lake, especially if you’d like to find it in Buena Vista. To the owners who allowed me to represent them in this sale, I thank you. To the new buyer who gets to enjoy their weekends in an entirely different frame of mind, congratulations.
There’s a simple thought relating to markets like ours that supposes a specific pricing segment should prove active in different market segments. The theory would say that if $300-500k condos are selling, then those condos should be selling whether they’re on Geneva Lake, in Geneva National, or Abbey Springs. In the same way, if a $400k lake access home in Loch Vista Club is in demand, then a $400k lake access home in Cedar Point Park should also find an audience. The theory isn’t very difficult to understand, but markets don’t always behave in the most obvious ways.
Consider the lake access market on Geneva Lake right now. There are 34 active homes priced under $700k. Of those 34, no fewer than 12 are pending sale. That’s a very active market segment, with offers flying and summer contracts set to close next month. If that market is supremely busy with buyers seeking a reasonably priced vacation home experience, then the other specific vacation home segments in a similar price range should be similarly active, right?
Abbey Springs currently has 19 available condominiums and single family homes. Of those 19, the MLS shows not a single pending contract. Year To Date, Abbey Springs has closed 18 condos/homes, which isn’t awful, but it certainly pales to the 24 such sales for 2017 YTD. If there weren’t inventory, I’d understand the difference in activity, but there is inventory, even if it is a bit light.
In the same way, Geneva National has 57 available condominiums and homes priced under $700k. Of those 59, twelve are pending sale. That’s a decent amount of activity, especially for Geneva National, which has had its fair share of ups and downs over its lifespan. If the lake access market has approximately 35% of its under $700k inventory under contract, and Geneva National has 20% of its under $700k inventory under contract, then what’s eating Abbey Springs?
The answer, likely, is nothing. It’s just the unique nature of the Lake Geneva vacation home market. That’s why I write this blog as often as I do. Markets here hinge on such low overall volume that a good weekend can right any listing ship. If there were three or four new contracts written in Abbey Springs last week that have yet to show in the MLS, just like that we’d see Abbey Springs marching in lockstep with the remainder of the vacation home segment. If you’re trying to figure out the exact rhythm of sales at the lake, don’t.
A Wednesday reminder that my listing at W4396 Basswood Drive is still available. I just reduced the price of this home to $8,495,000, and it’s now offered at an extreme discount to replacement value. Consider the pending sale of a home in Lake Geneva listed at $14,500,000. Now consider buying this home, renovating it, and being all in for far less than the sale price of that nine year old home. It doesn’t take a genius to make the right moves in this market, it just takes a bit of effort. Contact me for a private tour of this most lovely estate.
It might seem strange to even mention the term Price Reduction during this remarkable summer run. With sales popping and records breaking and everyone in the Midwest clamoring for a vacation home in Lake Geneva, why would we even bring up such a thing as a price reduction? It’s a wet blanket, really. It’ll throw off our momentum, ruin the buzz from this Kool-Aid fest. The agents who vie for your attention don’t want you to think about price reductions, they want you to think about how you can buy that home NOW! Need help figuring out how to win a bid on a Lake Geneva area home? You’re in luck, some agents are holding seminars to teach you (YES YOU) how to win the bid.
But this is all ridiculous, really. The truth of our market is that it’s hot, yes. All price segments are hot. All categories and sub-categories. Except vacant land in Geneva National, of course. A lot just sold there last week for $4000. That’s the price I paid for a 1986 Saab 900 with a questionably service history and 130,000 miles, which, in Saab miles, is at least 1,000,000. Every other market is hot, every home in demand. So why talk about Price Reductions? Well, silly, because ’tis the season.
See, smart sellers know that while our market is active for each of our 12 months, there will be a dip in overall activity once school starts. Knowing this, sellers with relatively aged listings are faced with a decision. Reduce now or reduce later? If they’re smart, they’ll reduce now, while there are a few extra buyers in the market. Something I’ve heard often this summer is a buyer’s plan to wait until the off-season to buy. Prices will be lower then. This is the position of the uninformed, as Lake Geneva doesn’t cycle based on seasonality it lives and dies on inventory. If inventory presents in August and it’s right for you, then buy it. If it presents in January and it’s right for you, then buy it. Don’t base decisions on the color of our leaves.
Still, sellers recognize the market will ebb and flow, and if a reduction is in the cards, now’s the time to make that move. Recently, I’ve been applying this to some of my listings, because I’m smart, and my sellers are smart, too. I dropped the price of my W4396 Basswood listing $500k to $8.495MM. That home, by the way, offers value far and away better than the pending listing in Lake Geneva priced at $14.5MM. Far. And. Away. Like with Tom Cruise, but different. I just reduced my incredible Bay Colony offering to $879k, even after we came close with several different interested buyers over the past few weeks. Why reduce in the face of activity? Because activity only counts when the result is sold.
Around the lake, there have been reductions. A new home on the north side of Fontana dropped its price not so long ago, as did a newer home on the south side of Fontana. I dropped my Clear Sky Lodge listing $120k. A home in Cedar Point Park that came to market earlier this year has been reduced several hundred thousand dollars, as that seller searches for a buyer. Off water, a home in Academy Estates has endured a series of micro-reductions this year, and a listing in Shore Haven just dropped in price last week. For all of the buyers claiming this is purely a seller’s market, have you considered any of these properties that are bleeding from self-inflicted chops?
It’s August, and it’s still summer. In fact, this past weekend was one of the more active, glorious weekends of the entire year. In spite of this, sellers are making moves, and if they’re serious about selling this year they’re going to be adjusting their prices a bit. Consider the market this month, consider the aged inventory, and be on the look out for price reductions. And as always, let me know if I can help.
Above, my Bay Colony Condo, just reduced to $879k.