I once had a customer who told me that the Lake Geneva real estate market lags behind the California real estate market, but that everything that happens in California will, ultimately, happen here. He told me this because he wanted a huge premium for his Lake Geneva home, and he figured that if he convinced me of the coming surge in prices that I, in turn, would be able to convince everyone else. He ended up being wrong, about that, and about other business things he did here, but the main sin in my eyes was his assumption that whatever California introduces Lake Geneva adopts. He was, and is, wrong.
That’s why I hate seeing real estate stories originating in California that portend to carry some weight. Most recently, a Business Insider article about the craziness of the San Francisco housing market. Homes, it seems, are selling over ask with alarming regularity. Not barely over ask, mind you, but ridiculously over ask. As in, one home just sold for 80% over its asking price. As if I need sellers to feel ever more confident. The article, presumably based on some version of some truth, goes on to say that the average San Fran home sold in less than two weeks and 69% of those sold for more than their asking prices. To those who would wish Illinois to collapse under the weight of its own taxation, consider the income tax of those poor souls in San Fran who are greedily gobbling up these homes.
My issue with the BI story isn’t what it tells us of the hyper-local San Fran market, but what it tells us of the national market. It says, in context that makes these following numbers seem pale and unworthy when compared to the titillating numbers from CA, that while the average SF home sold in just two weeks, the national average is around a month. A month! Could you imagine the horrors of a month on market? Me neither. At Lake Geneva, market times vary wildly, but it isn’t difficult to imagine market times far exceeding 12 months for many properties, and a round about average market time of 4-6 months is probably a fair estimate of our true latency from list to sale.
The story goes on to tell us that while SF has had 69% of its homes sell over the ask, we national pukes have only, on average, 24.5% of our homes sell over the sticker price. This is what they tell us, and this is what I do not like, nor do I believe. Do you? If four homes were for sale on your street, do you suppose one of them would sell over ask? If we sell 20 homes on the lake this year, will 5 of those sell beyond their tag number? If I put my car for sale, on the side of the road, are you going to pay me more than I want for it? Well, of course not, but that’s because you’re reading here, and excepting one commenter, we are all incredibly sane.
Never one to assume much, I looked back at the 74 lakefront and lake access sales that the Lake Geneva vacation home market has tallied over the past 12 months. The BI story cites Redfin for its statistics, so if those algorithmic geniuses at Redfin are correct, or at least reasonably close to being correct, we should see around 18 of those sales register over the asking price. The actual number? 2. Two. One of those was a dump for around $110k somewhere, and the other a home in Country Club Estates that closed for $10k over its ask, as a result of multiple offers on the home. That $10k represented approximately 1% of the value of the home, so while San Francisco has homes that sell for 80% over the ask, we at Lake Geneva can proudly tell you we once had one home sell for 1% over its ask.
But that goes back to the moral of this story. Lake Geneva is a Midwestern market, for those not paying attention. Midwestern markets behave entirely differently from coastal markets, or those overheated by easy tech money or international investor types who like just about everything they see. Remember that Million Dollar Listing New York where the smarmy agent hires a bunch of hacks to make cold calls to China to see if someone wants to buy an otherwise horrible condo that couldn’t be traditionally sold? Remember when some poor sap in China pays way over the ask for that place, sight unseen? So do I. The way that TV bit would play out in Lake Geneva would be rather sad.
Me, at the phone. Me, random dialing some person in Chicago. Hello, I say. They say, hello. I ask them if they’d like to buy a condo at Lake Geneva. They, no. I say, channeling my inner George, Well, why not??! They hang up, call the telephone cold call police, I get chided or jailed, either one.
That’s because people around here are a bit more skeptical than they are on the coasts, and I’d rather have it that way. So next time you read an article with any statistic from Redfin, question first the numbers, then be glad you don’t live in a market where people pay 80% over the ask on purpose.