I've written at length about the trouble that I see looming for the upper end lake access associations. The price point of $800k to $1.5MM, as it pertains to off-water association homes, is a very difficult price point. It's not only difficult, but I see a very disappointing future ahead for this particular segment of our vacation home market here. My thinking, for those of you who may be new to the site, is that entry level lakefront homes have dropped significantly to a possible price range of $1.15MM to $1.35MM, leaving little room for off-water homes in the same price range. Th rational goes that private frontage should almost always be the goal, and if private frontage is similarly priced to homes with lake access that are not private frontage, 99 out of 100 buyers would opt for the private frontage. As they opt for the private frontage, the price of the off-water homes has to drop to try to attract buyers. It's simple really, but don't tell that to some associations. There are exceptions to this pricing rule of mine, as homes that are remarkable for one reason or another- be it style, finish, or location- can indeed command off-water asking prices near the $1MM mark.

Somerset is a high quality lake access association on the East bank of Lake Geneva. There are also condominiums along the lakefront that are part of Somerset, but this post is addressing only the single family homes in that small association. The association isn't old, as associations on Geneva go, with most of the homes having been built in the 1980's through today. As a result of the "newness" of the association, the lots are larger, the homes larger, and the overall layout is considerably more modern than the traditional one lane associations that feature, you guess it, one lane. I do like this association, but I have to admit I don't like it nearly as much as I like other associations. The newness of the place makes it feel decidedly, well, new.

I like my Lake Geneva old. I like it classic. I like it with peeling white paint and and small white fences. I like it with lannon stone steps and lannon stone walls. Those sort of properties and surroundings transform you, and they provide a welcome change of pace and scenery after a long work week. If I wanted to live in a suburban style development, I'd just live in the suburbs. I didn't set out this morning to pick on Somerset, but I do think it's important to note that the association does feel different than many in this market. That different feel that I find a bit uncomfortable is undoubtedly what draws some buyers here. Many buyers prefer new. They like their privacy, and they don't have much use for peeling white paint. For those buyers, Somerset is ideal. Of course those larger lots combined with newer homes and a city of Lake Geneva location also mean big taxes, relative to other areas of the lake. If you're looking for a home in Somerset, the annual tax bill may very well be in the $10k to $20k range.

The association has fallen on somewhat hard times of late, and by of late I mean for the last 3 years, as the market adjusts to the newly lowered values of entry level lakefront. There are two homes for sale in the association at the moment, both priced around $900k, both looking for that buyer who is willing to pay that much money in the absence of a lake view. There hasn't been a public MLS sale in the association since 2007, a year when many individual markets at Lake Geneva reached their ultimate peak. Sales of $900k and $1.15MM within Somerset during 2007 were not bad buys, as the market at the time dictated those prices and buyers acted. The problem is to try to chase 2007 prices in 2010.

There is a chance that I'm wrong in all of this. I may be wrong when I say that homes priced in excess of $900k without a view and a slip will not sell in 2010. I may be wrong because I also don't think they'll sell for those numbers in 2011 either. But Lake Geneva has a way of proving rational thinking wrong. Just when you think a property won't sell for any price, some buyer shows up and pays a price that is so out of touch with reality, I cannot help but bemoan my poor luck for dealing with only rational, level headed buyers. I'm a free market guy, and I believe a house is worth whatever a buyer is willing to pay, it's just that in 2010, I think buyers need to remember the price of entry level lakefront, and adjust their aspirations accordingly. For now, it's going to be 91 and sunny at the lake, and I have plenty of open seats on the boat for anyone wishing to take a free boat ride on me. It's time to find out what exactly it is that I was talking about yesterday.