It’s not just the North Shore real estate market that remains strong. The demand for second homes from Lake Geneva, Wisconsin, to Saugatuck, Michigan, is tight, with buyers facing a shortage of listings. What’s driving the demand for second homes? While the desire for a “home away from home” in a bucolic, beachtown locale is not new, what has changed is how people are using them. With more North Shore residents working in remote or hybrid settings, the “lake house” is no longer reserved only for long summer weekends.
This week, brokers from the North Shore and resort communities along Lake Michigan told The North Shore Weekend that those looking for second homes in the region need to do their homework and hire a real estate professional that is knowledgeable about neighborhoods in their communities of choice.
Margaret Labus, a broker with The Starboard Group and @properties in Lake Geneva, Wisconsin, says a number of forces drove, and continue to drive, demand in the Lake Geneva market—including Wisconsin’s less restrictive approach to managing COVID-19 and the lifting of regulations on ownership of Airbnb and other vacation rental services.
“We’re a summer resort area for the Chicago market and before COVID-19, when you crossed the cheddar curtain, people were thinking, ‘We’re going to move to Wisconsin’ someday because of the taxes or whatever it is,” Labus says. “Ever since it’s been like a tsunami of people.”
Whereas buyers three years ago were looking for vacation homes, the mindset is different with options to work from home.
“Before the pandemic, the buyer wanted something different,” she says. “But post-pandemic, they just want to be where they want to be. They don’t have to live in the suburbs; they can be anywhere and still do their jobs.”
Labus says the uncertainty of the coronavirus early on and the fact that Wisconsin remained fairly open throughout also motivated many families to look for homes in the area.
“Our restaurants were open, and schools were face-to-face,” she says. “One of the surprising things to me were people who had secondary homes up here moving their primary residence here so that their kids could actually go to face-to-face school. We gained a lot of families because of that.”
Labus says the best advice she can give to buyers is to work with a local, experienced agent who knows the territory well. In a tight market where decisions must be made swiftly, it can make all the difference.
“People are saying ‘goodbye’ to Illinois and saying ‘hello’ to Wisconsin, but we just haven’t been building—just like everywhere else in the country,” she says. “We have such a limited supply of inventory.”
As a result, Labus says clients are looking at areas further from the lake, including communities where there is newer construction and prices are cheaper than being on the water. Across the lake in New Buffalo, Michigan, @ properties broker Liz Roch says it’s more of the same in Harbor Country as well. There’s been a considerable uptick in buyer demand mostly from second-home buyers, but some are making the move full-time.
“Recently, buyers have been frustrated by dwindling inventory, multiple offers, and rising prices, and active inventory has always been limited in our area, but the recent surge in demand has magnified the shortfall,” Roch says. “Higher prices have enticed some longtime owners to list and take advantage of favorable selling conditions. I believe this trend will continue throughout the spring, offering additional options for willing buyers, albeit at higher prices.”
Roch says those moving into the community are a mix of retirees and families with children. With the work-from-anywhere mindset, she’s seeing a more significant percentage of buyers in the young families with children segment, and several new children have enrolled in local schools after relocating from Chicago in the past two years. She says the pace of life is appealing.
“There’s a desire to spend quality time with family and friends, away from the usual hectic pace of everyday life,” says Roch. “There’s more flexibility in work schedules and the ability to work from home, and Airbnb and competitors can help homeowners offset the cost of ownership.”
Winnetka Engel & Völkers broker Karen Arenson says the company recognized the trend of more people working remotely a few years before the onset of COVID-19. The surge of clients looking for second homes since prompted the opening of an Engel & Völkers office in Douglas/Saugatuck, Michigan.
“When we opened our Engel & Völkers North Shore shop, it was always our intent to expand into Michigan and Wisconsin, but not for a few years,” Arenson says. “As a result of COVID, the movement to own a second home in a more remote or spacious or rural area took off, and we responded. In January 2021, we initiated the opening of our third Engel & Völkers shop in Douglas/Saugatuck, Michigan. We expedited our expansion because we did not want to miss the trend and activity.”
Arenson says restrictions during COVID made people realize the value of having a change in scenery, a place to escape, and a home-like retreat where memories can be made.
“We all had to put vacations on hold; most of us were forced to live, work, and school from home,” she says. “People were encouraged to conduct their work in locations where they could walk out their door when work was done to ski, swim, go to the beach, and more. COVID literally opened the door to enhancing our lifestyles by blending the space for work and study and play.”
Just south of New Buffalo, in Long Beach, Indiana, @properties broker Jordan Gallas says the market there is stronger than ever.
“It really amped up at the beginning of the pandemic where sheltering in place and working from home began being implemented,” Gallas says. “Current second home residents are here and using their vacation homes much more than in the past.”
Gallas says that with limited inventory and strong buyer demand, pricing has steadily increased, and buyers are now looking at the concept of home differently. Space is a premium, and the more the better.
“Buyers are looking for homes that have or can accommodate a home office, and consistent signal strength and internet speed is now a question people are asking,” he says. “As for current second homeowners, they would love to take advantage of their increased value, but if they want to stay in the area, they then become a buyer and it is insanely competitive.”
Chad Gradowski, a broker in Coldwell Banker’s New Buffalo office, says that while the area is still primarily a second-home market, the pandemic has caused a shift.
“The trend used to be that people wanted a weekend or summer home and that is still the case about 70 percent of the time,” Gradowski says. “However, with the pandemic adding flexibility to many people’s work location, we are seeing people spending more time in these second home locations and wanting more space and even office space in the home.”
Even for residents of the North Shore, Gradowski says the community offers something new and different.
“While those that live on the North Shore have access to beautiful beaches, there is still a strong desire to have a second home to escape to,” he says. “New Buffalo, for example, offers more of a beach town vibe with incredible restaurants and wineries to boot. It truly feels like you are a world away and gets you out of your day-to-day with only a short drive from the North Shore.”
Glenview @properties agent Connie Dornan says for clients who still go into the office once or twice a week, a second home within a manageable commute has appeal.
“For clients that still need to show up to office at least once or twice a week, they are opting for second homes within a two-to-three-hour commute,” Dornan says. “For clients that no longer are required to be at the office and have no particular family ties to our area, they mostly have gone either to the Carolinas or Florida.”
With Illinois losing more than 113,000 people in 2021, according to new U.S. Census data, people moving out moving out of state is an important part of the picture that can’t be ignored.
“People are moving to states like Utah and Florida where taxes are low,” says Jena Radnay, @properties broker in Winnetka. “For sure, the Midwest is still an option for a second home but I’m seeing people who are selling here on the North Shore moving out of state.”
“Our world has changed, and people realize that vacations are more expensive and harder logistically to plan,” says Highland Park Engel & Völkers broker Jamie Roth. “There is something easy and special about having your own home to go to and still feeling like you are on vacation. It’s a stress-free way to relax and recharge, and it also has the added benefit that it’s a good investment and you can rent out the house when you’re not using it.”