It’s been a challenging few years for vacation-home shoppers in Southeast Wisconsin, Northwest Indiana and Southwest Michigan. First came the pandemic, which set off an unprecedented buying spree that elbowed many would-be buyers out of the market. Then came the interest rate spike of 2022-23, putting previously affordable vacation homes suddenly out of reach and forcing some buyers to the sidelines once again. That one-two punch also created a massive inventory shortage, as years’ worth of supply sold in months, and then sellers got stuck in place, unwilling or unable to trade a mortgage with a 3 or 4% interest rate for one at 7 or 8%.
However, four years on, things are starting to look up for buyers, according to brokers who specialize in the popular second-home destinations within a couple hours of Chicago. Inventory is still tight, but rates are coming down, and price increases have moderated. Finding a dream vacation home can still be a challenge, but it’s doable – especially if buyers are willing to expand their search perimeter. Here’s a look at market conditions throughout the region.
Wisconsin
In Southeast Wisconsin, the market’s hot spots range from Twin Lakes near the Illinois border to the ever-popular Lake Geneva and Delavan Lake, and up to the Lauderdale Lakes community located west of the Alpine Valley resort, noted Don Shea, vice president of brokerage services for @properties Christie’s International Real Estate’s Lake Geneva office.
“During COVID and even more recently, we just didn’t have enough homes to meet demand. While it’s not quite at that level now, it’s still a seller’s market,” Shea said.
He noted that market times continue to be very short, at a little over a month, and homes that sit on the market for longer tend to be listed at “aspirational” prices.
Inventory is particularly tight in the $300,000 to $500,000 price range, and homes in the area are still selling at 98% to 99% of list price on average, Shea said.
“The difference we’re seeing today is that buyers are more discerning,” he said. “They’re not just rushing in to buy any property regardless.”
Though the luxury market has seen some mind-blowing transactions in recent years, including the $22 million sale of Aloha Lodge and the $36 million sale of the former Driehaus Estate, Shea cautions against drawing broad conclusions based on these outliers.
“Those are truly one-of-a-kind homes,” he said. “When you walk around the lake, there are very few of those out there.”
For those looking for a second home in Southeast Wisconsin, Shea suggests traveling a bit off the well-worn path of Lake Geneva. He said many of the communities in the Twin Lakes area offer vibrant social life and year-round sporting opportunities.
Northern Indiana and Southwest Michigan
George Schultz is vice president of brokerage services and managing broker for @properties Christie’s International Real Estate’s two offices in Southwest Michigan, located in New Buffalo and St. Joseph, as well as offices in Michigan City and Long Beach, Indiana.
Like the market in Southeast Wisconsin, COVID fueled a buying boom on the east side of Lake Michigan.
“What we saw was two years’ worth of business in a very short period of time,” Schultz noted.
More recently, the market has slowed.
“The total number of sales is down, but prices aren’t declining due to low inventory,” he said. “There are still multiple offers taking place, though market times are creeping up a bit.”
Real estate brokers in the area are hoping to see lower interest rates in 2025 and, in the not-too-distant future, development of larger subdivisions that can support the area’s strong demand.
“Supply has been an issue for far too long now,” Schultz said. “We need more new construction, and we need more sellers.”
However, Schultz said there are homes to be found, especially if buyers are willing to look beyond the core Harbor Country towns of New Buffalo, Union Pier and Lakeside.
For example, Michigan City, Indiana, has diverse options including condominiums, townhomes and single-family homes – both vintage and new construction, and prices tend to be more reasonable than in Michigan. Thirty miles north of New Buffalo, the town of St. Joseph, Michigan, also has a variety of residential offerings, plus a growing restaurant and bar scene.
“Both towns are kind of older, industrial, lakefront cities that have successfully reinvented themselves,” said Schultz.
Schultz said that the natural beauty of Southwest Michigan has few equals.
“It goes without saying that our beaches are amazing,” he said, comparing many to what you’d see on the Gulf Coast. There also are increasing options for dining, farmer’s markets and entertainment – and more high-end breweries, wineries and distilleries are popping up all the time.
“It has really become so much more than a family experience. It’s a region where you’re going to enjoy endless fun and enduring value, and what more could you want in a second home?”