Steamboat Vacation Home Sales Make a Comeback

  We are seeing the same thing here in Steamboat Springs.  Steamboat Real Estate sales volume started to turn late last summer and we have been up from about 200 to 270% vs. the prior year for 5 months now.  I have been seeing forward looking clients come back into the market since the Spring of 2009 and this has gotten stronger since late last fall.

  Most say that they see this as a good chance to get one of the best places at a great price.  Everyone is interested in the value for their money but nearly all see this as a good chance to get the right sized home, town home or condo for their family to spend more time together in Steamboat for years to come.  Many plan to retire for at least half of the year here and see this as a chance to move up to the right place from the vacation home they currently have.

  If you would like to talk about your goals give me a call at 970-819-6930 or search Steamboat Listings.  I have been able to get discounts of 10-35% plus for people depending on the property and how well it is currently priced so take that into account as you search for what is availible.

Vacation Home Sales Make a Comeback
CNBC

 The housing slump may be far from over, but vacation homes are suddenly hot again. Vacation-home sales rose 7.9 percent in 2009 from a year earlier, to 553,000 units, according to the National Association of Realtors (NAR) in its 2010 Investment and Vacation Home Buyers Survey. "It's a lessening of the fear factor," NAR spokesman Walter Molony said. "After three years of decline, we saw the activity picking up for the first time in November."

  Most people are buying vacation property for personal use, not as an investment. “The typical vacation-home buyer is making a lifestyle choice, with nine out of 10 saying they intend to use the property for vacations or as a family retreat,” NAR Chief Economist Lawrence Yun said, according to a press release. Much of the buying was by people in their 30s and 40s who were earning more income. The typical vacation-home buyer in 2009 was 46 years old and had a
median household income of $87,500. Retirement plans may also be a factor. Some 26 percent of vacation-home buyers intend to use the property as a primary residence in the future.

  The median transaction price of a vacation home was $169,000 in 2009, compared with $150,000 in 2008. “The higher vacation home price may reflect increased sales in higher priced markets,  particularly in areas of Florida and California where prices became highly attractive for buyers over the past year,” Yun said. Half of vacation homes purchased last year were in the South, 21 percent in the West, 17 percent in the Midwest and 12 percent in the Northeast. Seven out of 10 were detached single-family homes. Vacation-home buyers plan to keep their property for a median of 16 years while investment buyers plan to hold their property for a median of 12 years.

  To contact Jon call 970-819-6930 or send me an email. I respect your time and will answer your question without a sales pitch. For more of this Steamboat blog click back to the Steamboat Springs blog main page or go to my Steamboat Real Estate page if you want to get a feel for property in Steamboat.

WSJ: Luxury Real Estate Market is coming back to life

Real Estate volumes in Steamboat have doubled over the last three months that data is available from the previous year and I personally have seen strong buyer interest over about the last year as people look and often act on the chance to secure the perfect home in Steamboat. People still want to spend at least as much time here and want to bring their families together either as they see the last few years with kids at home or want to get as much time as possible with their grandchildren, others just want to get here for the recreation and a healthier lifestyle.

Prices can be 20-40% lower depending on the property and some of the best are available at these prices instead of choosing from slim inventory like was the case in 2007. It's not as easy as just comparing current and previous pricing though since the value in any particular property may still be below even a substantial discount given pricing in 2007 may have been beyond value and it really depends who owns a particular property and it's comps. You really have to know the local landscape in detail but if you do some opportunities will likely reveal themselves.

I am fortunate to have had a busy year already with multiple clients securing luxury properties including my largest single family property transaction to date. It was one of the best properties available quality and location wise and sold for 43% off original list, about $1.5m less than an offer the sellers had previously rejected. Both a large discount and a great value without considering that a lot that would be very hard to sell in this market was included as a trade for a very good price that I wouldn't have been able to get in the open market. As our market consolidates there will be more opportunities for deals like this. I have several in mind and a great set of friends that are actively looking right now. Give me a call at 970-819-6930 if you are curious to know more.

I've included some quotes from the article here: " At long last, the market for luxury real estate is coming back to life. Prices for primary residences, which plunged at least 20% from the peak in 2007, appear to have bottomed. In some of the snappiest locations, scattered bidding wars are breaking out and prices are turning upward.

In Greenwich, Conn., realty brokers say, the final months of 2009 were almost record-setters for sales volume, as two years of pent-up demand was unleashed. Even the megadeal is back. In Beverly Hills, film producer Jeffrey Katzenberg just plunked down $35 million for an 8,700-square-foot home on six acres.

There's nothing like a stabilized economy and a huge rebound in stocks to send folks looking for the perfect manse. Prices are way down–40% off the peak in some locations. Seemingly at or near bottom, they are starting to attract the first wave of bargain hunters–and not just families in need of R&R. Hard-nosed investors also are on the prowl, says Jan Reuter, head of residential real estate at U.S. Trust Bank of America Private Wealth Management: "We've seen an uptick in buying in just the last couple of months."

For more click back to the Steamboat Springs blog main page.

Local Lending situation update

Not a week passes that I have someone tell me about how they have read you just get a loan. These are all intelligent people that have come to this conclusion and it is no mystery why they think this given the simplistic and often dramatic headlines. I follow this closely because it is central to the health of our market and the advice my clients seek.

Here is the scoop. In talking with local lenders capable clients with good credit who can disclose income and bring 10-30% down depending on the property type are being issued loans everyday. It is not as simple as last year just more like 3-4 years ago which is just fine. One place it will be difficult is through independent mortgage brokers because the banks are keeping their mortgage originations in house. Locally Wells Fargo, Alpine Bank, Yampa Valley Bank and likely some others are actively approving then closing mortgages on Steamboat Condos, Town Homes and Single Family homes. Give me a call or send an email for my recommendations on the best mortgage lenders in town or anything else for that matter especially if it involves skiing or having fun in my favorite town of Steamboat Springs. For more click back to the Steamboat Springs blog main page.

Why the Mark to Market Changes will help stabilize the national market

I thought I would share this article I found on Mark to Market and how it is driving much of the current crisis. The current mark to market rules were added to increase the accuracy of financial statements but have become a real problem that is somewhat artificially squeezing banks out of business because tehy are forced to value assets on their books at the last sale instead of the value based on their expected payouts. As in all things there is a grey area since there is room for the unscupulous to manipulate things to hide problems but I think that the appropriate balance can be found to reduce the current domino effect we are seeing and allow assets to be held at reasonable values until there is a more normal balance of buyers and sellers. That balance will be helped in great parts by having banks that don't need to sell something today at a fire sale price that goes on to trigger additional sales by other banks and so on I have been describing this situtation to partners and clients a lot recently so I was happy to see it in a well written informative piece.

I believe in having a deep understanding of both our local market and the national real estate and credit markets that come to play in the decisions my clients are making so if you would like to discuss what is going on in more depth or work with someone who has the depth to advise you thoughtfully feel free to give me a call on my cell phone anytime at 970-819-6930. I will listen to your goals and thoughts then give you an honest picture of the things you need to consider to make a great decision.

In Steamboat we are fortunate to have a much more stable market that has either maintained values or increased in most segments and has a whole since we don't have the two key things that drove the 80% of the problems located in 5 key states. They would be risky loans and tremendous over-supply. We are also fortunate to have well over 95% of buyers that do not need to sell and very little foreclosure activity.

The article: "There are a lot of rumors about what is happening in the financial markets. This should give you some insight on one of the factors. Whatever the political posturing regarding the current rescue plan, a plan needs to be passed. Credit markets are frozen and banks are going bust every day. This is not totally because of "toxic" mortgages. This has a lot to do with FAS 157, also known as "mark to market". This is only one piece, but is important to understand.

Each day lenders must mark their assets to the marketplace. The increase or decrease in the value of these assets is offset in capital. If values increase, capital increases, and if values decrease, capital is decreased. It's like you having to appraise your home everyday. If your neighbor was under duress because they got very ill, divorced, or lost their job and was forced to sell their home quickly they may have to sell it inexpensively. Let’s assume that with a normal sales process it was worth $500,000 and they sold it for $400,000. Now, does that mean your house is worth that $400,000? Clearly not. Why? Because you are not under duress. You have the time to sell your home and get a more normal price, which more accurately reflects true market conditions. (Think of the price you get at a pawn shop versus selling the item on an open market.) But "mark to market" does not allow for valuing at true market conditions, which creates a vicious cycle.

Why is this so bad? Most Financial Institutions are required to maintain certain amounts of capital relative to their assets (primarily loans and investments). As lenders mark down their assets thru capital, the ratio of capital to assets decreases with no change to the amount of assets they have on their balance sheet. For example, say a bank has $1 million in capital and they have $15 million in assets outstanding. Their ratio is an acceptable 15 to 1. But should they take a paper write down of $500,000 due to mark to market requirements, their ratio suddenly changes to 30 to 1. This is because their capital is now only $500,000 after taking the paper loss, while their loans outstanding are the same $15 million. And at 30 to 1 this bank is viewed as risky. So the stock price starts to get hit, it becomes harder to borrow, and most importantly harder to make money. The bank is then forced to sell some of its loans or investments to reduce its ratio...at below “true” market prices. Yet really, nothing has changed at the bank. And this makes the vicious cycle continue.

This is not easy to understand for the general public. In fact most politicians don't get this either. That's why it is a difficult yet critical bill for them to vote on. Once this is done it will take some time but the markets will stabilize. As for the real estate and mortgage industries, it will take a bit of time but we will make it through this. Rates will remain attractive and the influx of credit availability will help the housing market gradually improve. This ultimately will be the medicine needed to improve the situation overall."
For more click back to the Steamboat Springs blog main page.

Colorado Home Price trends compared to distressed states

Here is an updated graph per a reader's request. Colorado remains in much better condition than others. Volume in Denver has picked up considerably as people have become more active in buying foreclosures (lower average price than a non-distressed sale which does pull down average prices) which I believe explains some of the dip in the graph below. Colorado is the blue line in this first graph and red in the second one. The word I hear from good sources in Denver is stabilization and some improvement as inventory is going down. Original graph when this post was first done
The Steamboat Voice of Reason Blog had the audacity (many news sources find it more profitable to cover only the bad news) to post credible data from the Federal Reserve Bank of St. Louis showing the chart above that compares relative home price changes in California, Florida and Colorado. Colorado is the red line and it shows pretty clearly the differences between our market and the 5 states where the large majority of the housing crisis is playing out as represented by California and Florida. It is nice to see data that shows this so clearly from such a credible source. I am not saying we don't have issues in Colorado or the other 45 states but it is nice to see how individual states are doing.

I follow this very closely and even I was surprised by the differences between these states and how good Colorado looks after so much one sided news coverage.

If you would like to know more or talk about how this affects your situation just give me a call anytime at 970-819-6930. For more click back to the Steamboat Springs blog main page.

Home Prices rise in 30 of 50 States

Somehow news like this rarely reaches the front page and instead the gripping headlines with bad news are almost always chosen. While the national market clearly has issues it is not all bad and there are often encouraging stats like this if you red some of the more thoughtful media.

According to the Office of Federal Housing Oversight's Housing Price Index for the 2nd Quarter of 2008 released August 26th, 30 of the 50 States had positive changes in house prices from June 2007 through June 2008, including Colorado!

Only 4 States (Arizona, Florida, Nevada, and California) experienced overall price declines of more than 5 percent.

The 20 ranked cities in the United States with the worst price declines over the last 4 quarters were ALL in Florida, California, and Nevada.

I really do sympathize with the people of these four fine States. Some of the price declines they have experienced are simply horrible! However, there are 50 States and only 4 with truly bad news for the last year. The rest of the country is simply experiencing a market correction from a rapid increase over the last 5 years combined with some sloppy loan practices that hurt the lending industry. The United States overall had a -1.71% change over the last year (skewed down heavily by the 4 troubled States).

However, even with the challenges over the last year, if you step back and look over a few years like any long term investment should be evaluated the United States STILL has had a 34.84% increase in home prices over the last 5 years! - That is not bad at all and the states that are down the most now are still up more than the national average. Over the last 5 years, Arizona STILL gained 62.68%, Florida STILL gained 54.03%, Nevada STILL Gained 50.81%, and California STILL gained 41.81% despite the losses of the last 4 quarters.

It is time for the news media to put away "The Sky is Falling" focus of their reporting and report the good news along with the bad. There are many signs that the market is working through the current challenges, inventory is going down and prices are stabilizing. While we still have challenges and some real problems the market is making progress.

Here in Steamboat we are up quite a bit more over time and prices have held stable and even increased in higher end properties. Only a few low end properties have been effected and those are still up by large percentages over a few years time. Give me a call if you would like to hear more about what is going on here in Steamboat. For more click back to the Steamboat Springs blog main page.

Housing Crisis Hits the Colorado Mountains

Eagle county is not unique in this regard but the meaning of housing crisis is quite different that in most of the country. The maxim that all real estate markets are local definitely holds in this case. Don't worry now, the problem here and in most mountain resort communities is a shortage instead of a glut like we all read about in the national papers. The national market is suffering from both oversupply and credit issues from the sub-prime market, two factors where the mountain resorts differ significantly from other areas. Limited land given the vast national forests / desire to maintain our rural character, the limited growth of city boundaries if any at all, the goal of so many to spend more time in the mountains they have vacationed in for so long and the prosperity of the baby boomers is creating demand far quicker than supply in a market where a large group of people have the means to buy with a large cash down payment if not just in cash.

We are all here for the quality of life so that is something people here think about and guides land use and development here in Steamboat.

MSNBC -EAGLE COUNTY, Colorado - It's official. Eagle County is in a "housing crisis" and can expect to feel the economic impacts in the next few years, experts say.The county needs 3,400 homes now, both affordable and market-priced, to address the current housing shortage, and more than 8,000 homes in the next decade to keep up with future growth, according to a recent study by RRC Associates and Rees Consulting, firms that specialize in housing analysis in resort communities.

Also, local residents own about 51 percent of the homes in Eagle County, a drop from the 69 percent of locally owned homes in 2000, the study said.

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105 inches to go ...

Let's hope for another 400 plus inch snow year. After our late start it has been a truly spectacular year. The snow quality has been amazing even when there was only 4 inches new since that nearly always followed a couple of feet in the previous few days. Most days have been truly Champagne Powder and Intrawest is keeping up the Steamboat tradition of under reporting on the daily snow report so us locals can keep more of the good to ourselves :) I'll toast to that with a deep day in my favorite places to find the best Champagne powder. Come out soon and help us ski all of this snow!

From Today's Steamboat Pilot:
"Today marks the first day of February, typically the third-snowiest month of winter at the Steamboat Ski Area. The ski area reported more than 100 inches of snow falling on the slopes of Mount Werner in December and January — just the third time in resort history that’s happened.The ski area reports receiving 295 inches of snow since late fall. There have been only five 400-inch ski seasons in Steamboat Ski Area history: 1983-84, 1992-93, 1995-96, 1996-97 and 2005-06"
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For most buyers the Mortgage market is healthy

The widespread notion that the entire mortgage market is in crisis is just plain wrong, say lenders in various parts of the country.
The following is an article from the Washington Post that talks about the overall impact of the mortgage market. It's conclusion is that high quality buyers are unaffected. In Steamboat we are fortunate to have both high quality buyers from a cash and credit standpoint along with limited supply. This along with how many things are working together to improve the experience in Steamboat over the next few years has kept the market here in Steamboat strong. When I talk to the local lenders I know I have found that they are still getting the approvals they need. Most have had 0 to 1 loans fall out since the national issues cropped up.

Give me a call if you you would more insights into this or the current market in Steamboat and the improving fundamentals and demographics that are driving our market. My number is 970-819-6930.

"The majority of mortgage products have been unaffected by troubles in the sub-prime segment. Interest rates for 30-year, fixed-rated loans remain in the low 6 percent range for people with reasonably good, though not necessarily perfect, credit records, according Kenneth R. Harney, managing director of the National Real Estate Development Center and syndicated columnist.

While there is plenty of money to lend, Harney says underwriting standards are more strict than they were a year ago. Jumbo loans, for example, often require two appraisals – one by an appraiser selected by the lender and the other by one working for the investor.

Similarly, FICO credit-score standards generally are higher than a year ago, stated-income mortgages with no verifications are hard to find and lenders are especially wary of excessive "layering of risk" – combining low down payments with marginal credit scores and high debt-to-income ratios – in markets where prices are trending lower.

Source: The Washington Post Writers Group, Kenneth R. Harney (09/29/07)
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Wildhorse Meadows Trailhead Lodge results

I heard from a good source who was involved in the sale that 71% of the units sold yesterday, 61 out of 86 condos. I would call that a very successful launch given the pricing averaged $904 per sq foot and the most expensive ones on a per sq foot basis went first. They now have almost 2 years to sell the remaining 30% and they are likely to make a push to sell a few more before they go public with the news by calling everyone again like they did on the Range lots.

One Steamboat Place is is also progressing very well through their selection process. They have fewer units but it is taking longer because they give people overnight to decide if they want the time. The conversion rate from reservations to people deciding to proceed with their purchase was over 75%. That is nearly unprecedented even if it comes down as they get further through the list and people can't get the units they wanted. One Steamboat Place is going for between $1,000 and $1,100 per square foot. Both projects are realizing ground breaking prices and bringing higher levels of quality to the market.

These sales have big implications for pricing of both mountain and downtown developments going forward including existing units. I believe that higher quality units will see a particularly strong pull from these new price points. If you are curious how the market is moving, what impact it is likely to have on your property or your goals and what the real drivers are feel free to contact me. My number is 970-819-6930 or email me at the address on this page.

Back to the Steamboat Springs blog main page for more.

Sheraton Steamboat sale is now official

This confirms my post last week that the Sheraton Steamboat sale had closed. The Steamboat Pilot published a front page story by Matt Stensland with official confirmation that the deal has closed and Starwood is the new owner. The final price was $57m for the hotel and the golf course, a number that is about $5-7m below it's value because of how the deal was handled.

I see the completion of the sale as good news because it brings the new owners to the table and it will help the base area improvements progress.

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Steamboat Sheraton was sold to Starwood

I heard this from credible sources a month or two ago but it is now a done deal. I understand they will make an official announcement soon but they could take their time to put a good story together. It is good to see this wrapping up. The firm that handled this deal was a little to proud of themselves, sometimes bumbling (I am being careful here to comment not on my own experience with them but on more than enough anecdotes from others) and often appeared to be operating in ways that did not optimize value. This resulted in a longer process than it needed to be and lower values realized for their clients than could have otherwise been unlocked. Now that they are out of the way things can proceed and a wonderful new village can come out of the legacy of neglect that the previous owners left behind. They had plenty of cash but preferred to let things deteriorate. Steamboat will be much better off without them.

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Intrawest completes Steamboat Purchase Early!

It's Official! ASC didn’t back out this time and Intrawest is the new owner of the Steamboat Ski area. I’m sure that Intrawest won’t be perfect but odds are Steamboat will soon be an even better place to ski. Steamboat is one of the top brand names in skiing and Intrawest considers Steamboat to be a marquee resort in their portfolio. They have the cash to invest and the smarts to really bring up the level of experience on the mountain. It will be very interesting to hear more detailed announcements over the next few months with details on their plans for Steamboat and I’ll pass those on as appropriate. For more background scan back in time on my Steamboat Springs blog main page for more.

A lift or two, some on mountain improvements, and an overall step up in service will go a long way. Most importantly I hope that they stick to their commitment to not change the things that make Steamboat special. BTW We have gotten 6 feet of snow in the last 6 days and more is falling now. It was a little thin earlier this year so I think this calls for another visit to Steamboat soon. You deserve some epic powder days, don’t you?

I'll have more thoughts and details soon so check back. I'll post links to the best articles published on the sale. If you want to understand more about what is happening in Steamboat Real Estate feel free to give me a call at 970-819-6930.

Steamboat Real Estate Market update

The Real Estate Market in Steamboat Springs continued to be strong in January with an 110% increase in sales year over year on volume that was 20% lower. This shows the strong demand we are experiencing here in Steamboat and the tightening supply we are experiencing as availible land, condos, townhomes and homes get harder to find. The average price of units sold county wide more than doubled since last January. This continues a trend that really took hold in June that has seen many new and more expensive properties coming on the market along with appreciation on a comparable unit basis. Just to be clear that doesn't mean the price of the average property has doubled it is just that the mix of higher end properties have increased (and sales of development properties) along with apreciation across the market.

Given the weakness in several markets like Florida and Las Vegas you might ask if Steamboat is heading for the same situation. I study the market here pretty closely and feel comfortable that this is not the case here in Steamboat. I won't go into the details here supply continues to tighten while demand has been increasing due to several strong factors like the sale of the ski area to Intrawest, improvements and the redevelopment of the base area, the relative value Steamboat represents, the tight supply of lots along with several other strong Steamboat specific drivers and nationwide demographics.

If you would like more details on how the market is developing here in Steamboat feel free to give me a call. I will be happy to send you data and talk in depth about what is driving the market and what I expect to see moving forward. We are in the midst of some strong drivers that will improve the overall experience in Steamboat and prices are likely to follow. You can reach me at 970-819-6930.

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Steamboat Real Estate Market hits $1.12B in 2006

A very strong fall that kept on growing during the normally dormant months of November and December pushed our local real estate market to a new high in 2006, a 25% growth in dollar terms from $885M in 2005 on a 110% growth in units. December grew 74% which was on pace with the recent months. The ski area sale wasn't announced until mid-December so any sales driven by that news will show up in 2007 due to typical escrow timing. I would add that we are even more supply constrained than in 2005 which clearly limited the overall sales growth.

The anticipation of a sale definitely didn't hurt but there is much more going on in our market than that sale. We have several big improvements coming online over the next few years that have historically driven values in other ski areas including:

• a URA making upgrades to the base area including a promenade linking the base area together.
  
• several new projects at the base kicking off this year that will begin to make the base more of a destination and upgrade the overall experience year round.
• 5 new mixed use residential and commercial projects going in downtown will preserve the good parts of downtown, remove some eyesores and add significant life to downtown.
  
• The capacity of YVR Airport in Hayden doubling along with a strong program to fund new direct flights and the arrival of Frontier Airlines.
• Scarcity of development land
• The expected sale of the Ski Area to Intrawest and upgrades they are expected to make to the mountain experience.
  

I can't predict exactly what will happen but I expect that the discount that Real Estate in Steamboat sells for relative to other top ski areas will narrow more rapidly in the next few years. I also expect pricing of the new projects to pull up existing quality properties at a rate faster than the market as a whole.

We are also seeing the impacts of the increasing number of people looking for a second home or to move here with their kids as the baby boomers are starting to make plans to retire or are now free to work from nearly anywhere and want a great place for their kids to grow up.

Drop me a line if you would like a copy of some more detailed Real Estate stats to look over or for more detailed insights into what is happening and how different parts of the market are faring. My number is 970-819-6930 or email me at jon@mybrokers.com. See the Steamboat Springs blog main page for more.