News
Your article “How much is your property worth now?” really didn't answer the question.
In the past appraisers took comparable sales from county records, made a few adjustments and developed a number. Without an abundance of current sales, the valuation process gets more difficult.
However, a key value is being overlooked, which is replacement value. As a builder of both custom and spec homes in Vail Valley, we have accurate information on cost to build.
For example, a home in Cordillera with high-end finishes and appliances will run about $350 per square foot for just labor and materials. Land costs then have to be added. Land prices usually represent lot size, views, scarcity and amenities such as proximity to skiing, shopping, golf, etc.
Next you have to add in soft costs. These are to some extent fixed. These represent architect-engineering fees, tap fees, DRB fees, transfer fees and building permits. On a 6,000-square-foot home in Cordillera, the total cost could run $410-$420 a square foot.
Other factors also have to be considered. The primary one is profit to the seller. Homes that were built over 10 years ago have a built-in profit which comes from lower land and construction costs at the time of construction.
More recent homes reflect the owner's desire to make a comparable profit on money that could have been invested in other ventures. Because, in most cases, Vail Valley homes are investments, one should not assume that people will sell at a loss just because the stock market is down. This is most evident in the land prices.
In Cordillera, there are approximately 100 lots for sale, and many have been on the market for well over a year. Yet most of these properties have not had a reduction in price. Although price is normally determined by a willing buyer and seller, these sellers have said “pay my price or I'm not selling.” This in fact does create a stable pricing point.
Right now there are homes selling for below replacement price. Savvy buyers would be wise to consider them.
Once this current inventory is absorbed, prices will return to pre-2007 levels unless there is a drastic reduction in labor and/or material prices.
Labor prices may actually go up. With the current downturn in construction, many of the quality laborers have left the valley. Once construction starts up again, a limited labor pool will drive up prices.
There are many other intangibles to value when comparing Vail prices to other resorts. Limited availability of land, world-class skiing, beautiful weather, airport access, top notch entertainment and dining, all offer value. All in all, Vail Valley real estate is the treasury bills of real estate investment. The prices reflect this.
Ryan Dunn
Trinity Builders
In the past appraisers took comparable sales from county records, made a few adjustments and developed a number. Without an abundance of current sales, the valuation process gets more difficult.
However, a key value is being overlooked, which is replacement value. As a builder of both custom and spec homes in Vail Valley, we have accurate information on cost to build.
For example, a home in Cordillera with high-end finishes and appliances will run about $350 per square foot for just labor and materials. Land costs then have to be added. Land prices usually represent lot size, views, scarcity and amenities such as proximity to skiing, shopping, golf, etc.
Next you have to add in soft costs. These are to some extent fixed. These represent architect-engineering fees, tap fees, DRB fees, transfer fees and building permits. On a 6,000-square-foot home in Cordillera, the total cost could run $410-$420 a square foot.
Other factors also have to be considered. The primary one is profit to the seller. Homes that were built over 10 years ago have a built-in profit which comes from lower land and construction costs at the time of construction.
More recent homes reflect the owner's desire to make a comparable profit on money that could have been invested in other ventures. Because, in most cases, Vail Valley homes are investments, one should not assume that people will sell at a loss just because the stock market is down. This is most evident in the land prices.
In Cordillera, there are approximately 100 lots for sale, and many have been on the market for well over a year. Yet most of these properties have not had a reduction in price. Although price is normally determined by a willing buyer and seller, these sellers have said “pay my price or I'm not selling.” This in fact does create a stable pricing point.
Right now there are homes selling for below replacement price. Savvy buyers would be wise to consider them.
Once this current inventory is absorbed, prices will return to pre-2007 levels unless there is a drastic reduction in labor and/or material prices.
Labor prices may actually go up. With the current downturn in construction, many of the quality laborers have left the valley. Once construction starts up again, a limited labor pool will drive up prices.
There are many other intangibles to value when comparing Vail prices to other resorts. Limited availability of land, world-class skiing, beautiful weather, airport access, top notch entertainment and dining, all offer value. All in all, Vail Valley real estate is the treasury bills of real estate investment. The prices reflect this.
Ryan Dunn
Trinity Builders
