EAGLE COUNTY — After years of up, down and sideways action, the Vail Valley real estate market may finally be ready for something different — slow, sustained, “normal” growth.
Compiling its own numbers and those from the Vail Board of Realtors, Slifer Smith & Frampton, the valley’s largest real estate company, recently released its annual report for 2013. Jim Flaum, the company’s managing partner, said the report is the most asked-for piece of information the company has. The reason is simple — the 26-page report has a ton of data about the local real estate market, broken down by community.
Here is a handful of Big Thoughts from the 2013 edition:
There aren’t many homes listed for sale in the valley’s Multiple Listing Service, the publication that compiles every for-sale piece of property in the valley. In fact, there haven’t been this few homes for sale in the valley since 2006, toward the end of the boom years for local real estate. The 2013 number, a “snapshot” of what was available on Dec. 1, was 1,146 units. That pales in comparison to the 1,974 available on the same date in 2008, which was before a wave of foreclosures hit the county between 2009 and 2012.
Michael Slevin, managing broker at Berkshire Hathaway HomeServices Colorado Properties, said that lack of inventory is due to a few factors — fewer foreclosures, an improving economy and an improving market for “desirable properties in desirable areas.”
Slevin said many homeowners still owe more on their homes than they’re currently worth. But, he added, an improving economy and, in many cases, arrangements made with lenders, has convinced those people to stay in their homes, further reducing the number of “distressed” units for sale.
“Inventory tells it all,” Flaum said. “Supply and demand has really changed.”
Time on the market
For the most part, units are spending less time on the market. There are areas where homes linger longer with “for sale” signs out front — condos in Vail Village and Lionshead, for example — but homes valley wide are selling a bit more quickly.
Again, it comes down to inventory. Lower supply often equals stronger demand. That’s especially true for neighborhoods made up mostly of year -round residents. Single-family and duplex units in Avon, for instance, spent an average of 130 days on the market in 2013, compared to an average of 203 days in 2012. In Gypsum, single-family and duplex units took an average of 36 days to sell this past year, compared to 99 days in 2012.
That’s not true everywhere, of course. Units in Edwards, on average, took longer to sell in 2013 than in 2012, and the wait time in some of the resort areas was dramatically longer in 2013 than the previous year. Average time on the market for single-family and duplex units in Bachelor Gulch Village more than doubled during that two-year period.
Sale price vs list price
When the market was at its depths in 2009 and 2010, a number of local brokers would privately grumble that sellers were clinging too tightly to boom-era prices. Similarly, there have been whispers during the past couple of years that buyers — often those shopping for vacation homes — were too interested in bargains to complete sales.
That seemed to change a bit in 2013. In every neighborhood covered in the report, the sale price of homes was within 10 percent of the final listed price. Condos and townhomes in Gypsum sold for 100 percent of the previously listed price.
That can be a little deceiving, Flaum said, adding that sellers with homes lingering on the market may have dropped the price — perhaps more than once — before finally getting an offer.
Still, both Flaum and Slevin said the market seems to have hit something of a sweet spot in which buyers and sellers seem to mostly agree on value.
What about 2014?
Flaum and Slevin also agreed that the trend of the past couple of years shows a market coming back to “normal” after a decade of boom and bust.
With low inventory and stabilizing prices, there might actually be some money to be made in new construction in some areas. Anecdotally, there was more building in 2013 than there has been in a few years, and Flaum said prices for new homes are no longer uneconomically higher than the price of existing construction.
So, what does that mean for 2014 — barring unexpected shocks to the state, national and world economies?
Flaum sees transaction numbers for more than half the real estate bought and sold in the valley before it makes it to anyone else’s list. With that insight, he said he believes 2014 will continue the trend of a slow rise in prices and tight inventory. That may tempt people who have held on to their homes to take another shot at the market.
Slevin said he’s seeing more “spec” homes — units built by developers without a buyer already lined up — and continued demand for “desirable” units.
“I believe this is the start of a healthy economy,” he said. “The demand is there.”