Brokers seeking more properties to sell
EAGLE COUNTY — Back in the good old days — 2007 — it was fairly common for expensive condo projects to be sold out in what seemed like moments after groundbreaking. New homes in family-friendly neighborhoods sold almost as quickly. We all know what happened next.
These days, brokers, especially those who work primarily in the western valley, are clamoring for new units to sell.
Craig Capan, who works in the Eagle office of Berkshire Hathaway HomeServices, is one of those brokers. He recently showed potential buyers through a five-unit Brush Creek Townhomes building now under construction near the ice rink in Eagle. At least two of those units are already under contract, Capan said — he’s not the listing broker of the project — and all five might be sold by the time the building is complete.
Another five-unit building at the Brush Creek Townhomes was completed earlier this year, he said. All five units were sold by the time the townhomes were ready to be occupied.
Echoing the remarks of other brokers this year, Capan said units priced at less than $300,000 sell very quickly, and there’s a brisk market for units priced at less than $400,000. In the western part of the valley, the market starts to slow when prices rise above $500,000 — there are units priced between that level and $1 million available in the middle of the valley.
Even that market is starting to see more action, though. Capan said he knows of one builder who’s just about finished a “spec” home — built without a buyer lined up — in Eagle Ranch. That same builder will start another home once the current project is finished and sold.
While Capan and other brokers want more units to show and sell, that could take some time.
New banking laws passed in the wake of the 2008 financial crisis have made it more difficult for builders and developers to finance projects, Capan said. Builders are being asked to put up half, or more, of a project’s estimated cost before they can borrow money.
“If you’re talking about a house that will sell for $750,000, it’ll cost about $550,000 to build,” Capan said. For smaller companies, it’s daunting to put $275,000 of their own cash into those projects.
Travis Bossow, president of R.A. Nelson & Associates, said new-project financiers these days need to see pre-sales and ensure other requirements are met.
“There’s a lot more crossing of T’s and dotting of I’s involved,” he said.
Capan said a few local banks are making loans, but capital is still hard to come by.
Bossow agreed with Capan’s assessment of the difficulty of building new projects.
But there are a few projects being built, and, especially at the right price, those units are more than welcome.
Bossow said R.A. Nelson is currently working on a pair of projects in Pitkin County, one that stopped in 2008 and another that’s broken ground this year.
And, Bossow said, he’s heard of people who are “dabbling” in custom homes at the moment.
But, Bossow said, prices will be the push needed to spur more construction.
“Sale prices need to recover a bit,” Bossow said. “They’re trending in the right direction, but they aren’t there yet.”
Beyond financing, problems include the rising costs of materials and subcontractor labor. Frank Payne, CEO of Avon-based Beck Building Co., said those costs haven’t reached the highs seen in 2007 or so, but they are quite a bit higher than costs in 2010.
But, Capan said, land costs are still relatively low, which should attract builders who can find financing. Capan said there are single-family home lots in Eagle’s Eagle Ranch neighborhood that are selling today for less than their initial asking prices a decade ago.
Despite the hurdles, both Bossow and Payne said their respective companies have had a good 2014 and are looking forward to next year as well.
Whether the projects are custom homes, apartments in Vail or townhomes in Eagle, that’s welcome news to Capan.
“It’s very encouraging to see new stuff going up,” he said.