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Local real-estate market could be worse; recovery is uncertain

Robert Allen
Summit County, CO Colorado

SUMMIT COUNTY – After two years of falling prices and transactions for local real estate, local experts aren’t sure whether the Summit County market has hit its lowest point.

“We probably have already hit the bottom,” said Bernie Zurbriggen, broker and owner of High Country Real Estate, adding that there’s significant “pent-up demand.” “I tell people there’s going to be a feeding frenzy at some point in time.”

He said prices could be back to previous highs within four to six months.

But Chris Johnson, Realtor with RE/MAX Properties of the Summit said whether the market has hit bottom is “hard to say.”

“There certainly is concern out there that we may fall a little bit more,” he said. “Houses that are selling are the ones that have had a drop in price.”

He added that now is a good time to buy “even if prices do drop a little bit more,” because it’s a better opportunity to buy on the down curve as opposed to buying on the upstroke.

Nationally, experts have said housing prices could remain low throughout the next year as unemployment is expected to remain elevated and more foreclosures occur, according to a National Association of Home Builders article published Tuesday at http://www.nahb.org.

Daniel Johnson, broker with Resort Brokers Real Estate in Breckenridge, said that considering how much the local market lags behind national and even statewide trends, a bottoming out elsewhere likely signals a bottoming out locally.

“It’s really hard to know where it’s going,” Daniel Johnson said.

The first few months of 2009, Breckenridge’s 1 percent real-estate transfer tax revenues ranged from 45 percent to 60 percent below those of the previous year.

In April, the revenues totaled more than the previous three months combined, at $442,039. The numbers took another dip through the summer and remained well below the previous year through September and October.

In both November and December, RETT revenues were noticeably higher than what was budgeted – at 178 percent and 147 percent, respectively. Part of December’s revenue was likely due to the record $8.28 million home sale that occurred at the end of the year.

For 2009, the town’s RETT tax ended at 23 percent below 2008.

Daniel Johnson said he’s noticed frequent sales from people who pay cash for residences that have dropped in price from, for example, $1.8 million to $1.5 million.

“People coming with cash (know) they have more leverage,” he said.

He also said location is as important as ever.

“Properties that have always been highest demand are still likely to be sellers,” he said.

Frisco’s 1 percent real estate investment fees trended similar to Breckenridge, but on a lower scale.

The town’s February 2009 REIF revenue was 89 percent below that of the previous year. September and November both brought higher revenue than the previous year, but the 2008 year-end total was still 33 percent less (see chart).

“Although inventory levels are still high compared to historic levels, (there’s been) good absorption recently since August,” Chris Johnson, Realtor with RE/MAX Properties of the Summit said, adding that Frisco had particularly good movement in August and September.

“Frisco is a stable market,” he said. “It’s a small niche, and in my opinion, more stable than other areas in Summit County.”

He said the most sales activity appears to be among residences costing less than $500,000.

Chris Johnson also said most of the people buying are from Colorado, the Front Range in particular, and that people buy because they “want to use the property first.”

He said these people are often interested more in family and lifestyle – enjoying the property – and the investment follows that.

Breckenridge and Frisco’s numbers could mean an uptick, but it’s tough to say, considering the housing crash that began in 2007 deepened significantly in the fall of 2008. In both communities, the revenue totals never matched or exceeded the amount collected in 2007.

The town of Dillon has no real estate transfer tax. Silverthorne collects a 1 percent tax on Angler Mountain Ranch sales. In 2009 it received $64,170 and in 2008 it received $130,226, according to Kathy Marshall with the town of Silverthorne.

One other indicator of the softened market: Membership with the Summit Association of Realtors dropped a bit. The number of members decreased from 718 in 2008 to 660 in 2009.

Robert Allen can be contacted at (970) 668-4628 or rallen@summitdaily.com.


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