Market slump hits Vail Valley ‘affordables’
VAIL VALLEY, Colorado – For much of last year, one part of the housing market in Colorado’s Vail Valley resisted the slump that hit everything else. Those days – like the days of “stated income” mortgages – are over.
A combination of job loss, people packing up and leaving and the difficulty in securing a mortgage means the county’s stock of “deed restricted” housing – in which appreciation is capped by various methods – has hit the same hard times as the rest of the market.
There used to be long lists of potential buyers for units at the Miller Ranch affordable housing project in Edwards. Not any more.
Kim Williams of the Eagle County Home Store – the county office that coordinates information and sales for many of the valley’s deed-restricted projects – said the list of eligible buyers for Miller Ranch condos could be 40 deep as recently as 2007. The next year, the average list length had shrunk to less than 15. Last year, even as the number of units on the market rose, the list had shrunk to seven, five, or, in some cases, zero.
Beyond the dearth of buyers, Williams said that some Miller Ranch sellers aren’t seeing even the limited appreciation on their units.
“Some of these houses aren’t selling for their maximum resale price,” she said.
Those prices are kept low by contractual restrictions that tie a home’s appreciation to growth of wages in the county, but can grow at no less than 3 percent per year.
Williams said maximum-price sales are still the norm at Miller Ranch, but added that the buyers still in the market are getting more picky.
A unit that Williams called “kind of gross” lingered on the market, and finally sold for less than the maximum price. Meanwhile, a much nicer unit sold for the most it could, and actually had several buyers interested.
But that’s just Miller Ranch. There are several different methods to limit appreciation on deed-restricted homes. Many are tied to the Denver-Boulder Consumer Price Index, a number generated by the federal government.
The deed-restricted units at Eagle Ranch in Eagle are tied to that gauge. But Tori Franks of the Home Store said there’s no guaranteed appreciation at Eagle Ranch. Nor is there a “floor,” meaning if the price index drops, home values drop, too.
Between the step backwards in value and the drop in the price of free-market units, Franks said some owners of Eagle Ranch units now owe more than their homes are worth.
Eagle has several other deed-restricted units about town, Franks said, and owners there seem to be getting full-price offers for their homes.
Besides the economic slump, buyers simply aren’t able to get mortgage loans. Williams said anyone who wants a Miller Ranch home had better be ready to write a check for 20 percent down and have great credit.
The process is also taking weeks longer than it did in the days before the financial bubble burst.
In Gypsum, Andy Forstl, the general manager of the Stratton Flats project, said his company has found a source of federally-backed mortgages that require far less down – there are still some 5 percent down and zero-down plans available. Those loans are available to virtually anyone with a credit score of 600 or greater.
The problem, Forstl said, is that it’s much easier to get a dinged-up credit score these days, and harder to get the numbers back up. Add in car or credit-card payments on a family budget, and it’s tough to get a “yes” from a lender.
Complicating the situation is the fact that lenders now want to see steady paychecks, not seasonal or tip-based pay.
Limiting the potential buyer pool to people with year-round paychecks and good credit means business is slow at Gypsum. But business is slow everywhere.
With buyers either disappearing, shy or unable to qualify, about the only advice Franks has for potential sellers is to hang on.
“If you don’t have to put your unit on the market right now, don’t do it,” Franks said.
On the other hand, if you have cash in the bank and great credit, it’s a great time to buy.
Business Editor Scott N. Miller can be reached at 970-748-2930 or email@example.com.