Vail Valley economy: Real estate will return to ‘normal’
VAIL, Colorado Colorados Vail Valley is not Las Vegas or South Florida, where foreclosures have sent home values plummeting. Its not even the Steamboat Springs or Aspen areas, where home sales decreased by half last year.But, in Eagle County, real estate is a $2.2 billion industry second-biggest to tourism thats shrunk noticeably over the past year as the national housing market has collapsed. That means less work for not only the 700-plus Realtors in the valley, but also less business for architects, builders, planners and others in the construction industry. Construction and real estate comprise 23 percent of Eagle County jobs.Some Realtors say they expect home prices here to drop farther. But many also say they expect a rebound in sales soon as buyers and sellers come to a consensus on home values.One things for certain: Vail real estate is coming off a three-year spike thats hard to measure up to. This years 25 percent drop in sales volume might seem big, but it puts the market in line with what it was in 2002.For a decade starting in 1993, Vail real estate saw steady growth, said Harry Frampton, an owner of Slifer Smith and Frampton and former president of Vail Associates. For the last four or five years, the market has seen a perfect storm that has escalated business to enormous heights, Frampton said.My observation is, were going not going to return to the perfect storm anytime soon, Frampton said. Were going to return to more of a normalized and healthy market that we saw between 1993 and 2003. Will that be as good as it was in 2007? No. Will it be good? Yes.Local Realtors report that buyers are more cautious this year. Indeed, there were just 1,606 transactions last year, down 40 percent from 2007.Realtor Led Gardner who specializes in selling second homes, which make up about half of Eagle County homes describes some clients as taking time to get over the shock of having lost substantial amounts of their investments over the last year. Gardner sees lots of clients from New York, Chicago, Texas and California, as well as a few local buyers.At the high-end niche, if youre worth $100 million and you lost $30 million in market, youre still worth $70 million, Gardner said. Get over shock of having lost $30 million of your net worth, and you can still buy anything in the valley you want. Thats the type of conversation weve been having.
Across the country, home prices are falling, pushed in part by foreclosures. Home prices in 20 U.S. cities declined 18.5 percent in December from a year earlier, the fastest decline on record, according to the S&P/Case-Shiller index.However, in Eagle County, average and median prices actually climbed in 2008. The median real estate transaction price rose to $609,000 in 2008 from $584,000 in 2007.Still, Gardner and other real estate agents say they expect prices to fall before an equilibrium is reached between buyers and sellers.In the high end of the market, Im seeing price reductions of 10 to 20 percent on a very regular basis. That can be $1 million to $2 million, Gardner said. Theres a bit of a disconnect between what sellers expect to get and what a buyer expects to come into town and expects to pay. … Slowly we are seeing that disconnect become less.Foreclosures are starting to increase in the valley, too. There have been 48 foreclosures this year through Feb. 26, compared to 179 for all of last year. But those foreclosures arent significantly affecting home values, said Michael Slevin, a Realtor with Prudential Gore Range Properties.Foreclosures are not what are driving (price) reductions at this point, he said. Theres still a bit of a stalemate out there between buyers and sellers. The uncertainty of when things begin to turn around is causing some buyers pause. Its kind of a chicken and an egg thing.Theres even been an apparent drop in demand for affordable housing. Don Cohen, executive director of the Economic Council of Eagle County, said fewer people are lining up to buy properties at Miller Ranch, the affordable housing community in Edwards.A year ago, you could see one to two dozen people in line to buy a home at Miller Ranch, he said. That queue has shortened up to three or four people. … Theres less interest because there are fewer jobs.Prospective homebuyers are waiting as the job market remains uncertain, Cohen said.Somebody who may be looking for a home is sitting on the sidelines because theyre worried about their jobs, he said.
The fast times of the last three to five years had to end eventually, said Josh Lautenberg of Sonnenalp Real Estate.People referred to Vail as being bubble proof, but I think we finally saw the bubble, he said.Lautenberg said he thinks home prices could stabilize in another six or eight months. A true turnaround in the local economy could be a couple of years out, he said. Vail is, and will remain, a place where people will want to buy homes, he said.Gardner expects a V-shaped rebound, one that hits bottom and then rebounds quickly.It might be this summer, it might be 12-18 months from now, he said.Cathy Miskell, a real-estate agent with Slifer Smith and Frampton who specializes in the high-end second home market, just put an $11.9 million Arrabelle at Vail Square penthouse under contract. She is starting to see more energy, more vitality, more interest in the real-estate market.At the beginning of the ski season, everyone was under their desks seeking cover. That was a panic, she said.The market is already turning around, she said.Im seeing buyers picking up, she said. Im seeing more buyers coming in because theyre savvy. Theyre seeing discounts now and price reductions and saying, Its time.Staff Writer Edward Stoner can be reached at 970-748-2929 or email@example.com.
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