Vail Valley real estate market will probably stay slow this year
Vail, CO, Colorado
VAIL ” Hang on.
That was the advice Dr. Lawrence Yun had for a lunch meeting of the Vail Board of Realtors Wednesday.
Yun, the chief economist for the National Board of Realtors, said the long-term outlook for the resort real estate market is bright. The near term, though, looks pretty tough.
The market for at least the next several months will continue to be hit by a combination of record-low consumer confidence, loss of value in the country’s stock and real estate markets and exceedingly tight qualification standards for “jumbo” mortgages, which most second-home buyers need to buy resort real estate.
In the longer term, though, Yun believes resort real estate will gain strength. Baby Boomers remain a potent economic force, and many of them are at the point in their lives that they’re looking at second homes. Many of those people eventually retire to their vacation homes, Yun said, but they’ll buy a few years before retirement.
But getting back to that point is going to take some time.
Yun, who USA Today has ranked among the country’s top 10 economic forecasters, said he expects the nation’s gross domestic product to shrink by 2.5 percent or more in 2009. His forecast estimate the economy will grow by less than 2 percent in 2010.
“It’s a very difficult environment out there right now,” he said.
But for the national economy to recover, the housing market needs to recover, Yun said. That could happen, thanks to a combination of price drops in many markets and mortgage interest rates as low as they’ve been in the last 50 or 60 years.
On the other hand, if mortgages remain hard to get, or if potential buyers stay out of the market, waiting for prices to fall farther, it could take longer for the market to recover.
“It was an eye-opening, realistic outlook for the future,” broker Rick Messmer said after the presentation. “It was good to hear about points of brightness among all the challenges we have now.”
Larry Agneberg, a longtime veteran of the local real estate business, asked Yun if the local market will lead the national recovery or lag behind it. Yun, who acknowledged he doesn’t have intimate knowledge of the local real estate scene, said the Vail Valley could be behind a national recovery, in large part because jumbo loans are more expensive, and harder to get, than conventional loans.
After the session, Agneberg asked Yun his favorite question these days: If this recession was a baseball game, what inning would we be in?
“He said nationally, about the seventh,” Agneberg said. “Locally, probably the fourth or fifth.”
Business Editor Scott N. Miller can be reached at 970-748-2930 or email@example.com.
– The original subprime mortgage meltdown happened primarily in four states: California, Nevada, Arizona and Florida.
– While Los Angeles real estate prices over the last three years have risen and fallen dramatically, the rise and fall has been far more gentle in the Denver market.
– While the best borrowers for conventional mortgages are finding rates lower than 5 percent, “jumbo” mortgage rates ” typically those of more than $625,000 ” are significantly higher.
– Home sales are starting to rebound ” quickly ” in California. Sales for February of this year are more than 100 percent higher than February of 2008.