Vail Valley real estate set for good year
EAGLE COUNTY – Forget the “fiscal cliff” showdown between the president and Congress. Jim Flaum has already seen such a cliff and lived to tell the tale.Flaum, president and managing broker of Slifer Smith & Frampton Real Estate, and everyone else in Eagle County went over a fiscal cliff between 2008 and 2009. In those years, real estate sales volume dropped 60 percent, with total sales going from $2.2 billion to $898 million in those years.Since that low point, the valley’s real estate market has climbed, unevenly, back above the $1 billion mark. Sales bounced back to nearly $1.5 billion in 2010, then fell back to $1.1 billion last year.This year, there’s been a steady climb from last year’s numbers, in both transactions and sales volume. In fact, only March’s numbers were behind those recorded in 2011.According to the latest report from Land Title Guarantee Company, transactions and dollar volume for October were both significantly higher than last year. Transactions jumped by 68 percent, and dollar volume increased by 42 percent.There were 218 transactions in October, the first time the county had surpassed the 200-transaction mark since September of 2007. That year – which seems like a long, long time ago – monthly sales averaged 224 transactions per month for the entire year.We’re still a long way from 2007. But we’re also a long way from 2009, the very bottom of the local real estate market.Michael Slevin, the owner of Prudential Colorado Properties, said buyers seem to be more optimistic than they’ve been in a while.”It starts nationally with second-home owners living markets that are on the rebound,” Slevin said. In a separate interview, Flaum agreed, saying that prices in Denver have been on the way up for the past couple of years.Beyond the optimism, Flaum put buyers’ calculus in simple terms:”If you say something’s going to be more expensive tomorrow, you buy today,” he said.Beyond price, Slevin said sellers seem more willing to accept the fact that prices are what the market says they are these days. “If you price something at an appropriate level, it’ll move,” Slevin said.People are also responding to relatively low inventory in the for-sale market. A recent report from the Vail Board of Realtors showed just more than 1,200 units of all types for sale in the Multiple Listing Service. And the spread between units listed and those under contract is as low as it’s been in years.A few sales of very expensive property continue to inflate sales volume numbers. In October, there were six sales of $4 million or more, which accounted for more than 25 percent of the month’s sales volume. Most transactions are for much less and in communities in the western part of the valley.The lower-valley communities also seem to have most of the “distressed” sales – properties that are either bank-owned or are being sold on “short” sales for less than the owners owe on their mortgages.Bank sales in particular have depressed prices, but those sales seem to be tapering off. Bank sales accounted for more than 20 percent of all real estate sales in 2011. In October of this year, banks sold 11 percent of all units that changed hands.While inventory seems to be stabilizing, both Flaum and Slevin said the valley has an unknown amount of “shadow inventory” – units that owners are keeping off the market until trends shift.But that’s not the only uncertainty in the market. As national politicians fight over what tax and spending policy will look like in years ahead, there’s always the possibility that we may see changes to mortgage interest tax deductions that make second homes attractive investments.”We’ve had a very few specific incidents, (of people holding off),” Flaum said. “But we have sophisticated buyers, and one way or another this is going to get fixed.”
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