Recovery Enters 6th Year As Market Slowly Approaches the Previous Record Highs

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1st Quarter 2015

It was a solid year of continuing recovery in the Summit County real estate market.  Sales and prices increased respectably and the market is now within 15 percent the peak price levels of 2007, 2008 and 2009.
While the number of properties sold is still below average, about eight percent more properties sold in 2014 bringing total sales to within ten percent of the 20-year average.  1877 properties closed, the average is 2043. To put the scale of the recovery in perspective, at the low point in 2009 just over a thousand properties closed.
2014 brought sales of just under a billion dollars making it the 4th best year ever.  There have been only three years with more than a billion dollars in sales in Summit County, 2007 was the high point with $1.35 billion.  At the low point just 2 years later, the market had shed more than half it’s volume with only $600 million sold in 2009.
The 2014 average sale price of $498,000 stands at 87% of the peak in 2008 and is the 5th highest average sale price in history.  The average price for 2014 was $325 per square foot for residential properties.
Tnumber sold by yearhe only ones who are still waiting to break even are the 5200 folks who bought in 2007, ’08 or ’09 and they are getting close.  When that happens, the inventory will swell.
Properties sold for an average 96 % of list and took 216 days to sell.
The time on market really dropped as the year progressed and the inventory declined to the lowest number for sale since a short period in 2007.  In the 4th Quarter, the inventory dropped from a very low 1500 to stand at about 1100 for sale by the end of the year.  It can be argued that had there been a normal inventory, there would have been a lot more sales last year.  Lack of inventory starved the market.

Avg. Price Change 2011 to 2014
By market sector the results showed clearly that lack of available credit really held a couple of segments back.
Condominium prices only gained 2.7 % to $326,800 on 855 total sales.  They sold for an average 95.8% of the asking price and $347 per square foot.  Lenders are extremely reluctant to make condominium loans blaming government regulation and lack of a mortgage-backed securities market to dump the loans into.  A few smart lenders (perhaps two) have seen the huge potential for shareholder profit and are making sensible, solid loans that they keep in their own portfolios.  Still, more than half of all condominiums sold for cash.
Land is the other victim of lender perfidy.  A lackluster 115 lots sold last year averaging $324,500 or 2.3% less than the year before.  There were about 350 lots for sale at any given time last year and the few that sold went for 88.8% of list price.  Land remains the most undervalued segment of our market.  That’s where the only remaining bargains are.  A lot of folks will be kicking themselves five years from now when land sales and prices take off again.
Single-family homes did very well in 2014.  427 homes sold for an average $863,900, an increase of 9.5%.  They closed at 95.7% of list price and $293 per square foot.  Home loans are easy to get as lenders cherry pick the easiest jobs.

Avg. Sale Price
The best performing sector was in duplexes, or “paired” homes as they are now called.  New high dollar construction drove this sector.  Seven homes at Shock Hill Landing at Breckenridge averaged $1.9 million each and that’s only one of several examples. New construction activity drove the average duplex (excuse me, paired homes) price to $669,700, an increase of 15.9%.  138 of them sold at and average $316 per square foot and 97.5% of asking price.
So our market continues to chug along out of the depths reached in 2009.
Make no mistake, folks, this was a Depression and it has marked the current generation just as in the last Great Depression of the 1930’s.  It took our grandparents another 25 years to even consider a vacation let alone to toss money at a second home.  Fortunately, it is taking this generation a lot less time to move on.

Ditch the Green Shag… Look at your home like a buyer will

There’s nothing like deciding to sell your property to change your view of the place.  
Suddenly you see it as a buyer might; old carpet, scratched paint, odds ‘n ends of furniture.   It always looked good enough before, but suddenly your new super human power of vision makes every little thing grow in size and importance.
What to do?  Renovate the whole thing or just change out the green shag carpet?1952-chartreuse-carpet
I get this question all the time.
Generally, unless the place is so disgusting that buyers will just stop at the front door, don’t spend a ton of money right before selling.  I recommend not spending more than $3000 to $5000 before putting your home on the market and only then if you really need to.  That will usually cover carpet and paint and freshen the property up a lot.
Don’t renovate the kitchen and baths.  You should have done that soon after you bought.  Now you won’t get the cost back in a higher sale price next week.
The old furniture your relatives donated or came with the place when you bought it in 1995 might be a problem.  Instead of buying all new furniture, removing it and selling unfurnished is your best choice.
Rather, price the property to take the needed renovation into account.  Buyers will do that automatically and their estimate is usually about double the actual cost.
So let’s say the most recent sale at your condominium complex was for $250,000 for a unit with minor renovation or had complete renovation fairly recently.
Let’s further say that your unit needs $25,000 to do the kitchen and 2 baths.  Your best strategy is to price yours at $235,000 instead of spending the money and expect that buyers won’t discount as heavily for the job they are buying into.  If you were to spend the $25,000, the higher sale price won’t compensate you for the time and brain damage it will take to complete the renovation.   Take my word for that.
And particularly in condominiums or other multi-family properties, appraisals won’t justify a sale price ten or fifteen percent higher than the last sale at the complex because of your renovation.  Your gain, if any, will be negligible and you will have done a lot of planning and arranging for free.
Plan major renovations well ahead of the time when you expect to sell, preferably soon after you buy the property.  Get the benefit of a better place to use for the years you own it and a higher selling price than for a unit that still looks like it did ten years ago.
Don’t delay and don’t just pass a functionally obsolete property on to the next owner.  It will cost you more than if you had renovated in a timely manner.
You can borrow my super human power of vision to give you an objective opinion about what you need to do before you sell.  Just remember, you asked me. It’s nothing personal but the green shag has gotta go.

Is an HOA Really Necessary? Maybe Not…

Often folks looking for a second home in the mountains limit their search to properties with a Homeowners Association such as condominiums and townhomes and don’t consider a single family home or duplex.
The reason they often give is that they need someone look after the property while they are not in residence. Because about half of second homes are never rented, that is a valid concern.
But is an HOA really necessary?  Maybe not if you are willing to arrange your own services.

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Managing property is perhaps the largest segment of the Summit County economy.  It’s what we do here. You can find any level of service you need.  There are dozens of companies and hundreds of individuals who do nothing but take care of second homes.
These range from large national companies with local offices such as Resort Quest that provide turn-key management to a guy with a pickup truck who can arrange cleaning, repairs, periodic checks or anything else you may need.
There are concierges who can stock your place with groceries, make reservations for dinner, set up ski rentals and bring in a caterer to cook your meals for the week.
There are book-by-owner companies that handle the cleaning and maintenance if you do your own rental through VRBO.
Whatever  level of service you need, it’s available.  And it will probably cost less than HOA dues.
The downside is that you will get all the bills for water, sewer, trash removal, power, cable and everything else that the HOA dues generally cover.
You will need to keep a list of go-to contractors to handle emergencies and repairs.  You will be in charge instead of having an HOA to back you up.
But the upside is that you don’t have as many HOA rules and regulations or perhaps none at all.  Your second home can be in a more secluded location, you may have some land around you. You won’t have to worry about pets being allowed.  You may be able to park your RV or boat at your property.
In short you will be a home owner, just not in full time residence and without HOA services.
If you just want to come, drop your bags and be on vacation, an HOA is your best bet.  If you don’t mind being the general manager, there are lots of ways to get what you need done.
I’ve been here for years and can help you find the resources you need to go HOA-free if that is your choice.

Million Dollar Homes Seem Recession-proof

Million dollar homes attract the attention of the media and popular culture.  Everyone wants to know who’s buying what and for how much.
So far, Summit County’s high dollar owners are not high profile; Internet entrepreneurs, lawyers, oil people and the like.  But it’s clear that the well to do are arriving in increasing numbers and that Breckenridge and Summit County have become the third alternative behind Aspen and Vail.

The most expensive home ever sold in Summit County...  $8.3 million in 2009

The most expensive home ever sold in Summit County…
$8.3 million in 2009

A  Summit County residential property first sold for a million or more in 1996 when 5 of them sold.  The best year for expensive property was eleven years later in 2007 when 199 of them sold.
Last year 148 residences and lots sold in Summit County for over $1 million, 10 more than in 2013.  122 were in Breckenridge including the top 13 most expensive homes in Summit County.  Silverthorne was second with 18 and everywhere else combined had a total of 9.
Million-dollar sales declined less than most other price ranges during the downturn beginning in 2009.  The lowest number since then was 2011 when only 105 of them closed.  And even amidst the economic melt down of 2009 one home sold for $8.3 million, probably the highest price ever.
The most expensive home sold last year was a 5100 square foot home in Shock Hill at Breckenridge for $3.6 million.
2014 was the 4th best year for expensive homes.   The high-end market continues to grow.

Rumor, Gossip & Innuendo

radioWinter in Summit County is off to a booming beginning…  Thanksgiving snow was some of the best ever and Christmas storms just dumped on us.  Judging from the crowds, the traffic, the stuffed restaurants and the lodging rentals, Denver and everywhere else west of the Mississippi must have been deserted.

It took an act of congress… literally… to change the Lake Hill property from National Forest to the control of Summit County.  That’s the strip of land between I70 and the Dam Road overlooking the lake.  The plan is for more deed-restricted attainable housing to be built so people who work here can afford to live here instead of driving in from Kremmling every day.

Some still await the end of the world as we know it… since pot became legal in Colorado.  Until that happens, however, we’ve got this embarrassing problem of too much success.  Pot is now a major business and Summit County leads all resort areas in sales and revenues.  Tourism is up substantially, Colorado colleges have big wait lists, and we have too much tax revenue.   It’s always something, isn’t it?

Vail Resorts continues its quest to dominate the world… having just taken control of most of the East Side of the Wasatch in Utah.  Park City is the latest to be assimilated (resistance is futile).  Seems the Epic Pass will get Californians to come to Colorado.  They have always stopped at Salt Lake City (probably for the wild bar scene). Vail hopes that once they find that we have a Whole Foods… and bars… they’ll be hooked for life.

I70… its’a mixed blessing… As Colorado plays catch-up for neglecting the road, CDOT is doing everything at once.  Fortunately, the Twin Tunnels project is complete but the 3rd lane toll road to Denver project will continue all summer.  The upside is that buyers are buying in Summit County to avoid the weekend gridlock.

The Final Word

It’s starting feel more like normal here in Summit County.  
Normal winter weather, no drought, better than normal visitor traffic, real estate sales approaching a normal volume with pretty good appreciation.
And people are feeling more normal as well; more relaxed, in better spirits, not so worried about the future.
Summit County has arrived as a truly world class destination. World class competitors in several sports routinely train, compete and live here.  
We have built an international reputation among visitors.The future looks brighter than ever here.  
Come join us, if you  haven’t already.
Chuck Leathers, CRS
broker/owner

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