Calm before the storm

Summer, at least temporarily, has arrived in Park City. What a beautiful weekend! Temperatures in the 70s, golf course opened, barbecues going, and everyone taking advantage of the outdoors. However, as is all too typical for this time of year, snow is forecast starting Tuesday night through the weekend. As we get later in the spring the time between snowstorms gets longer and the weather is nicer. If this is a typical spring, we still have another three to four weeks that it can snow. It rarely snows after the middle of June.

As far as real estate goes in the Park City area, we are just beginning to see early signs of the market recovering. Buyers that have been looking throughout the winter are coming back to town and are writing contracts on properties. Additionally, the national economic news seems to be improving as well. There are signs that the economy is beginning to improve and more articles are appearing that we have not gone into a recession and probably will not. In talking with my fellow realtors from the other resorts, I am hearing that one of the reasons for the drop-off in number of offers having been written for the first quarter of this year can be attributed to the different expectations of buyers and sellers. With all the headline “doom and gloom” real estate news, and the factual downturn in the real estate market in areas like Florida, California, and Nevada, a growing percentage of buyers come into town expecting sellers to accept offers 30-40% off of their asking price. Here in Park City, as well as many of the other resorts, listing agents have always made an effort to counsel their sellers to put a price on their property that is realistic and within the expectations of whatever the current market is. We as agents find no value in letting our sellers list their properties at 20-40% over what they will take. We definitely advise our sellers that while they do need to leave a little room for negotiations, they need to price the property realistically and close to what they will accept. As a consequence, while buyers are frequently making offers substantially below asking price, the sellers feel that their price is fair, realistic, and they are not willing to accept offers that are significantly lower.

Because the market is significantly slower than it has been, we as agents are recommending to our sellers that they price their property aggressively, and at a point that it will actually sell. As a result, there are many excellent buys for the savvy investor. On a fairly regular basis, I see new listings come on at very favorable prices or older listings have a price reduction to make them favorable. For the smart investor who has cash, and can move quickly, there is an opportunity to make a lot of money in today’s market. This is not a market for the flipper who is looking to purchase a property, maybe make a few minor repairs and put it back on the market for a significant profit. Today’s market is such that a buyer who has staying power and can hold onto a property for a few years has an opportunity to see strong appreciation and a significant return on their investment. As with all of life, when looked at intelligently, a downturn in the real estate market can lead to an upside. A real estate investor from Florida that I spoke with yesterday mentioned that he was selling several condos to a cash buyer at deeply discounted prices. He mentioned that he is always looking for bargains, at which point I asked why he was selling the condos at such a discounted rate. I asked him if at that price would it be attractive for him to purchase, to which he answered, of course. So my obvious next question was, why are you selling and not holding onto them? Which he agreed with me, and is now going to hold onto them. Right now there are excellent opportunities in the stock market, financial markets, and certainly in real estate. The smart investor knows that trying to predict the bottom of any market is impossible, but to buy when prices are low will always be wise and profitable.