Spring Skiing

Spring skiing in the Rockies takes on many shapes and forms. When we talk about spring skiing typically the thoughts turn to warm sunny days and soft or even slushy snow. But here in the Rockies, March and April can be very, very snowy, and it seems that the last few years some of the best powder skiing has been at the end of the season with this year being no exception. This is me skiing Deer Valley on Sunday!

It has been a crazy week with snow just about every day since last week Monday and the skiing just can not get any better. Deer Valley is now reporting a 118-inch base and it is snowing hard today with another foot of snow expected. But then the best news is, is that we are expecting warm sunny days starting Wednesday for classic spring skiing, at least until the weekend when more snow is forecast. This is a perfect time to come out and visit your favorite ski resort in the Rockies as the skiing is the best it’s been all year, crowds are down, and you can get great deals on lodging.

In real estate news, real estate sales continue to be quite strong (I’ll be doing an end of the season wrap up in mid April), but all indications are that this ski season's real estate sales are going to be substantially higher than last year. Of particular interest, to me, is the new montage hotel in Deer Valley. This is a high-end boutique luxury hotel located at the base of the Empire Lift with fabulous amenities and of course ski-in/ski-out access. The hotel opened for business December 9th of this year and prior to opening there were three pre-sales of the condos. The condos first went on sale at the end of last ski season. There have been five new sales this ski season with a penthouse for $6,000,000 just being sold last week. In addition there have been a couple of sales in the St. Regis, also located ski-in/ski-out in Deer Valley's Deer Crest area. After the 2009/2010 season with no new sales in St Regis, it is refreshing to see the high end buyer returning to the resort market. In looking at what is selling each day, I am seeing more sales over $2 mil than I have for quite some time. Is this a sign that the resort market is beginning to turn? Before jumping to any conclusions, let's see what the summer brings for sales, but this is certainly good news for resort real estate here in Park City/Deer Valley.

So stay tuned in a couple of weeks for the end of the year wrap-up which I think will be very interesting and until then come out and enjoy the fabulous spring skiing.

Finding the Perfect Vacation Home

This is the time of the year when many of our visitors, after having a thoroughly enjoyable ski week, consider purchasing a vacation home here in the mountains. When they come to my office asking about vacation properties there are several questions that I ask that help both me and the prospective buyer narrow down just what it is they actually are looking for.

The first question that needs to be asked is: Are you intending to rent the property during the times you are not using it? The importance of this question is that not all properties are zoned for vacation rentals, so if this is an important criterion I immediately eliminate the areas that are not zoned for this or in some cases, though zoned for vacation rentals, may not be practical.

The second question concerns location: Is ski-in/ski-out important? Is being close to the center of town important? Or, is getting in the car to go skiing or into town acceptable? As we spoke of in the previous post, ski-in/ski-out properties, like ocean-front properties, tend to be quite expensive. So if you are willing to put up with the inconvenience of taking a car or public transportation to the resorts, you can find a similar property for considerably less, or a much larger property for the same price.

Now we get into the nuts and bolts questions: How many bedrooms are needed? Would you prefer a townhouse-style condo over an apartment-style condo? And of course, price range. Here in Park City, we are blessed with having an abundance of developable land throughout the area which gives us a wide variety of size and price of vacation properties. We can find one-bedroom condos outside the core area under $100,000 while a one-bedroom near the resorts can easily be $300,000 or higher.

One thing that most people don’t actually think about until we start looking at property is views. Not only are views important aesthetically but also very important for resale. In purchasing in a resort, people are looking for the view as that is why they came here in the first place. This is where a local Realtor becomes invaluable. If you are just looking on the internet at properties and are focused on size and price, proximity to the resorts and the views may be confusing or even misleading. A photo from the deck of a condo may show fabulous views to the resort, when in fact those views could be blocked by a new development going in near by, or perhaps the view is taken from an angle that you wouldn’t normally see. Having local knowledge of upcoming developments, preferred views or preferred locations is information that is best obtained by your Realtor.

So when considering purchasing in a resort, in order to ensure that your Realtor is focusing on the properties that are right for you and your family, there needs to be a discussion on just what it is you’re looking for, what your use will be, and of course, a price range that you’re comfortable with. It is important to have this discussion when you first sit down with your Realtor. Your Realtor will be able to put together a selection of properties that best fit your needs, rather than showing you every property with the right number of bedrooms and right price. You are here on vacation and our goal, while wanting to find you the perfect vacation home, is also to maximize your vacation time and spend time looking at properties to just what works for your family.Hopefully your Realtor will have this discussion with you on your first meeting or very early on, but if not, know the answers to these questions yourself and make your Realtor aware of your needs.

It’s springtime in the Rockies, which means that we’re getting lots of snow. It seems that the last few years some of the best skiing has been at the end of the season and this year is no exception. Strong snowstorms with great powder skiing followed by bright, sunny days. So come experience spring skiing in Park City, bring your sunscreen, warm clothes, as well as spring wear, and be prepared for anything.

Resort Real Estate Musings

In today’s blog I’d like to talk about two topics that are very relevant to today’s real estate market. First will be financing resort real estate and the second will be an interesting observation about the current market.

In my travels around Park City this winter, whether it be riding with someone on a chairlift, meeting somebody in a restaurant or talking to a prospective buyer on the phone, one of the first questions always asked of me is “Is it possible to get a loan these days?” Contrary to what you hear in the media and popular rumor, financing for resort properties is not only possible but not all that difficult. I believe that a lot of the misconception about financing is coming from a change in lenders’ attitudes. For several years preceding the financial meltdown in 2008, pretty much anybody who was breathing could get a loan on a property without regard to their actual ability to pay it back. Those were the days of the “liar loans,” where lenders would make a loan based on what the buyers stated their income was without the need to verify.

In today’s lending climate, lenders are once again requiring verification of employment, income, and assets, and are looking at the borrower’s debt to income ratio. This is really not much different from when I was selling real estate in the 1990s where buyers had to show they actually had the ability to repay the loan. What a concept! Now with all of the foreclosures that have occurred in the last two years, lenders are looking much harder at buyers documents and are often verifying employment and income several times during the loan process and almost always just prior to funding of the loan.

Another area that has become more difficult but not impossible as a result of all the foreclosures in the resorts is condo financing. Both Fannie Mae and Freddie Mac, who underwrite the majority of all loans, have tightened their requirements for underwriting. Much to the detriment of the resort markets, is the stipulation that condo developments that are used for vacation rentals are not eligible for Fannie Mae and Freddie Mac financing. On the surface this would seem to eliminate almost all resort condo projects from the ability to obtain financing because vacation rentals is what we do. This certainly was the case in 2009 and into 2010 when we saw the condo markets take a dramatic downturn in number of sales which then forced the prices down.

As with any new government regulation, it just took some time for mortgage brokers to understand the laws, understand what was being asked for, and then packaging the loan to meet the requirements. So while it certainly is more difficult to obtain financing in the resorts and particularly for condos, it is certainly not impossible.

But I do want to stress (and I cannot stress this enough) that in today’s lending climate it is absolutely crucial to use a local lender who understands the resort market, understands the various projects and how to package the loan to meet Fannie Mae and Freddie Mac guidelines. The days of searching for the internet lender with the best rates is over as far more often than not, despite their promises, they just will not be able to fund the loan and close on the contract. This is where your local realtor will add even more value to your purchase by recommending a good local lender who can get a purchase closed. While the loan process is hateful, time-consuming and annoying, remember that it does come to an end and you will have your property to enjoy.

The second thing I wanted to talk about today is an observation about today’s market. A telling aspect is the number of buyers who are purchasing multiple properties right now. When I say multiple, I’m not talking about two or three, but dozens. These buyers/investors are seeking developments that they feel are under-valued and have a strong up tick on appreciation. When they find one, are purchasing 15, 20, or more properties in a single development. This can be a newly constructed condo, a golf-course property, or a new subdivision. In some of these projects prices have dropped to 1/3 or sometimes even less of the original purchase price. These investors are feeling that purchasing at these prices will give them a strong profit margin if they hold on for a couple of years. With the economy improving and interest rates slowly creeping upward the feeling is that this opportunity may not exist much longer.

It is springtime in the Rockies, which means long sunny days interspersed with frequent snowstorms. Yesterday everybody was outside on the decks enjoying lunch in the sun and today it is snowing, so come out and enjoy springtime in the mountains.

Park City's Version of Beachfront Property

As the founder and president of the Western Mountain Resort Alliance (formerly the Rocky Mountain Resort Alliance), I had the opportunity to travel to and visit almost all of the western ski resorts in Colorado, Wyoming, Idaho, Utah, and California. One of the things that I found that was very unique about Park City is the amount of ski-in/ski-out properties that we have. To most people, the term "ski-in/ski-out" is something they haven't heard before and is unique to ski towns. "Ski-in/ski-out" is pretty much what you would think the term implies: this can be a condo or a home, located directly on the ski slopes of one of our ski resorts. Here in Park City and Deer Valley, we have taken the definition to being right on the slope or at least at the base-area complex. If you have to walk across the street to get to skiing, we don't consider this ski-in/ski-out. As walking across the street to the beach is not considered beachfront prperty.

By far the majority of ski resorts in the western United States are built on forest service land which precludes their ability to have private homes located anywhere other than at the base or in town, thus severely limiting what can be ski-in/ski-out. Park City is very unique in that the ski areas here are all built on private land, mostly owned by the major mining company, United Park City Mines, and therefore is available for development. Particularly Deer Valley, which was designed more of what you would think of as a golf course country club with homes surrounding the resort. The same goes for The Canyons Resort here in Park City. When Edgar Stern first developed Deer Valley, he had the idea of developing it more like a country club and sold off parcels of land adjacent to the resort to private parties to develop homesites and condos. This is very evident as you ski around Deer Valley and ski through beautiful on-mountain homes and condo projects. At The Canyons Resort, the most prominent area of ski-in/ski-out homes is a development called The Colony at White Pine Canyon. This is an incredibly beautiful piece of land, broken mostly into five- and ten-acre homesites, all with direct ski-in/ski-out access to The Canyons Resort.

As with beachfront property, the scarcity and desirability of the product drives the pricing on these properties. For instance, at the Silver Lake area of mid-mountain Deer Valley, the least expensive ski-in/ski-out three-bedroom condo is priced at $1.4 million. If you are willing to walk a block or two to the resort, you can find a three-bedroom condo in the lower $900s. In an area of Deer Valley called Deer Crest, which is almost exclusively ski-in/ski-out homesites, a vacant lot of about one acre will start at $1 million and go up to about $3 million for the most desirable lots. For a finished home in the Deer Crest development, the lowest-priced home currently on the market is around $3.4 million, with the highest-priced just over $19 million. For comparison, there is a section of Deer Crest that does not have direct ski-in/ski-out access and a 10,000-square foot new home with incredible views can be purchased for under $3 million.

Resort real estate is really not much different from real estate anywhere else in the axiom of "location, location, location" is as true here as in any other real estate market. The focus of the location in our resorts IS the resort. And as in all resorts, the further you are from the focus of the resort, the more you get for your dollar. However, as you get farther from the resort, the rentability and the dollar amount that you can command for a vacation rental drops rapidly. So when contemplating purchasing a vacation property at one of our resorts, several questions need to be asked: Do I want true ski-in/ski-out and is the convenience and ambiance of being "on the mountain" enough to justify the price, or am I willing to settle for either a short walk or a short drive to get more of a home at a lesser price. Interestingly enough, these are the same questions that renters ask themselves when looking to book their vacation. One point that I always try to make to potential buyers if they have decided they do not need direct ski-in/ski-out access is that once they have to drive to the resort--that is, pack up the car with all the gear and load the family in--it doesn't matter if you're driving five minutes or ten minutes to get to a resort. But that extra five minute drive can get you a substantially larger property for the price.

In the age of the internet, most buyers are shopping online as there are many terrific websites to help you find properties. What you can't get a feel for online is the location, which translates to desirability, rentability, and resale-ability. This is where the knowledge of a local Realtor becomes invaluable.

It is snowing hard here today with 2-3 feet expected overnight and I am looking forward to an incredible powder day in the morning. Book your vacation to Park City and let me show you our mountains, and the terrific opportunities we have in resort real estate.

Snow, Snow, and More Snow!

President's Week here in Park City finished as it started: with lots of snow. It started snowing Thursday night, and by Saturday morning we had nearly 30 inches of classic Utah fluff. As you can imagine, every powderhound was out Saturday morning enjoying the knee-deep snow. Very difficult to say whether this past Saturday or the previous Sunday was the best day of the year. But both were fabulous and visitors to Park City during the holiday will be talking about this week for many, many moons. With over five feet of snow during the week, conditions have never been much better. Snow during the weekend, sunshine during the week...everyone was smiling.

I was on Main Street Friday night and couldn't believe how crowded it was. I guess I shouldn't have been as it was the holiday weekend and everyone was in town. Main Street merchants, management companies, and owners of rental properties are once again smiling.

Which brings me to this week's real estate topic: the rental market. As I overtoned in last week's blog, at the conference of resort Realtors from the Western states that I attended in Vail at the end of January, we had a presentation from a real estate consulting and appraisal firm out of Denver, Colorado. The presentation's topic was the trends and future of resort real estate. The final portion of the presentation was on the hotel aspect of resort real estate. Not surprisingly, the past numbers from the hotel industry closely mirror real estate sales. 2005 and 2006 made up the high point for occupancy and rental rates. We then saw a pretty steady drop, and then bottoming out in 2009. Similar to real estate sales, 2010 saw an increase in occupancy numbers but not an increase in the daily rental rates that units were commanding. For anybody that owns a rental property in a resort, this is not surprising news. 2009 was a terrible year for rentals and most property management companies reported a decrease in rental days of around 30%. In 2010, we saw visitors returning, but they were still negotiating very hard on prices. What I find very interesting in this report is the future predictions from Colliers Hotel Industry. They are forecasting a steady increase in occupancy days as well as average daily rental rates through 2014.

Click here to see the report.

If this comes to pass, it will be terrific news for the resorts, for owners of rental properties, and for real estate sales. We know the first thing that has to happen is visitors have to come to our town, fall in love, then they purchase.

Right now, we have the perfect combination of low prices, good supply of inventory, and low interest rates. However, we are starting to see interest rates trending upwards. How long this combination is going to last is the focus of much discussion and speculation. But one thing we all feel is that we may never see this combination again in our lifetime. So, come out, ski, enjoy the mountains, and if you are interested in finding a mountain vacation home or just curious about what the real estate market in Park City is doing, please call.