Third Quarter Resort Comparisons

A very interesting observation as winter approaches North America is in watching reactions to forecasts of snow. When watching the news stations or weather channel I have noticed that when snow is forecast for most cities in North America or the US, it comes with a warning for travel and usually with advice for residents to avoid traveling outside and to stay at home. It does not seem to matter whether the forecast is for an inch of snow or several. Ski resort towns, on the other hand, not only do not panic with the forecast of snow, but instead celebrate it. The ski resorts in the western US really don't even take notice or start to get excited unless the forecast is for at least a foot. Then the excitement is not for concerns of traveling around town (we all know how to drive in snow) but rather the prospect of excellent skiing the next day. Just another example of how ski country people are just a little different from the rest of the country.

This past weekend we had a fairly decent storm with 8-10 inches of snow on the Park City side and between 1 and 2 feet in the Alta/Snowbird area. Unfortunately the combination of new snow and early season enthusiasm is a recipe for disaster. Over the weekend and mostly on Sunday, there were around a dozen skier/boarder-triggered avalanches in the Wasatch Range. And most unfortunately, pro-skier,  Jamie Pierre was killed in an avalanche at Snowbird Resort. Prior to the opening of the resorts--Snowbird and Alta don't open until this Friday--the resorts aren't doing avalanche control work and early season enthusiasts forget that while skiing at these resorts, one must take the same precautions as backcountry skiing. This is a lesson that is all too often learned too late.

The third quarter statistics for all of the resorts of the Western Mountain Resort Alliance have just come out and are pretty interesting. The statistics are for most of the major resorts in the western US: Whistler in British Columbia; Park City, Utah; Steamboat, Vail, and Crested Butte in Colorado; Sun Valley, Idaho; Big Sky, Montana; Lake Tahoe, California; and Jackson Hole, Wyoming. Pretty interesting that what I've been reporting for Park City all year is quite similar to what's happening at the other resorts. All year I've been reporting that the number of listings has been down (and for Park City it's down 6% over last year) and likewise, the other resorts are down anywhere from 2% in Whistler to 16% in Big Sky. Only Lake Tahoe is up at 6% and Jackson Hole is even from last year. Over this past year I've been saying the number of units sold has been up in Park City (which it has by 18%) and every resort except for Crested Butte is also showing number of sales up over last year. Vail is basically even, up only 1%. Big Sky, Montana has had the biggest increase at 40% in number of sales of last year, and Crested Butte is the anomaly down 45% in number of sales last year. I have been following these statistics since 1996 and pretty consistently, Vail has always sold about twice as much as we have in Park City. However last year and again this year, total dollar volume sold in Park City has surpassed Vail. Through September, Park City has sold just over $853,000,000 for a 7% increase over 2010. Vail, on the other hand, has sold just under $725,000,000, which is a 24% decrease over 2010. In looking at all of the resorts, four are up this year and five are down. Whistler, Park City, Steamboat and Big Sky are all showing increases in dollar volume over 2010. While Sun Valley, Vail, Lake Tahoe, Jackson and Crested Butte are all showing a decrease. Jackson Hole continues to have the highest average sales price of all resorts with the average sales price for all property types for the entire county of $1,225,000. By contrast, Vail, which we always assume is very expensive, is showing an average for all property types of $898,000 and Park City at $676,000. Jackson Hole has always been expensive because of the scarcity of developable land. Only 3% of all the land in and around Jackson is available for development. This is one of the big contrasts that we have here in Park City where one of our main issues is actually that there is too much land that can be developed. Please feel free to contact me for detailed or more specific information for any of these resorts.

The snow is piling up, the resorts are opening, Park City, Alta, and Snowbird open this weekend, so it's definitely time to find where your ski gear hid itself over the summer and get the ski legs in shape.

Memorial Day Week

Memorial Day weekend is coming up, the traditional day of the start to summer, barbecues and pools opening. Unless you live in the mountains. A quick look at this week's forecast is calling for Saturday's weather of 47 degrees and rain, hardly makes you feel like summer. People frequently ask if Memorial Day is a busy weekend in real estate and a good time to hold open houses. Anywhere else but the mountains, this holds true. But up here, more people leave than come into town for the holiday.

Last week Thursday I hosted and was moderator for a panel discussion of resort Realtors for three of our neighboring resorts: Lake Tahoe, California; Sun Valley, Idaho; and Vail, Colorado, that was attended by the Park City Board of Realtors. It was a wonderful lunch meeting with over 200 Park City agents in attendance. Not surprisingly, while there are some regional differences, the state of real estate in each of these resorts is very similar to what we're seeing here in Park City. Numbers of sales were up, prices are down and the general feeling is that prices will not be rising anytime soon due to pressure from distressed properties. The differences are in the details for each area. For example, in Vail, high-end condos in the heart of the village have sold at over $2,800 a square foot. Lake Tahoe, where is the real focus of the resort is around the lake (instead of the ski resorts) there are very few condos for sale and prices are around $400 per square foot. Sun Valley is in between but closer to Lake Tahoe with maximum prices pushing but not exceeding $1,000 a square foot. Here in Park City, our high-end ski-in/ski-out hotels on the mountain of Deer Valley sell for between $1,300 and $1,500 per square foot. (Throughout the 16 years I've been involved with the Western Mountain Resort Alliance, prices and amount of real estate sold in Vail have always been the envy of the other resort Realtors.) Each of the resorts reported that skier visits to the resorts, lodging numbers and retail numbers were up 5-10% over last year. Everyone was pretty happy with this gain and gave their confidence that this summer's real estate activity and visitor traffic would continue with upward trends.

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.

President's Weekend in Park City

Snowing hard, blowing hard...it must be President's Weekend! I’ve just seen more often than not that President's Weekend is very snowy, and this one is no exception. We got about 25” of snow from Saturday morning to Sunday morning. Which of course made for incredible skiing. I was out on Sunday which was as usual a sellout day at Deer Valley and everyone had big smiles. The powder was soft and deep and the groomed was perfect soft-packed powder. Just from watching everybody and talking to people on the lifts they will be talking about this weekend for many moons.

At the end of January, I attended the WMRA annual meeting in Vail, Colorado. These meetings give me an opportunity to meet with fellow resort realtors and discuss with them how their market is faring in today’s economy. The overall consensus was that everyone’s market had improved considerably starting sometime during the 3^rd quarter of 2010.

During the weekend’s meetings, we were fortunate to listen to a presentation from a real estate consulting and appraisal group out of Denver, Colorado. This group has been hired as a consultant for many different projects throughout all of the western resorts. The presentation that they gave was extremely positive and enlightening and quite encouraging. Looking at resort numbers from 2007-2010, a trend became quite obvious. 2007 (and for some areas 2006) was definitely the high part of the market with 2009 the low point. Pretty much every resort showed the same trend: high dollar volume and high number of sales in 2007, trending downward in 2008, bottoming out in 2009, and starting to recover in 2010.

Two other interesting statistics came out during this presentation which I also found very relevant. First was the number of active listings per single family home and condos for each of the Western resorts showed a sharp decline from 2009 through 2010. The second was that the average sales price for homes and condos was at the peak in 2007, declined through 2008 and continued to decline through 2009, then remained relatively flat in 2010. Anyone familiar with economics would find this interesting in that if the number of sales are on the increase while inventory is decreasing. Logic would state that prices should also be on the increase. More demand, less supply, causes higher prices. I believe that we still have enough downward pressure on prices from bank foreclosures and short sales that we will not see prices increasing quite yet. However if the trend of increasing demand and decreasing inventory continues, prices will have to follow.

Click here to view the presentation. (It's a rather large file, so please be patient. It's an excellent read!)

There was another section of this presentation regarding resort hotel occupancy, but I’ll save that for next week. In the meantime, come out to Park City and enjoy the incredible winter we’re having; the skiing is fabulous!