Spring Market Update

Spring has arrived and the snow is (very) slowly giving way to green grass and warmer days. May is an excellent time to reflect on the past real estate season and the outlook for the remainder of the year.

Market Analysis
This past winter was one of the most interesting that I have seen in my 19 years of real estate. Record snowfall brought incredible ski conditions, a record number of visitors to town, and the fewest number of real estate sales in over 5 years. It’s not that visitors did not want to own real estate here, but the constant barrage of negative press made buyers nervous, cautious, and wanting to wait to see what’s going to happen. Comparing the ski season, December 1, April 30 of this year to last year, here are some numbers: Number of Transactions for Single Family Homes is down 45%, and 44% for condos. Interestingly enough, during the same period the average sales price of a home went up 46% and the average sales price of condos rose 22%. In looking at the other destination ski resorts throughout the Rockies, I see that the same trend has occurred at the other resorts. This tells me that people continue to want vacation property and that our prices are still perceived as a good value. Whistler, in British Columbia, is the only resort in the west which reported an increase in number of condo sales (up 8%) and a 100% increase in sold price. This is understandable as Whistler is reaping the benefits of the upcoming 2010 Winter Olympics and the favorable exchange rate between the US dollar and the Canadian dollar.

Some specific areas of interest here in Park City are:

Old Town (including the Park City resort):
Single Family Homes were down 47% in number of sales (8 this year compared to 15 last year) and the average sales price was down 20 % ($1,376,000 compared to $1,712,000).
Lower Deer Valley:
Single Family Homes were down 71% (2 compared to 7) but up 7% in average sales price ($2,375,000 compared to $2,218,000).

Upper Deer Valley (Silver Lake):
The number of sales were off 43% (4 compared to 7) and the average sales price was down 2% ($5,411,000 compared to $5,507,000).

All of the areas within the city limits:
The number of home sales was off 26% (34 compared to 60) and the average sold price was down 3% ($2,419,000 compared to $2,500,000). This small decrease in sold price is reflective of resort markets where sellers generally do not have to sell, have the means to wait out a slowdown, and thus are not willing to drop their prices significantly.

For condominium sales:

Old Town (including Park City resort):
The number of sales was down 26% (54 compared to 73), but the average sold price was up 38% ($1,130,000 compared to $818,000). This is in large part due to the new Silver Strike project which was completed this winter.

Lower Deer Valley condos:
Number of sales were down 28% (13 compared to 18), and up 1% in average sales price ($1,195,000 to $1,188,000).

Upper Deer Valley:
Even in number of sales (11 compared to 12 last year), but average sales price was up 20% ($2,660,000 compared to $2,216,000).

For all areas within the city limits:
Condo sales were down 40% (108 compared to 180) and average sales price was up 24% ($1,331,000 compared to $1,075,000).

I frequently attend national real estate meetings where I make a point of speaking with agents from around the country. From my conversations, it appears that the resort real estate market is holding much stronger than many of the residential markets. Agents from the metropolitan non-resort areas for the most part are describing markets where the number of sales are down even more significantly than ours and sold prices are also significantly down.

From visitors that I spoke with and showed around this past winter it is very clear that they still want to buy here, will buy here, but are just looking for an increase in their comfort level. We saw this in 2001 and 2002 where terrorist attacks and wars created uncertain times, where buyers were also nervous and cautious about purchasing. In 2004 and 2005, confidence level returned and there was a pent-up demand for vacation properties throughout the West. At that time, all of the resorts experienced a frenzy of buying where properties were selling as fast as they came on the market, often with multiple offers. While no one can say when, I expect we will see something similar in the next couple of years. In 2007, many buyers that I had been working with for some time said to me, “Why didn’t you make me buy in 2005?!” In the next three years I expect that I will be hearing similar statements and that people who purchased during this downturn will be feeling very smug.

News on New Developments
Empire Pass at Deer Valley is moving forward. Last summer the second Arrowleaf building in Empire Pass was completed with all but one unit sold prior to completion. The Silver Strike condominium building is well under way and is expected to be completed early this summer. Last summer, the new Flagstaff condominium building broke ground and should be completed for the 2009/2010 ski season. The ski-in/ski-out homesites being built by Christopher Homes are under construction with two of the 18 homes pre-selling prior to completion. In addition nine lots in Red Cloud at the top of the mountain were released this winter and there were two sales in the Red Cloud subdivision, both well over $4 million.

Montage is a new luxury resort spa hotel under construction at the base of the Empire lift at Deer Valley. Completion is expected for sometime during the 2010/2011 ski season and we expect the first relase of condominiums to be late this summer or early this winter. The Montage will feature a 30,000 square foot spa, restaurants, and lounges. While no specifics have been announced as far as prices, floorplans, or sizes of units, we are expecting the first release to come out between $2,200 and $2,500 per foot. The Montage will certainly have the premier location of any of the resort hotel spas in Deer Valley and Park City. Watch for further updates as information becomes available.

The St. Regis Hotel in Deer Crest at Deer Valley is steadily progressing and about 65% sold out. Two units just sold this past week. The St. Regis will feature a spectacular slopeside pool, deck, and lounge area with ski access from the Deer Hollow ski run. There are only 25 units left with completion expected in early summer 2009.

Silver Star is a new development at the base of the Park City Resort, is ski-in/ski-out, and is a combination of condominium apartments, townhouses, and single family homes. The project is about 70% completed and was completely sold out prior to breaking ground. In addition to the residential community in Silver Star the developers have painstakingly chosen to preserve the mining heritage and have converted many of the original mine buildings into an artist colony which will be the home of next year’s Sundance Film Festival.

The big news at The Canyons is that earlier this winter, American Ski Corporation, the owner, dissolved, paving the way for the sale of the resort. There was a fierce battle between Vail Resorts and Talisker Corporation for the resort. Talisker is the developer of Empire Pass at Deer Valley and the Tuhaye golf community just outside of town. After several heated court battles, the courts have ruled that Talisker’s offer to purchase was legitimate and above board. This has paved the way for Talisker to purchase the resort and it is expected that they will close on the purchase as early as the end of May 2008. This is very good news for the Canyons, as it will bring a much-needed infusion of money, and energy back to the resort. In anticipation of this purchase, we saw good activity in an area called The Colony, a ski-in/ski-out home development adjoining the Canyons where six lots sold and two homes, one being a home listed for over $14,000,000 sold. When Talikser has completed the purchase of the Canyons and the news is released, I expect that there will be a flurry of activity for lots and homes in the Colony as well as the new condominium developments at the base of the Canyons Resort.

Very exciting news at the Canyons is that a new condominium project called Dakota has aligned itself with Golden Door Spas and the Waldorf-Astoria hotel chain. Bringing these two nationally known hospitality giants to the Canyons Resort speaks volumes about their confidence and where they see the future of the resort.

The Promontory golf club and home development is going through some rough times. Promontory opened up its second signature golf course last summer, a Jack Nicholas-designed championship course, but its two major creditors, Credit Suisse and Wells Fargo bank have forced the developer into a chapter 11 restructuring situation. It is felt that Promontory will emerge from this, be back in business, but most likely with a new owner and management team. In the meantime construction on their third championship golf course is on hold.

The Tuhaye golf course and community was quite active this winter in both lot sales and homes. Tuhaye has benefited from being a part of a unique club concept called the Talisker Club. The Talisker Club has combined golf amenities with ski amenities at Deer Valley, fishing, boating, and horseback riding. This club concept is the first of its kind which allows members the luxury of year-round activities, whereas clubs that have amenities just on a ski area or golf course only provide activities for a small part of the year. This is a very successful idea and from the number of inquiries I received last winter, it has been well received.

There is nothing that Park City loves more than real estate gossip. And the latest news here is that Jim Lewis has sold his company, Lewis, Wolcott & Dornbush Real Estate and the new owner has joined us with Sotheby’s International. Our new name is Summit Sotheby’s International Realty. While this of course does not change me or my relationship with any of my clients, it does bring the power of the Sotheby’s name to our marketing. The Sotheby’s International connections should bring quite a lot of marketing power and exposure to my sellers’ properties that LWD as an independent company could never afford to do. Combine the Sotheby’s name, direct flights from Paris to Salt Lake on Delta, a very favorable exchange rate between the euro and the dollar, I am anticipating an increase in foreign visitors and buyers, particularly from western Europe.

As we slowly move towards summer, it seems like winter will not let go. We are cautiously optimistic for real estate sales this summer and we have seen a flurry of activity this spring. We are all hoping that the economy rights itself and consumer confidence once again reemerges. In the meantime owners of property here in Park City are enjoying the use of their home or condo, both during the ski season as well as during the summer months.

Golf Course News

With the snow slowly melting the local golf courses are gearing up for summer play. The Park City Golf Course along with the private golf courses of Glenwild, Promontory and Tuhaye are all hoping for a mid-May opening. Even though we continue to get snowstorms each week, the days in between the storms are getting progressively warmer and the courses are beginning to green up.

What will be very interesting this year is to see what happens with Promontory. Promontory is a very large golf course community with two championship courses and many homesites. Promontory is going through some financial struggles and trying to work out an amicable situation with its creditors. Earlier this year, Credit Suisse announced that it had taken over the operation of the community and amenities. Since that time Wells Fargo Bank, the second lien-holder has forced the Pivotal Group (which is the developer of the community) to file for chapter 11 bankruptcy which is allowing them to reorganize while still having capital to operate.

Glenwild Golf Course is in the enviable position of having been the first true golf course community built in the area. As a result, Glenwild has 90+% of its properties sold with the golf course and clubhouse seasoned and functioning smoothly.

Tuhaye, one of the newest courses, seems to be doing well, mostly as a result of its affiliation with Deer Valley Ski Resort. Talisker, the underlying developer, has created a unique club concept combining the golf course amenities with a clubhouse and dining facilities on the mountain at Deer Valley. This gives Talisker Club members a true year-round recreation program in ski country. I expect that this unique program will allow Talisker and the Tuhaye Golf Course to remain strong during these difficult times.

There are three new golf course communities underway in the surrounding areas and I will be very interested to see how they do. If we look at how many available lots there are combined in all the communities that are either built or under construction we have about a 30-year supply of inventory. As a result, I do not expect that all the golf communities will survive. As with all real estate purchases, this emphasizes the importance of using a local and knowledgeable real estate agent to guide you in the right direction.

The snow is melting SLOWLY

The snow is finally melting in Park City. Here is a photo taken this morning. You can almost see my front door behind the snowbank.

This photo was taken in January of my backyard:


This photo was taken in February:

And this photo was taken this morning. It will be a while before we're golfing, that's for sure!

Is it a Buyer's Market?

Resort real estate and in particular, western real estate has a history of peaks and valleys. While the ski resorts throughout the Rockies have been somewhat insulated from the traditional urban real estate markets the economic downturn over the last six months has had an effect on us. Fortunately, unlike the real estate market throughout much of the country, we have not seen the drastic drop in prices as we hear about, particularly in places like Florida, Arizona, and California. For the first quarter of this year compared to the first quarter in 2007, we have seen a decrease in the number of sales of about 40% across the board, but only a 3% decrease in average sold price. This is similar to the last big economic downturn in 2000, where we saw the stock market drop 50-60% but real estate values in Park City remained quite stable. During the 2000 downturn, owners who owned property in the resorts saw their investments holding steady instead of losing value in the stock market. We are seeing a very similar trend right now where the market is on a roller coaster of ups and downs and our real estate prices are remaining flat. As in 2000, this kind of a market presents many excellent opportunities for savvy investors.

With properties taking longer to sell than they have in the past, we have more listings available for buyers to see, choose from, and find out which sellers are the most motivated to sell. Because Park City and Deer Valley are very desirable and sought-after, not all sellers are ready to give their properties away. With the expected ups and downs of resort real estate I always advise my owners to purchase with the understanding that real estate markets do fluctuate, and it is important that they be able to weather the slow periods. Unless there is a specific need to sell a property right now, I am advising most of my owners to either hold onto their price and wait out the economy, or just not put their property on the market at this time. Fortunately my clientele is such that the vast majority of my owners fall into this category. However as I mentioned earlier, there are sellers that are not in this position and not all real estate agents are giving this advice to their sellers, so there are some excellent opportunities to be had. As with the stock market, the smartest time to buy real estate is when the market is down rather than waiting for activity to pick up where sellers are less negotiable and there are fewer properties to choose from.

Closing Week

With much fanfare the 2007-2008 ski season came to a close this past weekend. The ski conditions were the best that I have ever seen for closing with over a 10’ base and mid-winter conditions all last week. The weekend finally brought sunshine, warm weather and spring ski conditions on Sunday. Sunday the mountain was crowded with all locals and parties were everywhere. By Sunday afternoon the beach at Silver Lake was rockin’ with many stories being told of this past season. As we now wait for the snow to melt we can take a deep breath and relax with many fond memories of the season. From late December through early February was some of the best skiing imaginable as it snowed most every day. This year people were finally saying that they’d had enough powder skiing for the season.

Big news in real estate this week is that Lewis, Wolcott & Dornbush Real Estate is now a Sotheby’s franchise and our new name is Summit Sotheby’s International Realty. This is very exciting as Sotheby’s brings strong name recognition, and a lot of power to our upper-end market. With the worldwide connections we expect to tap into much more of an international market than we could as an independent brokerage here in Park City. Watch for further information as we make this transition.

Spring Skiing?

While the calendar may say it’s April 1, it feels more like December. After about a foot of new snow over the weekend, we woke up to temperatures near zero this morning which is making for incredible skiing for this time of the year. This year it appears that true spring skiing is still several weeks away. Visitors to town are enjoying uncrowded slopes and perfect ski conditions, very unusual for this time of the year. With only two weeks to go to the end of the ski season here for the local resorts, this past week saw the town alive with spring festivities. We had concerts Thursday, Friday, and Saturday nights on Main Street, and the Canyons held their traditional pond-skimming contest on Saturday. For the pond-skimming competition, the resort digs a large pond out of the snow, lines it with plastic, and fills it with water. The goal then is for skiers to ski down to the pond and maintain enough speed and balance to make it all the way across. This rarely happens. The event is filled with laughter, music, and many very wet skiers in a variety of costumes. If you ever have a chance to see one of these events, make a point of it.

Recently, the IRS has clarified some of its rules regarding 1031 “like-kind” exchanges and the ability of owners to use their property. The IRS has ruled that as long as owners have their property available for rent at market rates, they may use it for up to 14 days per year plus reasonable days for maintenance and upkeep and still qualify as an exchange property. As always, it is important to document usage, stays for maintenance purpose and amount of time the property is rented each year. Check with your accountant or an exchange accommodator for full details on these new rulings.

April 2008

As we wrap up the 2007-2008 ski season, it’s a good time to reflect on the past year. The skiing was the best it has been in many years with what seemed like snow every day from mid-December until February. Long-time visitors to Park City rediscovered our famous powder skiing and first-time visitors discovered what Utah skiing is really all about. It seemed like every other day in January we were saying that it was the best day of the year. All of the snow and all of the publicity brought record numbers of visitors to town. It will be interesting to see the final visitor nights but from what management companies have been telling me, this was their busiest year ever. And from the difficulty that I had showing properties, this was certainly true from my perspective. The ski shop owners are all smiles. Visitors to town were buying new skis, new ski outfits, and of course, everyone needed accessory items like gloves, hats, and goggles. This has certainly been good news to condo owners, store owners, and restaurant owners as news of economic downturns throughout the rest of the country seem to be the headlines every other day.

All of the Park City resorts are scheduled to close April 13, even though we will have around a 10-foot base and incredible skiing. Starting Monday, April 14, not only will the town be quiet from lack of visitors, but the residents will be headed south for warmer climates in an attempt to thaw out their frozen bones. Mid-April through May is definitely the quietest time of the year in Park City. Time for everyone to catch up with old friends, swap stories of the winter, and make summer plans. Quite humorously, I just received the schedule for the Men’s Golf Association and the first tournament is scheduled for April 27. Considering that there is still three feet of snow on the golf course and it is not melting quickly, I don’t see much chance of this occurring. Spring is the time for everyone to recoup, recharge the batteries, and prepare for a busy summer season. Now is the time to make your plans to come out and visit Park City and experience summer in the mountains.