The Future of Real Estate

During these uncertain times everyone wants to know what is going to happen with the real estate market and their investments in particular. My crystal ball has been very cloudy lately but I can confidently say that the resort real estate market will rebound and it will most likely be before the metropolitan markets. Now just what is it that I see that causes me to make such a statement? I am seeing several very positive signs that indicate a recovery in the real estate market, if not already occurring, it is not far off.

First is the stock market. The stock market tends to be an indicator of what will be expected six months from now rather than a single snapshot of the economy at the moment, so while the unemployment numbers are very high the market feels like the turnaround may be near.

Second, the number of new real estate contracts written in Park City has steadily increased each month beginning last March. It is true that the majority of these buyers are bargain hunters but the fact that they feel that we are close enough to the bottom or to get off the fence, is very encouraging. What is interesting to me is that the increase in activity covers all ranges of the market. Again, an indicator that confidence in our market has returned.

Third, for the past year I have shown property to many buyers who stated that “We are in no hurry and want to wait for the bottom of the market”. This waiting creates a lot of pent up demand. It is often said in a market that is moving downward that no one wants to be first but no one wants to be third either. So when the real estate market does start to rebound, as we are seeing, the pent up demand often causes a flurry of activity. Barring any new economic or political disasters, this initial flurry of activity can be the catalyst to a sustained increase in market activity.

While we are still in the middle of summer, oddly enough, buyers are thinking of the upcoming ski season and are thinking that now is the time to start looking for ski investments. As we get closer to the ski season there are more buyers looking and as a result of this sellers are feeling less pressure to accept drastic price cuts. Savvy buyers understand that the best deals are to be found from mid spring through mid summer.

Resort real estate is always speculative and subject to the whim of the economy but Park City is in a unique situation with its proximity to Salt Lake City. No other major ski resort destination in the west has the convenience of an international airport that is an easy 30 minute drive away. Another unique aspect of Park City is that unlike any other western resort Park City is not surrounded by national forest but rather land that was prospected for silver and privately owned. While other resorts have a scarcity of developable land witch puts upward pressure on prices we seem to have an over abundance of land, which helps suppress prices. The ski resorts certainly have their share of expensive properties but we are blessed with an inordinate amount of very affordable homes and condos (for ski resorts). This allows me to help buyers find a property that fits just about any budget and need.

So what does all of this mean? While nothing can ever be said for certain, my confidence is very high that Park City will come out of this downturn sooner than most and today’s buyers will be very pleased with their purchases.

Summer in the Mountains

After the wettest June on record the month of July arrived and with it came summer. Since the 1st of July the weather has been hot and sunny with just the occasional afternoon thunderstorm. As a result of the early rain and warm sunny days the mountains are a symphony of color. When out hiking, mountain biking, or even driving over some of the mountain passes, one can not help but be amazed by the array of flowers and all of the various colors. Both visitors and locals can’t stop talking about how beautiful the mountains are right now. Another welcomed benefit to the rain is that the hiking/biking trails are well packed down and not thick and dusty like in many years past. This is certainly a year to come out and see for your self how spectacular summertime in the mountains can be.

Last weekend Park City hosted its annual Food and Wine Classic. Friday was the Main Street Wine Stroll where vintners from around the world displayed for participants to sample. The event started on the plaza of the Town Lift right on lower Main Street and then continued to the top of Main Street where various restaurants and galleries hosted a stop. At each stop a group of vintners poured samples of their wine while the restaurant or gallery provided a delicious array of food. The event, always popular, was a huge success and my group finished off the evening with an outdoor dinner at a local restaurant (owned by Robert Redford) where Rich Wyman performed. Rich Wyman is a local recording star who frequently travels to Ireland and northern Europe for concerts. His music is both entertaining and exciting and at the end of his show we all toasted each other to a delightful evening in Park City. Visit www.richwyman.com for more info on this wonderful artist.

In Real Estate news the market turnaround that we first saw starting in March has continued through the month of June. We saw the number of real estate contracts written and accepted begin to increase in the month of March and each following month has been stronger than the previous month. While we are certainly still in a “buyers market”, I am beginning to detect a bit of urgency on the buyer’s side as the exceptional deals are being snatched up. Even though the news that we hear every day indicates that the nationwide real estate market has yet to bottom out, the western resorts are a different animal. For the past 18 months we have seen numerous buyers wanting to purchase a vacation home here in Park City but felt that they were better off waiting for the real estate market to correct itself. Now that the market correction seems to have occurred, this pent up demand is the driving force behind our market turnaround. The word about the continued monthly increase in sales has filtered down to our buyers who are seeing the writing on the wall. During this recent real estate downturn it is often said that no buyer wants to be the first to leap into the market but they but they certainly don’t to be last either.

While I would still say that the majority of transactions are in the $1 million and under price range we continue to see a number of purchases above $3 million also. An interesting home that has just come on the market is a 20,000 square foot home situated on 60 + acres near mid mountain Deer Valley and is listed for $55,000,000. While the home is spectacular the setting on over 60 wooded acres makes this a one of a kind property. For more information on this property type this link into your internet browser : http://pcmls.com/Pub/EmailView.asp?r=1298536824&s=PKC&t=PKC.
While this number appears astronomical, and it certainly is, an estate home in Aspen just sold for $40,000,000. As always, there are buyers willing to pay for the unique property that cannot be duplicated.

One of the unique attributes of Park City/Deer Valley is the amount of developable land not only directly on but high up on the mountain. Because most western ski resorts are on national forest land, we are unique in our ability to build ski homes directly on the upper elevations of the resorts.

This is the summer to visit us and when you do, take some time and let me show you what is so unique about Park City and Deer Valley.

4th of July and Golf

This past weekend was the 4th of July here in Park City (and everywhere else). Park City has the quintessential small town 4th of July parade. Entries this year included the Park City junior kid’s hockey team, who periodically broke into fights on main street. The People’s Health Clinic with people walking down main street on crutches and hospital gown’s open in the back. The junior luge team with kids coming down main street on luges. Several local breweries with beer taps on the back of the float. And the girls gymnastic team performing handsprings down the road. The parade was followed by a town party in the City Park with music, children’s games and the annual rugby tournament. As expected, this was capped off with a fireworks display at 10pm (sundown in this part of the world). Parade’s in small town America are a must see and Park City’s is one of the most enjoyable I have seen.

The rains of June have ended and summer has definitely arrived. The sunshine and heat have brought the wildflowers out in such a dazzling display of colors that it is breathtaking just driving around town. The mountains the greenest I have ever seen and the golf courses are plush and in superb condition. This past weekend a new golf course just outside of Park City, called Red ledges opened for play. This is a Jack Nicklaus “signature” course and is one of the prettiest courses I have seen. It is set amongst the red rocks, just southeast of park city in the town of Heber. Typical of a Jack Nicklaus course, it also very difficult with narrow fairways and long 2nd shots to small greens. However the setting and the scenery keep the experience extremely enjoyable.

Several other private golf courses in town are Tuhaye, Promontory, Glenwild, Jeremy Ranch and Park Meadows. Both Jeremy Ranch and Park Meadows are older courses that have been around since the early 80’s. While these are private courses, membership is open to anyone, not just homeowners in the neighborhood. Of the two, I find Jeremy Ranch more scenic and interesting. Winding through a broad valley the course has a lot of elevation changes and beautiful views of the Wasatch Mountains.

Glenwild, which was the first true golf course community in Park City and designed by Tom Fazio, is the course for serious golfers. While the clubhouse is beautiful, and the fitness and spa rooms are excellent, Glenwild is really all about the golf. This is where Michael Jordan has a home and plays golf.

Promontory, the second golf course community in Park City, has two 18 hole golf courses. The first course which has been open for several years was designed by Pete Dye. Their second course, which is going into its second season, is a Jack Nicklaus designed course. While Promontory certainly has a strong golf presence, I consider it more of a family oriented community. Promontory features the best children’s center in the area, a beautiful pool and spa, small lakes where children can fish and sail, and an outfitters cabin for hiking and biking in the summer, snowshoeing and cross country skiing in the winter. Promontory also has an excellent tennis facility with a beautiful stadium center court. For someone looking for golf, and activities for the entire family, Promontory is the best in the area.

Tuhaye, one of the newer golf communities around Park City, is best suited for golf enthusiasts who are also avid skiers. Tuhaye features a Mark O’Meara designed course and in the works is a Fazio course as well. While Tuhaye has an excellent spa and arguably the best pool in the area, the member’s clubhouse has yet to be built. What is unique about Tuhaye is that club members enjoy the golf facilities and a member’s clubhouse called The Tower Club, located on the mountain at Deer Valley Ski Resort. The Tower Club, which has ski-in/ski-out access, features a lounge where members can get lunch during their ski day avoiding the crowded Deer Valley restaurants or stop in après ski for a snack and favorite beverage. While Promontory has a member’s lounge located in the village at Silver Lake at Deer Valley and Red Ledges plans to build a clubhouse at the bottom of the gondola in Deer Crest, Tuhaye is the only club that offers a true ski in facility, on the mountain, where members can dine.

Victory Ranch is a golf and fishing community with the golf course scheduled to open later this summer. This is a spectacular course set high on a bluff overlooking the Jordanelle reservoir and the Wasatch range. I have driven this course and from the looks of it the views are going to be stunning and the course extremely enjoyable. What victory ranch offers that is unique is the Provo river running through it with world class trout fishing. No other course or community in the area can offer this amenity.

For the golf enthusiast Park City offers a total of 14 public and private courses each with their own unique characteristic. Whether you are a serious golfer, a golf/skier, golfer/fly fisher, or golfer/spa person, there is something for every taste. Come enjoy Park City in the summer, see how much father your ball flies in our thin mountain air and take advantage of the activities we have to offer.

Western Mountain Resorts

This past week I hosted a conference for real estate agents of the western ski resort communities in Jackson Hole Wyoming. We had representatives from Sun Valley, Idaho, McCall, Idaho, Park City, Utah, Vail, Colorado, Breckenridge, Colorado, Steamboat Springs, Colorado, Winter Park, Colorado, Jackson Hole, Wyoming and Lake Tahoe, California. As president of the Western Mountain Resort Alliance my job among others was to moderate a panel discussion of all the resorts. Questions were asked of each representative about their current real estate markets, sales activity, prices, activity on new developments, and sales activity in their golf course communities.

While there were some striking differences between the resorts, the overall market activity was very similar. All of the resorts reported that sales numbers and dollar volume was down around 45-50% comparing this past ski season to the previous ski season. The big differences were apparent in average price and price per square foot in homes and condos sold. Vail grabbed everyone’s attention with new slope side condominium development’s selling for up to $2900 per square foot while Winter Park, CO said their new slope side development’s are selling for around $500 per square foot. Park City falls somewhere in the middle with new slope side development’s selling around a $1000 per square foot. However, Park City does show a penthouse condo in the Empire Pass area of Deer Valley under contract/pending at $1900 per square foot.

McCall, ID, home of Tamarack ski resort, reported that their prices have dropped low enough that nearly every property sold is receiving multiple offers. Several of the other resorts, particularly Breckenridge, are also experiencing a return of multiple offers being written for exceptional properties. Pretty much every resort is experiencing signs that the real estate market is turning for the better.

Near unanimous were the resorts reporting that home sales under $1.5 million and condo sales under $700,000 were the strongest parts of their market. Also unanimous was that vacant land sales were the weakest. The lack of land sales can be attributed to a lack of vacant land near the resorts and the unwillingness of lenders to make loans for undeveloped land.

We discussed at length how golf course communities were doing at each resort. Nearly unanimous was that vacant land and home sales in private golf course communities was extremely slow. Everyone felt that in the late 1990’s and early 2000’s too many golf course communities were developed and that there was just not enough demand for all the supply that came on the market. It appears to us that the resorts, in an effort to become a Four Seasons resort rather than just a winter resort, developed too many golf course communities. For instance, in the Vail area which encompasses an area from the Vail valley and continues west along I70 for about 70 miles there are now 13 golf courses and many of those are real estate communities also. That number got everyone’s attention until Park City announced that we now have 14 golf course communities in and around the immediate area. Jackson Hole only has 5 golf course communities. North Lake Tahoe has 4 golf course communities, all put in many years ago and now North Lake Tahoe is enforcing a moratorium on any new golf course communities. As a result the North Lake Tahoe communities have sold out of all developer product and re-sales are fairly strong. Perhaps the rest of the Western Resorts should pay attention to this lesson.

In final comments almost all of the representatives were optimistic that the increased activity we have seen in the last couple months will continue through the summer months and in to next year.

Has Summer Arrived?

After 4 weeks of rain every single day, the sun came out this afternoon. Could this really be the start of summer? While the calendar tells us summer starts this weekend you never really know living in the mountains. But based on the calendar Park City begins the summer season this Friday. We will be kicking off the summer with a dinner and Jazz Festival on Main Street Friday night. This is knows as “Savor the Summit” where we close Main Street to traffic and put tables end to end from the top of Main to the bottom of Main. Our local restaurants all participate with a special menu to serve. And several Jazz bands will be performing along Main Street while people dine. This is a great event and really gets everyone going!

Next week on Wednesday the free concerts begin at Deer Valley Resort. These occur every Wednesday through August and have become the social event of the week. Everyone gets lawn seating, brings their favorite beverage, dinner and music is def secondary to the party.

In real estate happenings May was a very strong month for sales (considering the economy) with the number of contracts written surpassing July, 2008. This was really good news and hopefully a start to a solid recovery of our real estate market. June typically begins the home selling season as most people prefer to wait until school is out to move their families. Right now buyers have an excellent selection of homes to choose from in all price ranges and when combined with the historically low interest rates, I am optimistic that the home buying season will be good. Historically resort condo sales do not pick up again until about August, when the approaching ski season rekindles interest. We should start to see interest in golf course property now that summer has arrived and with the competition among all of the golf course communities there are some opportunities that we may not see again for a long time (more on the golf courses next week).

Rain Rain Go Away

This has been the wettest June on record, 10 out of 11 days this month have seen rain. On the positive side, I have never seen the mountains so green and lush, the reservoirs are full and the fire danger is extremely low. This all bodes well for the upcoming hot months of July and August. Fortunately, the snow level has been above 10,000 feet so we have not had to deal with snow.

In real estate news, the market turn around that I first noticed in March, continued through April and really picked up some steam in May. Beginning last September we experienced a steadily declining number of sales here in Park City. March saw the first significant increase in both closed sales and the number of pending contracts written. As an example: in February 2009 the Park City Board reported 42 pended transactions. In March that number jumped to 70, increased again in April to 83, and in May the Park City Board reported 98 pended contracts. The same held true for closed transactions. In February there were 50 closed transactions, in March there were 63, April saw 60 closed transactions, and May jumped up to 73 closed transactions. This is particularly interesting because April and May tend to be very slow months with fewer sales than the traditional busy ski season months (December-March).

What does this mean? Anybody’s guess at this point. Is this a beginning to the recovery? Or is it just a false spike brought on by low prices and low interest rates? Only time will tell at this point, but here in Park City we are experiencing more optimism then we have for quite some time.
This Sunday the “Park Silly” market held on lower Main Street begins its summer season. This is an eco-friendly market featuring artists, crafts, music, locally grown produce and food booths from local chefs. There is always a lot of fun energy and it is a great way to end your week. Don’t worry, the sun will come out and it will warm up so plan a vacation to Park City and experience summertime in the mountains.

New Developments

The weather this first week of June is cool and rainy with a forecast of snow for this weekend, which is pretty typical this time of year. However, the last two weeks of June are historically the driest two weeks of the year, so we eagerly await the expected precipitation this weekend.
The past year has seen a flurry of activity at the ski resorts with new condominium project developments. In the Empire Pass area of Deer Valley a new condominium project called Flagstaff is well under way with an expected completion date of late fall /early winter 2009. Flagstaff offers 3 and 4 bedroom condos with direct ski in/out access and ranges in price from $3,300,000 for a 3 bedroom to $6,000,000 for a 4 bedroom penthouse unit. Flagstaff is a part of The Talisker Club which offers a “members only” lounge on the mountain at Deer Valley Resort as well as access to the Mark O’Meara designed Tuhaye golf course which includes a clubhouse with a restaurant, spa and pool.

At The Canyons Resort several new condo projects are under construction or nearing completion also. Most noteworthy is The Dakota Mountain Lodge which features the Golden Door Spa which will be managed by the Waldorf-Astoria chain. With Talisker Corporation (the developer of Tuhaye Golf Course and the Empire Pass developments at Deer Valley) recently taking ownership at The Canyons resort and the addition of the Golden Door Spa and Waldorf-Astoria, it appears that The Canyons Resort will rightfully claim a spot as our 3rd world class destination resort.

In addition to Dakota Mountain Lodge other new projects at The Canyons are Sunrise @ Escala which features 1-2 bedroom condos starting at $695,000 and Juniper Landing which features 2-3 bedroom condos starting at $825,000. These condominium developments are all located in a new village just below the base area of the resort and will be connected to the ski area with a new chairlift that will be under construction this summer. Also planned for this development is a resort golf course that will wind among the condominium developments.

Park City is continuing to grow and prosper and this would be a terrific summer to come out and see what is new here to get a feel for where we are heading. It will not be long before the resorts are completely built out and the only properties available will be re-sale properties.