Snowmaking and Real Estate

This week winter arrived in earnest with snow and very cold temperatures. With the arrival of the cold weather all of the Utah resorts have begun making snow in preparation for the upcoming ski season. Snow making puts down a very dense layer of snow which is perfect for building a base and virtually guarantees that the resorts will be open on their individual scheduled dates.

Surprisingly, the concept of making snow was first discovered in Florida of all places. A method that the citrus growers in Florida used to protect their crops during cold snaps was to spray a fine mist of water over their citrus trees. This would create a layer of ice over the fruit, thereby insulating the fruit from cold temperatures. As the story goes, on one particularly cold snap as the farmers were spraying this mist over their fields it was cold enough that the mist froze coming out of the nozzle and fell in the form of snow. While not particularly useful for citrus growers, the ski resorts in the northeast immediately saw the potential that this had and thus snowmaking was born. Snowmaking systems are very sophisticated and resorts use a combination of two different methods for making snow. One is using compressed air and water and the other is known as “airless” system.

The compressed air/water system was the first system developed and is still used extensively at most resorts. The air/water system is composed of two pipes buried deep in the ground with a “hydrant” spaced at intervals up the mountain to which hoses are connected to along with a snowmaking “gun” on the other end. With the two pipes under ground one contains water and the other pipe has highly compressed air. One hose is hooked to the water outlet and the other to the compressed air. The pipes feed the water and air to a mixing chamber in the snowmaking gun and force it out at a very high speed through a narrow nozzle. This breaks the water into a fine mist or small droplets. When this hits cold air it freezes into snow crystals and consequently falls as a very dense piece of snow. A big advantage that this air/water system has is that as the air/water mixture is forced out of the nozzle and the air expands rapidly. As a result of this expansion the air also cools. The air temperature in the vicinity of the gun is significantly reduced making for more efficient snow making and allowing for snow to be made at temperatures in the mid to upper 30’s.

The “airless” system, which is shown in the photos taken today at Deer Valley Resort, consists of a large tube with a fan at one end and a ring of water nozzles at the other end. The fan blows a large column of air through the tube to which water is injected with the same result; the water droplets freeze and falls snow. This kind of system is capable of making large quantities of snow over a very short period but also requires lower temperatures below freezing, as there is little cooling effect from air expansion. With both systems the density of the snow is controlled by the amount of water that is mixed with the air. In early season snowmaking the desire is for the largest quantity with the most density possible, so the snowmakers inject as much water as they can. The amount of water that can be injected is determined by the air temperature and humidity. The lower the temperature and the dryer the air, the more water that can be injected and still fall of snow. If the snowmakers inject too much water or if temperatures start rising the water droplets are too large to freeze and instead come out as a liquid drop and freeze on the ground, which creates ice instead of snow. So the snowmaking crews are constantly monitoring the air temperatures and adjusting the water/air ratio’s to make the largest quantity of snow possible.

A few years ago Sun Valley Resort installed a state of the art computer driven snowmaking system. This is an air/water system which is operated by a computer that monitors the air temperatures and humidity’s as well as constantly adjusting the air/water ratios. This is very efficient and Sun Valley is known for having a layer of “fresh snow” most mornings for their skiers and boarders to enjoy.

Moving on to real estate news, here are some of the latest statistics pulled from the Park City Board of Realtors:

• Starting from January 2009 the average list price for all property types has dropped 14%.
• The number of contracts written and accepted has increased each month beginning in March.
• The average sales price for a single family home is nearly $1,000,000.
• Total dollar sales volume from January-September is $576,401,594.
• We will end up the year just shy of $1 billion dollars in total sales volume. The highest sales volume was in 2006 totaling just over $2 billion.

Bargain hunters are taking full advantage of the decrease in sales price and the decrease in sales activity. All of the real estate agents in Park City are saying the same thing, sales are increasing, but only for properties that are well priced or for properties that sellers are willing to sell at a perceived bargain price. If you have been at all considering purchasing a mountain property, I can not stress enough that now is the time to buy.

Western Mountain Resorts Real Estate

This week I traveled to Whistler B.C. and participated in a conference put on by the Western Mountain Resort Alliance, known as WMRA. The panel was composed of a representative from Vail, CO, Jackson Hole, WY, Whistler B.C., and of course me from Park City, UT. The purpose of the panel was to discuss the current market and what has transpired during the past 12 months. Our secondary purpose was to look around Whistler and see how the preparation for the upcoming winter Olympics is going.

The markets in Vail, Jackson Hole and Park City were remarkably similar this past year. We all saw a dramatic downturn beginning last October 2008 which lasted until sometime between March-May depending on the resort. Park City seems to have been the first resort to emerge from the recession with our market turning around in March 2009. Vail and Jackson Hole did not really experience a turnaround until May 2009. All three resorts did not experience a booming summer in real estate but certainly saw sales increasing. All three resorts reported that while there have been some sales at the high end, the majority of buyers are looking at lower end properties and by lower end we generally mean under $2,000,000.

Whistler, B.C. has seen a slightly different market as a result of the upcoming Olympics winter games this coming February, 2010. Like all of the other resorts, their fourth quarter of 2008 and their first quarter of 2009 were depressing for real estate sales. But the second quarter of 2009 in Whistler, while still slow, was significantly better and their third quarter of 2009 was back to normal. They are expecting this fourth quarter to be equally as strong, but then as a result of the Olympic games the Whistler realtors expect that the 1st quarter of 2010 will again be very slow. Having experienced the Salt Lake Olympics and the affect that it had on Park City’s real estate, I explained to the Whistler realtors that while they really should not expect any real estate activity through the games March will pick up and most importantly real estate business in the subsequent years should be stronger.

When driving around Whistler evidence of the upcoming Olympics is everywhere. Streets are being widened, the finishing touches are going in on all the venues, and the town is alive with excitement. Interestingly, security appears to be even tighter than it was for the Salt Lake games. Last night we could only get within a half a mile of any of the venues. We attempted to go to the sliding track where the bobsled, luge, and skeleton events will be held but were turned away by security. The same was true for the cross country venue. As we saw in Park City in October 2001, the village center has an Olympic store and posters/ banners are everywhere welcoming guests to the 2010 Olympics. I learned recently that when the resort of Whistler was first proposed in the early 1970’s it was conceived with the intent of hosting the winter Olympics during the 1980’s. This did not occur, however the village was designed and built with idea of hosting an Olympics so it is very pedestrian friendly and beautifully laid out.

If you have ever thought of going to a winter Olympics the Vancouver/Whistler B.C. Olympics this upcoming February would be a great one to attend. Canada is very easy and friendly to U.S. visitors and the drive from Vancouver to Whistler is one of the most beautiful drives anywhere in the world.

Interesting Times in Real Estate

Most real estate markets throughout the U.S. are struggling to reach some stability and the rocky mountain resorts including Park City are no exception. While the general trend in number of sales has been on an upward trend since March, getting in to specific sales I find the numbers are all over the place. If we compare September 2009 to September 2008 the number of accepted contracts written were up 21% from 105 in 2008 to 127 in 2009. However, the number of units that actually closed was down 7% from 121 units in 2008 to 112 in 2009. I suspect that there are several reasons for this, the first is that in August 2009 only 85 accepted contracts were written and the second is a reflection on the difficulty buyers are having obtaining financing. In the past, from time of acceptance to closing for a property subject financing 30 days was common. With the current lending climate the days needed to close a contract has increased to at least 45 days and can often take longer than that.

Another interesting part of the Park City Real Estate market is the “seller’s mentality.” While we have been in a declining market for at least the past 18 months, this past year has been more like a free fall. Depending on when a property was purchased, sellers are now finding themselves selling their properties for the amount they purchased it for or in some cases less than the original purchase price. After many years of a steady increase in selling price this has been a very bitter pill to swallow particularly knowing that Park City is a highly sought after resort. For the past year Park City real estate agents have been working very hard to educate their sellers on where the market is and to price their properties to sell rather than be in a “chasing a declining market” game. Then the issue becomes that even though we have convinced the seller to price their property correctly, buyers are still coming in and expecting the seller to come even further off of the price. So the education now switches towards the buyer to explain where the market is and the true value of their vacation home. As consumer confidence increases I expect that we will see the number of sales continuing to increase and will be significantly higher than last winter. This could increase the differences in the mind set between buyers and sellers. With all of this said… this winter should prove to be very interesting.

Next week I will be in Whistler B.C. participating in a panel discussion with agents from Vail, CO, Jackson Hole, WY, and Whistler, B.C. Check back next week for what should be a very informative report.

Peak Fall Colors & Snow

After a warm and glorious September winter arrived yesterday with snow. It is very rare to see both the peak fall colors and snow at the same time. Enjoy these photos taken this morning October 1, 2009.

Click here to view the photos, or copy and paste this link into your browser:

http://www.flickr.com/photos/33891876@N04/sets/72157622495363498/show/

Snow, Snow, Snow

This September was the most beautiful that I have seen here in Park City. Every day was bright blue skies and warm balmy days. With some early cold weather that we had in August and all of the rain in June, the trees turned a little earlier than normal, but were particularly vibrant this year. Then today arrived, September 30, 2009 and we were reminded that we do live in the mountains. A very strong cold front arrived during the night with thunder, lightening and howling winds. We woke up this morning to rain which quickly changed to snow. It has been snowing all day here in Park City and while it is not sticking to the ground here in town the mountains are certainly white. The extended forecast is for more snow off and on for the next week. A certain reminder that winter is on its way and ski season is not far. While the resorts generally open in mid November, I have seen excellent skiing on Halloween…perhaps this will be one of those years.

In real estate news the real estate recovery seems to be continuing here in Park City. After a dismal start to the year the summer months were stronger than last year and the trend is continuing. For example, the number of properties under contract but not yet closed is down this year from last. There have been 750 homes pended this year and 912 in 2008. The number of pending sales increased for the month of August, 116 this year compared to 110 in 2008. Year to date, condos and land pending sales were down 16% and 42%. However during the month of August, condo sales were up 79% and while land sales were still down compared to last year they were down less than 30%. In numbers of actual closed listings year to date, we are off about 34%, 635 closed this year compared to 969 in 2008. The number of single family homes sold in the month of August was even last year and condo sales were off about 15%. The big drop in sales so far this year compared to last year is in vacant land, only 9 parcels closed this year compared to 22 in 2008. This reflects the caution of spec builders right now. With the lack of new home starts here in Park City and the likelihood that there will not be many for the next year to year and a half, newly completed homes are a rarity and are sought after if they are within the city limits. In the Deer Valley area there are less than a handful of newly completed homes for buyers to choose from. Everything else is either an existing older home or at best an older home that has been remodeled or updated. I expect that as a result of this new homes may be in demand this ski season. Scarcity has always been a significant driving factor in real estate.
With the new snow in the mountains as a backdrop for the bright gold’s and red’s, if there is any way to come out to the mountains this is the time to do it.

The Mountains are on Fire

The mountains are on fire with color right now. The oaks and maples are brilliant red and the aspens are just starting to turn gold. Contrasted against the deep blue sky when driving or walking around town everyone’s gaze is captivated by the scenery. This weekend looks to be the last warm weekend until next summer so we will all be outside enjoying a variety of activities.

In real estate news two new projects in Deer Valley are just about completed. The St. Regis in the Deer Crest area is scheduled to start closing on units later in October. The St. Regis is the first true five star hotel to be built in the area and we are all eagerly awaiting its opening. Another project in the Empire pass area of Deer Valley called Flagstaff will also be completed for the ski season. Now that it is nearing completion sales have picked up with three new transactions in the last two weeks. These were 3 bedroom units selling the $3 million range.

With the ski season rapidly approaching I am getting more calls for buyers looking to pick up a ski home for this year while prices are still low. We have an excellent selection of homes and condos both on and off the mountain and most sellers are still willing to negotiate on their prices. This is the perfect combination for buyers and the savvy ones are taking advantage.

Still #1

While it has not hit the newsstands yet we have heard that the next issue of Ski Magazine will show Deer Valley Resort as the #1 rated ski resort in North America for the 3rd year in a row. The rankings are the result of a survey that Ski Magazine sends to its readers each year. Readers are asked to rate the resorts that they have visited on the quality of their experience in a number of key areas. The survey asks readers to rank their experience in areas such as; customer service, snow quality, variety of terrain, run’s, on mountain food service, and proximity to night life and other amenities as well as their overall experience. For the 3rd year in a row the readers of Ski Magazine have rated Deer Valley as their #1 favorite resort in North America. Given the number and quality of western ski resorts, this is quite an accomplishment and Deer Valley is justifiably proud that its commitment to their guests is acknowledged and appreciated. While I have not seen the rest of the survey, Park City and The Canyons Resorts are usually ranked in or near the top 10.

In looking at real estate pended sales for each month the trend that I noted that began in March continued through August and has strengthened. Each month since March the number of pended sales has increased from the previous month and is now similar to where we were in September 2007.

There is still much debate as to whether the economic recovery that we are seeing is real and sustainable. On one side, the feeling is that the continued high unemployment rate remains to be a detriment to the recovery and that as a result the economy is destined to grow weakly. The feeling is that until more Americans are employed consumer spending will continue to be slow. While there will certainly be spikes in spending brought on by stimulus programs such as “Cash for Clunkers”, these are temporary spikes and not sustainable.

On the other hand, optimists say that the rebound will help kick start a self- sustaining recovery where improved confidence leads to consumers and business’s starting to spending more. Time will tell which of these scenarios will come true, or will it be somewhere in between?
What I have seen in Park City is that in many areas the number of sales from January 1st through August 31st comparing 2008 to 2009 there were more sales in this time frame in 2009. However, the average sold price was generally down in 2009 compared to the same time frame in 2008. This reinforces my statements several weeks ago that the bargain hunter buyers have moved from a “wait and see” to a “buy” position. It is certainly true that if a property is not perceived as a bargain, buyers are rarely interested in it right now.

I do believe that as the bargain properties are removed from the market we will see a slow and gradual return of prices. I am already seeing some signs of this as sellers are beginning to not give away quite as much as they were a month ago. Fall is typically a transition month for sales where we start to see more investors and 2nd home buyers looking to pick up a ski property for the upcoming ski season. I think that the next two months are going to be very telling whether the recovery of the market in Park City is real or is just a temporary correction.
September has been particularly spectacular with warm days, cool nights, and right now the mountains are full of red oak and maple trees. Most everyone feels that this is the best month of the year so come out and visit us and experience fall in the Rocky Mountains.