Second-home sales slow in Snowmass
September 24, 2007
SNOWMASS VILLAGE Sales of second homes are slowing in Snowmass Village, while demand remains strong for primary residences everything from the lowest end of the market to million-dollar-plus properties. After more than two years of robust sales and sizable gains in property values, a real estate market that once was insulated from outside forces appears to be feeling some reverberation from a national market gone haywire.Some observers believe that Snowmass Village is being hit harder than Aspen and downvalley not only because of the steep gains posted to properties since the approval of Base Village in 2005, but also because of the ongoing construction associated with the project. The market has slowed somewhat but its not across the board, said Greg Rulon, a real estate agent with Coates, Reid & WaldronSnowmass. Single-family seems to have slowed more than condominiums. With certain complexes, you list a unit, and its gone the next day.Steve Strickman has been trying to sell his four-bedroom, three-bath Melton Ranch home since June. Almost no one has looked at the house, he said. Apparently, a number of others are having the same experience. Im sure that the lack of traffic is in part because of the subprime mortgage problems, higher interest rates and the volatility of the stock market. Second-home buyers seem to have disappeared.The multiple listing service puts the Strickmans Sinclair Lane home at $3.395 million. Theres no shortage of Snowmass Village homes in the $2 million-plus category, which is out of reach for most locals.Second homes have slowed down, Rulon said. Thats where the discretionary income comes in. He added, Prices on the upper end have risen as much as 40 percent over the past few years, and some people may be hesitant if they think theyre buying at the peak. Most of the activity Rulon has seen recently comes from people relocating to the area, which hints at the strength of the local economy.Land Title Guarantee Co. reported that sales of all property in Pitkin County was up by 3.95 percent in July (for total sales of $162.2 million as compared to $156 million in July 2006). That followed a disappointing June, when sales were down by 50 percent over a robust June 2006 (June 2006 included a $48.5 million sale).Sales of zone 2 properties (Snowmass Village and Brush Creek) totaled $12.1 million in July 2007; there were eight transactions that had an average sales price of $1,517.063. In comparison, there were 38 transactions in Aspen during July, with the average sales price of just over $3.1 million each.Temporary blip?Some believe that what Snowmass Village is now experiencing is a natural adjustment following more than 30 months of heavy market activity.Still, one looks at other market signs and ponders whether they are significant.The Pitkin County Treasurers Office earlier this month had five properties on its foreclosure list, including one on Owl Creek Road and one in Old Snowmass. Thats been unheard of in the past, said one real estate agent who requested anonymity. Another agent spoke of an internal, interoffice listing service that includes a category called fallen out translated to mean sales that have collapsed.Ive never seen that before, said the broker with more than a quarter-century experience in the local market. I wouldnt say its a trend. Theres one deal here, one there. Yet he did think it rather unusual, especially given the seemingly unstoppable local market after the post-9/11 slump.Snowmass Villages finance director, Marianne Rakowski, is budgeting real estate transfer (RETT) taxes conservatively for the coming quarter just to be on the safe side, she said. Thats also the case for her 2008 projections, she said.Keep in mind that already the town has collected $4,598,092 in RETT sales for 2007. Last year at this time RETT collections totaled $1,918,360. When sales of Base Village and the Mountain Chalet (which totaled around $190 million, or $1.9 million in RETT) are removed, RETT collections are still up by 40 percent this year, Rakowski said. And that speaks to a market that could be considered healthy.But there are weak spots and blips on the screen.Sellers still think its a sellers market, said veteran real estate agent Rick Griffin of Coates, Reid & Waldron. Buyers think its a buyers market. Neither one really wants to accept anything less than their position.Griffin also is among those who believe the heavy construction in Base Village is impacting Snowmass Village sales negatively, at least for the time being. Strickman said hes also heard that the construction mess may have been keeping potential homebuyers away.Another cause for the perceived slowdown could be the medias close scrutiny to changes in housing, mortgages and hedge funds. The national sales slump and the increasing number of foreclosures especially in Colorado, which has one of the nations highest rates are often front-page news.Because of that, Buyers are having difficulty realizing the parameters of this market are different from that in Florida, California and New York, Griffin said.The National Association of Realtors reports that sales for the second quarter fell 4.8 percent in Colorado. Recently, the Associated Press reported that subprime mortgage problems are spreading to the upper end housing market. Jumbo mortgages those in excess of $417,000 are getting harder to secure, but about 70 percent of local sales are completed with cash. The hedge fund controversy may be having an effect on the slowdown of sales on the upper end, one agent surmised.Yet real estate agent Phil Miller of Aspens Mason & Morse is among those who believe the local market is as strong as ever. He eschews statistics such as time on the market and price per square foot, preferring instead to look at every sale as a unique experience.Miller agrees with local agents who believe that Snowmass offers more for the money than Aspen. In Aspen it could take $7 or $8 million for some good choices, (in Snowmass) you can have some good choices for $5 million or less.The market has never been as strong as it is right now,Miller added. The demand for property, with very few exceptions, is at record highs.Yet Snowmass Village sellers who expect a 20 percent increase over a prior sale may be disappointed in the markets reaction.What were seeing are sales continuing to increase as far as price goes, Griffin said. What were not seeing is that when people have priced them well above the last price (that the transaction is completed in a swift manner), said Griffin. He cited an example of units in Country Club Villas that hadnt seen much movement in part because of the sizable jump in the asking price.Griffin also pointed out that a reduction in the asking price is not the same as a reduction in the sales price.Its just cyclicalAsk anyone who owns property in the valley, and theyll tell you its rare to lose money on a purchase.Weve never dropped here, Rulon said. But weve flattened out. I bet in six months its all flattened out.That might be a difficult pill to swallow for those investors who had hoped to make great gains on their properties in the short term. Comparisons to last year can be misleading. Rulon said that 2006 was his best year in 31 years. Its possible that could be his best year ever or not.Clearly, 25 percent a year appreciation is not sustainable, Rulon said. That may mean lowered expectations or a good dose of patience for those with properties currently up for sale.