Colorado Second Home

Thursday, November 5, 2009

The Snow is Falling with the Prices

That's right, snow, lots of it throughout the month of October. There was even a morning when I woke up in my home in downtown Durango to several inches of the stuff, enough to force a premature donning of snowboots for the morning dog walk and a postponement (thankfully) of the morning run. It's been such a good early season for snow that Silverton Mountain opened for skiing on October 6, 2009. This photo was taken, unbelievably, on that day. And so it begins. Don't think there isn't part of me that doesn't want to leave for a warm-weather climate this time of year. Fortunately Durango notches over 300 days of sunshine and has always boasted the most amazingly comfortable skiing climate in the Rockies. I grew up skiing in Summit County where the windchill-factor almost always seemed to register somewhere in the negatives (I remember skiing one day at Vail at -40, and wondering the entire time why on earth I had actually paid to do that). In fact, Sumit County was the last place I heard anyone refer to "windchill-factor." Wolf Creek Ski Area is also open for limited skiing already - this is early and very promising. I wrote an article a while ago about the extreme skiing in Silverton. Check it out here:

http://www.insideoutsidemag.com/issues/2006/May_June/Unguided_and_Unhinged/


With the falling snow, we've got falling prices to announce. The Durango Area Association of Realtors recently released their third-quarter cumulative statistics and the report included plenty of negatives, as far as median price change went. Durango In-Town Homes, Durango Country Homes, and Resort Condo categories all logged median price decreases over 2008. You may want to save this link to view this recent and future statistical analysis put out by our local board of Realtors: http://www.durangorealtor.com/Area%20Statistics.htm. What is perhaps more interesting to note is that the price decrease is lessening with the release of each subsequent quarter's data. So our prediction of a recovery in this market is coming true. Also, Durango area condos showed a significant price increase over 2008 in this recent cumulative measure. It's common for the low end to recover faster as it's accessible to the engine that drives real estate recoveries - first time homebuyers. In short, opportunity is still knocking for buyers in this market, just a little softer, and not much longer. Of course, we'll say this until we're blue in the face and the majority of our customers will choose to buy somewhere between the middle and top of the real estate market recovery, if they follow historical trends at all. It makes sense that fewer folks are willing to take advantage of economic opportunity in a time of personal economic uncertainty. But every day more and more people are taking advantage of those opportunities, and Shazam!! (sorry, always wanted to write that somewhere), one day we'll be well beyond the recovery.

Here's a prediction: But first - something we've been saying for a long time - The Baby Boomers will drive the 2nd home markets in 2010 and beyond. It's an undeniable demographic trend that our industry has been writing about and anticipating for over a decade. It's based on a simple set of premises. They are:

• Baby Boomers are a giant population in the United States.
• They are the beneficiaries of most of the post-war growth in wealth in the world.
• They are further the beneficiaries of the largest post-industrial wealth transfer in US history as the previous generation gives way to them.
• Every Baby Boomer needs a 2nd Home. Well, perhaps that's a little self-serving. Let's just say that the studies out there on Baby Boomer trends indicate that they tend to value some of the intangibles that tangible real property in second home locations offer (family, lifestyle, togetherness, outdoors experiences, etc...) and they recognize investment property as an important component of their wealth generation portfolio.

The significance of 2010 and beyond is that many of the Baby Boomers enter retirement, or begin to, thus initiating one of the most active and dynamic generations of retirees our culture has ever witnessed. And it lasts for about the next fifteen years. This is where many of the people who study 2nd home and real estate economics have been placing bets on the future growth in markets like Durango's. And guess what? We just put everything on sale just before they were ready to buy. Hmm, this is hardly brain surgery, rocket science, or really even fourth grade math.
Baby Boomers are already having their impact on the new real estate economy. Read all about it in this recent Newsweek article:
http://www.newsweek.com/id/221105

One of the things our "new economy" and the new economists involved in evaluating it are noticing is that the Baby Boomers are being more careful about what they spend on housing and more conservative on things like the size of their homes, and the relative luxuries involved. Durango has always offered two very distinct things to the 2nd home buying market beyond its world-class beauty and over-abundance of lifestyle and recreational opportunity:

1. Value
2. An escape from the ostentation of other resort communities. The words you most often hear in association with Durango are: genuine, real-west, down-to-earth, welcoming, warm-hearted, family-friendly

So here's my belabored prediction: The Baby Boomers are still coming. I see and work with them every day. Maybe they've changed their approach as the recent economic tumult enters the American bloodstream. I think that Durango is the kind of place that will fit their adjusted second home and lifestyle desires best. Interestingly, Durango suffered far less compared to other resort markets around the country during the downturn (some of them don't even exist anymore. Just Google the word Tamarack). My prediction is that the next ten years will see unprecedented growth in value in the communities we serve because of these trends.

I'll bet 3rd quarter 2010 will see an end to negative mean price in Durango and the surrounding areas. Who wants to bet?

Here are some other recent articles that may be of interest to you:

CNN/Money, Existing Homesales Rebound to Highest Level in Two Years, October 23, 2009
http://money.cnn.com/2009/10/23/real_estate/existing_home_sales/index.htm?postversion=2009102311

CNN/Money, What Housing Bust? Most States Posted Home Price Gains, October 21, 2009
http://money.cnn.com/2009/10/21/real_estate/what_housing_bust/index.htm?postversion=2009102115

The New York Times, A Bounce? Indeed. A Boom? Not Yet, October 10, 2009
http://www.nytimes.com/2009/10/11/business/economy/11view.html?_r=1&scp=1&sq=bounce&st=cse

The Wall Street Journal, Yes, the Housing Market Has Rarely Looked Better, September 2009
http://coloradosecondhome.com/WallStreetJournalHousingMarketRareyLookedBetter.aspx

Business Week, Business Outlook - A Housing Recover with a Solid Foundation, October 29, 2009
http://www.businessweek.com/magazine/content/09_45/b4154016692288.htm

Cheers, and think snow!

 

Saturday, September 26, 2009

It's Hot Here in the Fall

Now things are really starting to heat up. We've been saying the market was poised to see the return of opportunistic buyers, since the opportunities are plentiful , and there are definite signs of a market upturn. Just a few months ago it seemed like the doom and gloom was saturating every media story, and now their usual "harbinger of doom" narratives have taken on an optimistic tone with everything real estate. Check out my personal real estate website at http://www.coloradosecondhome.com/ to see featured articles over the last few months on local and national real estate trends.

Anectdotally speaking this has been my best summer in the real estate business for total sales volume and number of sales. Our friends at Durango Mountain Realty have echoed similar sentiments. Just in the last two-weeks three of my most value-priced listings have gone under contract. All three were in property types (townhomes and a single family home) off the beaten path and just outside of the resort proper. All three were not sales I truly anticipated at this time. All three were priced below replacement cost, and enough buyers have entered the market who have begun to take notice.

In a previous post I waxed on about a property I'd put under contract at over $900k that I felt was perhaps valued at nearly half of its value from previous years. It's certainly been easy to sell, but tough to close. I've now written a third contract on this property. The first two fell out for distinctly different and personal reasons, which underscores the volatility of sales. In fact, only about 80% of contracts make it to the closing table right now. This is sharply down from years past. People are still slightly nervous, but there's a sense that things are settling into more normal patterns.

If you're out there with secure wealth, a desire for a lifestyle at least partially lived in southwest Colorado, and a desire to either diversify or enhance your investment portfolio or your lifestyle portfolio -- there's little question that now is the time to act. The bounce has happened. Distressed and under-priced properties are getting knocked off like so many ducks in the arcade, only this time the next shooter won't get a replenished line of ducks.

Three days ago an article appeared in the Wall Street Journal titled, "Seeking Real Estate Bargains, Try Looking at the High End." It focuses on the northeast and west coast, but the same is true in most high-end or luxury markets in the country. Prices are going up again in just about every other category of real estate after the precipitous fall, but there are still amazing bargains in the luxury and 2nd home markets ($200,000 and up for 2nd home condos, townhomes and single-family homes). And don't even get me started on land. Land has been flatter than the giant pancake that lands on the school in that horrific Cloudy with a Chance of Meatballs that my son dragged me to yesterday. But we're even starting to see sales there.

The temperatures are down in the 60's and 70's during the day and the colors look like the photo at the beginning of this article. Big secret here - now is the best time to visit Durango. Apparently nobody knows, because the roads aren't crowded and you can get a restaurant reservation before 9pm.

Wednesday, August 19, 2009

Don't Sell Yourself SHORT

For many in today’s economic climate, there is a perception that purchasing a “short sale” somehow equates with “deal of the century.” This is not always the case, especially in a “resort” area and second home market. In fact, with a healthy inventory and great selection of properties, most sellers who decide to list their property now, no matter what their situation, are prepared and willing to negotiate. A “short-sale” or “foreclosure” purchase, can take several months, and in many cases only impacts the psyche of the buyer, and not necessarily the wallet.

One of the most popular reasons a seller puts a property on the market based on my experience in working with sellers over the past 15+ years, is the desire to purchase a “replacement” property, which enables them to take advantage of being a “buyer” in this buyer’s market as well as the tax advantages associated with a 1031 exchange process. There are few short-sales in our resort area – those few over extended their equity in the property during the peak of the market. The bank is willing to take short the amount owed by the borrower, who may owe more than a comparable property listed for sale – while a seller who is not in default on the property, is simply pricing aggressively to be competitive with the supply.

In addition to other lien holders that the ‘short-sale seller’ may be in arrears with (i.e. homeowner associations/assessments, personal and real property taxes, utilities), there is a level of patience required on the part of the buyer. Once a “bid” is presented, the bank may take up to 30+ days for a response – if a response is given at all. The seller may also influence what the acceptance price will be, as they are still liable for any shortfalls in sales price and the amount owed to the lender. In the interim, as we see the lower priced properties, or low-hanging fruit, in the market get absorbed, the short-sale buyer can miss the market. This may not be true in Florida, Arizona, California and Nevada, but given the limited short-sale inventory, and availability of property at “distressed” pricing that doesn’t require short-sale negotiations here, a couple of sales in any segment can mean you missed the market.

In a buyer’s market, we recommend anyone looking to take advantage of these great opportunities to create a “wish list,” prioritizing their preferred location, type of property, and estimated “range” of pricing. Second, while not avoiding short-sales, look at comparable properties and price points, to avoid the often time consuming and frustrating process of a short sale, and potentially missing out on some very attractive interest rates or seller finance options. Finally, once the property of your choice is identified, don’t hesitate and make an OFFER.

An experienced and specialized real estate broker is your #1 resource for establishing what the best values are, and can best present offers to secure the best price possible. A savvy seller too, realizes this is a buyer’s market, and if they are truly interested in a sale, they will base their decision on motivation, inventory and competition, including those few “short sales” that may drive some on how they negotiate a bid on their property.

Exceptional opportunities exist right now – interest rates are at a 20 year low and areas like the resort community in and surrounding the ski area at Durango Mountain, are becoming more and more in demand. Our area has become increasing popular as a lifestyle choice for its alpine setting, views, location, weather, and affordability, especially when compared to other resort destinations in Colorado. Don’t find yourself saying “I shoulda bought in 2009!”… The long and the short of it…. THE TIME TO BUY IS NOW!

 

Saturday, August 8, 2009

On Real Estate, Mountain Lakes, Fish and Beer (Not necessarily in that order)

What a difference a couple of weeks can make. Your probably already know that interest rates are at historic lows. Couple that with the current housing price lows and affordability is at a 20+ year high according to most estimates we're seeing. Here's the thing though, Durango's market feels like it's taking off again. Anecdotal evidence:

• I showed property this week. Of the 13 homes I tried to show priced under $600,000, 4 went under contract before the showing, and the one the clients wanted went under contract the day of the showing.
  
  
• I put the same 23 acre property under contract twice in two weeks. The first time it fell out because the family decided they weren't quite ready to make Durango their full-time residence. But the deal was so good that one of my other long-time customers swooped in and purchased it. This property is 23 acres of incredible high-alpine property overlooking the Animas River Valley from a high perch on relatively flat land with no neighbors in any direction and national forest land leading to the Animas river as one of the property borders. And it had a 4,000 square foot home already on the site. It would have been priced over $2 million just a year ago. My customer has it under contract at under a million.
  
  
• We priced a small condo at Cascade Village to sell. There hadn't been more than a couple of sales at Cascade for over a year, and none in the type we were listing. It's under contract pending closing after being on the market for only a couple of weeks.
  
  
• Another customer put a completely re-envisioned and remodeled historic home under contract in Durango's historic district, on 3rd Avenue no less, at nearly 25% less than it's original list price (a realistic price to market when listed).

• Still another found a new condo in the historic district at a price of $265,000 for a two-bedroom right on 3rd Avenue and College, the heart of historic Durango. It makes me feel like a buffoon. I paid over $450,000 for a condo in basically the same location two years ago.
  
  
• Both bank-owned properties in Engineer Village at the ski resort are now under contract. So much for distressed property opportunities there, though there are still some tremendous condo deals at the mountain, and more great home bargains in the immediate vicinity.

The times are changing, and fast. I've personally never been busier. I'm having to carve time out for extra curricular activities, like a fishing trip to the lake in the photo above in the Weminuche Wilderness Area last weekend. I've been sworn to secrecy about its location and about the number of whale-sized trout it harbors, but I'll take you places like it, or show you how to get to them if you're interested. Hint: It's somewhere in this range below:

Don't' take my word on the market. Check out these independent sources:

Business Week, Where the Real Estate Market is Already Bouncing Back: Historically, the West coast is a real estate trendsetter and as sales there increase it suggests the rest of the country may soon follow, July 24, 2009

USA Today, What the Latest Data Shows: Recession Likely to End in September, July 28, 2009

NAR: Existing Home Sales Rise Again, July 24, 2009

Forbes, Experts Say Now is the Time to Buy, July 23, 2009

Realtor Magazine/AP, Investors Drive Foreclosure Prices Up, July 23, 2009

Realtor Mag/Business Week, Housing Experts: Now is a Perfect Time to Buy, June 22, 2009

All of these links and more can be found at my website http://www.coloradosecondhome.com/. There you'll also find my recently published articles on the beers of the four-corners titled, "The Great Four-Corners Beer Exploration." It's a four part series for Inside Outside Magazine. Here are the links if you're interested in why this region, Colorado specifically, has more micro-breweries than any other part of the country:

Four Corners of Beer, New Mexico, June/July 2008

Four Corners of Beer, Arizona, August/September 2008

Four Corners of Beer, Utah, November/December 2008

Four Corners of Beer, Colorado, January 2009

I'm contemplating a short return to the writing trail to focus on the vineyards of the southwest. Much like the Beer Exploration, I'll have to travel to all the vineyards, meet their people, drink their wines, and eat their food, all in the name of research.

In other statistical news:

• Sales in Durango of homes priced under $425,000 are up 4% through all of June of 2009 compared to last year. The low end and first-time homebuyers market is red-hot in fact. This is where the market comes back.
  
• Sales of higher-end homes are still soft, and there are deals out there, finally, like the one I detailed above. Sellers have gotten real and they have to compete with a bunch of other sellers if they want to dispose of property in the high-end right now. Land sales are also still slow. Good deals abound in that sector. The market is essentially having a sale. It's a wonder all of the customers I have aren't rushing through the doors like there's only one Cabbage Patch Doll left on the shelves. Well, some actually are.

Again, don't take my word for it on the market. Here's some information from Buffini and Company and Wells Fargo:

HOMES WITH MORTGAGES

FACT: Approximately 30% of all U.S. homes are free and clear and do not have a mortgage.

It seems like every time we turn on the evening news or read a newspaper headline, the bad news deepens our fear and concerns about the economy. With the news media in full throttle, using terms such as “MELTDOWN” and “CRISIS,” it’s easy to understand why you might lack confidence in buying or selling a home. We have to remind ourselves that the media reports NEGATIVE news, not positive news. Their key objective is to pull in an audience (and advertisers), not to make you feel good about yourself. They announce the unemployment rate rising, despite the fact that millions of people are still working, making money, eating at
restaurants and even buying/selling homes. In fact, while 3.3% of homes in the United States are in foreclosure, 96.7% are in good standing.
Instead of internalizing the negativity the headlines can cause, choose to be optimistic and focus on the opportunities around you.

FACT: Of the 70% of households that do have a mortgage, 96.7% are not in foreclosure.

Source: Mortgage Bankers Association
Are we really spinning out of control?
The Housing Affordability Index is at the highest level of affordability in history.

There is still time to take advantage of lower home prices and historically low interest rates.
And, despite what the nightly news reports, financing is still readily available for qualified buyers. When mortgage rates fall to a record low, housing affordability surges to a record high.
Source: Board of Governors of the Federal Reserve System
Source: National Association of Realtors®

How's the new real estate company doing in the midst of all of this? I couldn't have imagined it going better. We may have timed our entry into the market perfectly.

We're here to help. Be it beer, fishing, backpacking, high mountain lakes, or even real estate.

July 18, 2009

It's been a little over a month and a half since we opened a real estate brokerage two miles from the entrance to Durango Mountain Resort and in the heart of Durango's resort community. My partner Kris Daly and I left Durango Mountain Realty, the real estate arm of Durango Mountain Resort, to form a partnership with The Wells Group, Durango's premier market leader in real estate. The result is The Wells Group Mountain and Resort Brokerage (http://www.wellsgroupmountainresort.com/).

We are located in the Needes Country Square in an office formerly operated by Needles Real Estate. Our simple mission is to be the leader and independent source for real estate services in Durango's resort area and throughout southwest Colorado. Kris has over fifteen years of experience in this market as a broker with both Durango Mountain Realty and Needles Real Estate. I was the Director of Sales for Durango Mountain Realty's new base area redevelopment, Purgatory Lodge, and a broker with Durango Mountain Realty for over five years. Between us we are the most productive Realtors working in the resort area with more transactions and dollar volume of transactions than any other organization, and we rank consistently at the top of all brokers in the entire region.

Even with that going for us, it seemed a little daffy, even to us, to open a real estate brokerage on the heels of one of our country's most difficult recessions and one that really started with a melt-down in the real estate markets. Regardless, we felt there was an unfulfilled need in the market to provide buyers and sellers with an independent resource and unbiased delivery of real estate services and analysis. As Durango Mountain Resort has grown and developed its successful community and mountain master plans, their real estate services became almost solely focused on promoting in-house new developer offerings. It's a natural progression in a master planned community, but as the community grew at a rapid pace there was no real estate organization stepping up in earnest to serve the entirety of this market, which lies 25 miles beyond the town of Durango.....until now.

Was there a need? Well, if the last month and a half is any indication, we may be onto something. I came into this brokerage with very few listings. My previous position would not afford time to manage any but those with my personal clients and customers. Kris had a decent share of the market in listings on day one, but had not been actively pursuing new listings at Durango Mountain Realty because of the emphasis on developer projects and the lack of support given listings there.

It's been a busy month, to say the very least. Our office now has 53 independent listings compared to Durango Mountain Realty's 32 listings that aren't in-house developers. We are two brokers to Durango Mountain Realty's four. Our market share in independent listings after only a little more than a month looks like the chart below (we're in blue).

What about buyers? We've written six offers and put three deals under contract since we opened (pending a fourth as I type). Our chief competitor has no new buyer contracts to our knowledge during this time.

But enough of that. We'll publish our stats from time to time, and eventually post them regularly on our website, but our job here isn't to make ourselves David to their Goliath. We like and respect our former company and their successes are ultimately ours. As the resort prospers, so goes the community. We just wanted you to know two things:

1. We're here to provide the highest level of service offered in this area for your listing and buying decisions .

2. We're not only going to lead out of the gate, we intend to lead all the way to the finish.

And the only finish worth counting is a sale so successful that our buyers and sellers refer us to their friends, family and associates.

In my previous blog post I provided some market analysis you may want to investigate if you haven't read it already. The Durango Area Association of Realtor's issued their second quarter stats, and we can finally say it's a buyer's market, something we haven't seen in Durango in the last fifteen years, or more. We don't think we'll see it very long. The leading indicators we keep looking at show signs of recoveries in just about every sector that informs our local real estate market. We would cautiously estimate that there's a six to twelve month window where the buyer's market will prevail, perhaps more in certain market sectors (land most notably). Building permits are at historic lows in our county and while inventories have climbed, a small market like ours has a tendency to recover quickly without active construction growth.

The purpose of this blog will be to provide a continuous independent source of information on our local market and events in Durango, Colorado, as well as its resort communities. We'll try to keep the advertisement content to a minimum and provide valuable and insightful information that will be useful to anyone with an interest in property in this area. Drop us a line and let us know what you like and what you don't. Ask us questions and suggest topics for future postings. Even if you just need a good place to go fishing or a nice trail to hike on, we're here to help. Also, we'll soon have a podcast on our site with similar relevant information if you'd prefer to listen to our regular reports.

Thanks for your support.

Until next time.... Chris and Kris (we'll answer to either one)

 

 

July 17, 2009

 

The Durango Area Association of Realtors (DAAR) recently released their second quarter statistics.  I’ve posted a link to their report below.

 

http://www.durangorealtor.com/images/Statistics/2ndQtrStat2009.pdf

If you have interest in or already own real estate in Durango, you may want to save this link for the future.  That way you can check out the market as much as you like and make your own interpretations. 

Here are some things I noticed in looking at these numbers:

• DAAR doesn’t have a great way to include fractional sales in their general stats, so both 2008 and 2009 statistics are missing this significant component of the resort market in their general analysis.  At the end of 2008 there were more sales in the fractional condominiums, thanks to about $16 million in closings at the new Purgatory Lodge, then in all other categories in the resort market.  Similarly, in 2009, there have been seven sales that aren’t counted in the general numbers you see here.  In a small market, that’s a big deal, and those numbers would impact the final stats considerably were they to be included.

• If you were waiting for the market in Durango to soften or go down, your wait is over.  Numbers of sales are off as much as 50% in some categories, and down in all.  Though the resort area has proven more resilient then other parts of our market, especially if you include fractional sales, it too is now experiencing the results of more motivated sellers who are responding to more reluctant buyers.

• Sales in single-family homes in the resort area are at an insignificant number to draw price conclusions, but certainly the lack of sales and corresponding rise in inventories make for some great buying opportunities in this segment among others.

• These statistics are very similar to the mid-late 80’s in the Durango market.  That was the last timeframe that people really look back on here with the thought of, “I wish I would have bought then,” or conversely the stories of their buying brilliance.  You can see from the statistics that the slowdown really began here in 2006, though the Durango market in many categories has either continued to remain stable or grow since then.  If you’re a buyer, opportunity is knocking.  Sellers should probably stay put if they can.  Most inventory categories are not vast given the numbers in a small market, and a market recovery, which may be imminent given the performance of markets that tend to lead ours, will in many cases eat up the good deals pretty quickly, and permit pricing to reflect more normalized circumstances.

Statistics are always open to interpretation.  I’d be happy to discuss my thoughts with you more.  My partner Kris and I have consistently led the resort market in numbers and dollar volume of sales and we were glad to contribute those to the success of Durango Mountain Realty in the last two quarters and prior to then.   Our new brokerage is focused on providing you with knowledgeable independent analysis for buyers and sellers throughout the resort and greater Durango area, and we’re now part of the brokerage with the largest market share and exposure of any real estate brokerage in southwestern Colorado.  For information on The Wells Group share of the market and organization, you may want to visit http://www.wellsgroupdurango.com/whywells.asp. 

Let us know how we can help.