Volumes took their normal seasonal dip in January but were up against a very weak January of a year ago. Unit sales in the County dropped 68% to 96 transactions in January versus 140 in December but were up 10% versus the year ago period. As has been the case for the last year or more, dollar volumes year over year trailed the year ago period, falling 7.7% to $40.2 million despite the higher unit volumes. However, the dollar decline versus December was slightly less than the unit decline reflecting some stabilization in average selling prices. Year over year average price comparisons, however, were quite negative. The average selling price for a single family home was $665,000 down from $767,000 a year ago. Multi-family ASPs were also down substantially , falling to $338,000 versus $426,000. Once again these number tend to overstate the decline in pricing. Looking at like units, year over year price declines were closer to 10% but a continued focus of buying in smaller or lower quality units have generated substantially larger drops in ASPs. Lot prices also continued to show a decidedly downward trend with six transaction averaging $131,500 each. A year ago, that number was $222,000. While these number appear quite negative, I must add that things are “feeling” better. Inventory is down and the number of showings in the county is up 35% versus a year ago.
Next to “How’s the market?”, the most common question I get is, “Do you have any bargains?” I’ve developed a method for finding them.
Of course what constitutes a “bargain” is very subjective but one metric is the valuation placed on the property by the County Assessor’s office. While not perfect, the homeowners desire to keep his taxes low through a challenge generally keeps these valuations in line. I now have a proprietary algorithm that compares all properties currently on the market against their tax valuations. The results can be filtered and sorted to identify the best bargains that meet your specific criteria. Of the 1,500 residential properties currently on the market in Summit County, about 15% are priced below their assessed values—some as much as 50% below. Now the methodology is not perfect as assessed values do tend to lag market trends and won’t reflect more recent changes in property conditions but our method can get you off to a good start in narrowing prospective purchases. Contact me to have a proprietary search performed using your criteria.
December real estate sales in Summit County softened somewhat versus a year ago with unit volume falling 9% to $140 transactions. As has been typical this year, dollar volume comparisons were even worse, dropping 13% to $61.6 million. For the full year, transaction volume was actually up 10% to 1,448 sales but dollar volume slipped by 2% to $684.2 million.
For the year, average selling prices slipped in all categories. Single family home prices dropped to $734,262, down 4.7% from 2011 while the multi-family price dropped 14% to $367,280. Vacant land faired the worse with the average price down 26.8% to $246,478. Contributing to the declines was the decided shift toward the lower end of the market. For the year, 74.2 % of the residential transactions were for less than $600,000. Less than 10% were over $1 million.
While the magnitudes and trends varied based on type of property, in general the south end of the county (Breckenridge Blue River et al) held up better than Frisco, Silverthorne and Dillon.
December Summit County real estate transactions
November real estate sales in Summit County followed an all too familiar pattern with unit sales showing a marginal year-over-year increase but dollar volume continuing to decline. During the month, there were a total of 142 closings, up .7% from November of 2010 and down 12% from October. Dollar volume totaled $58.5 million, down 2.7% from a year ago and off 14% from the prior month. It should be noted that the sequential decline is reflective of the normal seasonal pattern over the last several years. On the plus side, it would appear the pricing pressures eased somewhat although demand remains focused at the lower end of the market. For the month, 81% of the transactions were under $600,000 versus 75% for the year to date. The average single family price dipped $5,000 to $745,000 but multi family pricing actually ticked up to $363,800 from $363,600 in October and even raw land saw some firming with ASPs rising $2,000 to $255,000. Inventory rose during the month with Single Family and multi-family listings both increasing by 7%.
Summit County real estate market trends
Summit County October Real Estate Statistics
October sales in Summit County followed what has become an all too common pattern – an increase in transaction volume but a decline in dollar sales. For the month, the number of transactions rose 5% year-over-year to 161 and were up slightly from 160 transactions in September. Dollar volume, however, dropped to $67.8 million, a 15% decline from both the $79.8 million of a year ago and similar total for September, 2011. The dichotomy in performance between the numbers and the dollars reflects two factors. First, prices continue to be under pressure as inventory, both real and shadow, is still historically high while buyers remain wary. Of even greater impact is the shift in demand toward the lower end of the market. In October 81.6% of the transactions were for less than $600,000 and only 5.1% exceeded $1 million. For the year-to-date, 74.2% of transactions were below $600,000 and 10% were above $1 million.
Is the notion of buying mountain property as an investment dead? So proclaims an article in the November 2011 issue of SKI magazine. No doubt ski properties across the country have taken a hit over the last several years. This article cites 30 % declines in Eagle County, Colorado condos and 40% drops in Lake Tahoe single family homes, numbers that aren’t far off of what we have seen in Summit County. These declines, however, pale in comparison to many non-ski markets like Florida, Nevada and California. They also are far less severe than what was experienced on Wall Street and public certainly hasn’t declared the death of stock investments.
In my mind, predicting that values will never go up again is just as naïve as the predictions that they would never fall. Sure there will be variability, but the long term trend has been and is likely to remain upward.
That said, I can’t disagree with the articles point that buying for high personal use is the best deal. That is the case for many of the same reasons that owning rather than renting your primary residence is attractive. First, you build equity. Even without a rising price value you will build equity versus spending on hotels or condo rentals. Second, it’s personal. It’s your furniture, your decorations, your clothes in the closets. No need to lug tons of luggage every time you visit. Third is familiarity and relationships. Sure it is nice to see different places but it sure is convenient to know where everything is and see people you know. Finally, there is the pride of ownership. Owning your own ski retreat has an element of prestige. It also will make you high on your friends and families popularity list.
Bottom line – owning a ski property is great for those that intend to use it frequently and it could turn out to be a rewarding investment as well.
September Summit County sales posted their second consecutive monthly improvements in both the number of transactions and total dollar value. Transactions in September rose 8% from August and were up 2% year-over-year (YOY). Dollar volume was up 21% from the prior month but up a more modest 9% from a year ago. Demand continues to be concentrated at the lower end of the pricing curve with a little more than 71% of the residential transactions being valued at less than $600,000. For the year-to-date, transactions under $600,000 have represented 72% of the total.
Looking at the numbers on a full year basis, year-to-date transactions have risen 16% to 1,005 but the shift to the lower end of the market (and perhaps some price erosion) trimmed the YOY increase in dollar value to a modest 2% at $79.8 million.
For the year so far, actual foreclosures are up substantially to 172 versus 127 (including timeshares) but the filings of NEDs (the process to initiate foreclosure) is down 6%.
People often ask me the difference between a short sales and foreclosures. While related, there is a substantial difference, both in the process and in the impact on the owner’s credit report.
A foreclosure is initiated by the lender, typically due to the borrower being delinquent on their payments. For a residential foreclosure in Colorado, the lender will file a Notice of Election and Demand (NED) giving notice that the debt must be paid and establishing a foreclosure date – typically about six months out. If the debt is not cured by the foreclosure date, the lender will make a bid for the property and that will become the initial bid for an auction of the property. Highest bidder wins and upon immediate payment owns the property. The borrower is still on the hook for any “deficiency” – i.e the difference between what was owed and what the property sells for at foreclosure. If the lender is the high bidder, they will typically put the property back on the market for sale.
Let’s look at another scenario. An owner wants to sell the home but he owes more than the property is worth. His desire to sell might be driven by a pending foreclosure or it might just be because he wants to move. In a standard sale, the owner would bring money to the table. Say he can sell the house for net proceeds of $300,000 but he owes the bank $350,000. In this case he would need to come up with $50,000 to close the sale. But let’s say the borrower doesn’t have the extra $50,000. In this case, he can go to the bank and negotiate with the bank to accept less that it is owed. This is a short sale. The bank is willing to forgo its lien on the property even though it is not getting paid in full. Now a short sale does not necessarily let the borrower off the hook. Unless the negotiations stipulate otherwise, as in a foreclosure, he will still owe the difference between what he initially owed and what the bank received from the short sale or foreclosure auction.
Why go for a short sale rather than just let the bank foreclose? Two significant reasons. First, foreclosures generally will produce a greater hit on your credit score – i.e around 200 points versus 50 points for a short sale. Secondly, after a foreclosure, a borrower is ineligible for Freddie Mac backed loans for 5 years and then only eligible number of packages. The ban is 2 years after a short sale and all packages are then available.
None of the above should be construed as legal, financial or tax advice. This discussion is based on practices in Colorado. Laws very from state to state. Please consult with your attorney, accountant and or financial adviser before making any decisions regarding a short sale or foreclosure. If you would like more information about the processes or ramifications of a short sale or foreclosure, or need help negotiating the selling/buying process call 970 515-7900 ext 3 for a free recorded message and to receive my Short Sale and Foreclosure seminar presentation.
According to the National Association of Realtors (NAR), the inventory of homes listed for sale fell 20% compared to a year earlier. At 2.19 million homes, that represents the lowest inventory since Realtor.com began tracking the data back in 2007. Our research indicates that Summit and Park counties have seen an even more favorable trend with total inventory down 28% including a 23% decline in single family homes and a 29% drop in condos. Raw land in the counties did not fair as well registering a decline of only 17%
As noted in the NAR announcement, the lower inventories have not yet resulted in an improvement in housing prices. Demand, while up from 2010, remains historically low and the “shadow” inventory of homes that have been taken off the market or bank owned properties that haven’t yet come on the market is likely to limit any near term price recovery. Nevertheless, I believe it still may be a good time to buy. Interest rates are unlikely to stay at the currently very depressed rates and with it taking longer to sell a home it remains very much a buyers’ market.
Here is an interesting article regarding home ownership. Of course, not sure if being the highest is good or bad. Home ownership is good but not if one is buying something they really aren’t qualified for.