Don't Celebrate Yet

The Vail Daily Staff Report on September 2 quoted the Land Title Monthly Housing Report which showed there were 92 completed real estate transactions in July. This number was far above the 75 transactions a year previously. For most of this year, we have seen other monthly increases over 2009. The fact remains that 2009 was probably the largest declining market I have seen in all my years selling real estate here in Vail(20 years). From the perspective of the Gateway Land office, there is no question that we have seen a lot more activity this year than last. However, there are several reasons for this activity.
First, because prices finally dropped when the market went south means that a lot of savy real estate investors have swooped in to buy up distressed properties at bargain prices. Secondly, many of the 'low end' deals were driven by tax incentives that are no longer in effect today. This fact is backed up by the fact that 75% of the transactions were below $1 million.
But now look at the other side. According to realtytrac.com there were 339 homes and properties under foreclosure in Eagle County on September 5. The recently improved sales figures amount to only 27% of total foreclosures assuming no one else defaults. When you add other homes on the market, there is almost a one year backlog of property on the market. Sure there are wealthy investors out there who can afford the super expensive homes that are being offered by the likes of Ritz Carlton, Four Seasons, Solaris, etc. but, while dollar volume rises, actual number of transactions continue to drop.
One of the biggest reasons for concern is the bank situation, not only in this valley, but across the country. Non performing assets are filling up the portfolios of our local banks and the possibility of dissolution for many is close by. How can we sell real estate when the biggest contingency for a sale is bank financing and the banks only loan to people who do not need a loan?