Of late buyers are finding it increasingly difficult to find mortgage money.  When prices of real estate adjust downward (nationally) banks holding mortgages find their ability to lend money for homes diminish.  Banks are required to have $1 dollar on hand for every $29 loaned out.  When things change, ie: value of real estate falls, banks find themselves in what is called a “liquidity crunch”.  Learn more about this by clicking on the attachment below.

Because many banks are faced with a liquidity crunch, they have no money, so to speak, to lend unless you are a well established customer.  Even then it is difficult to get financing.  However, there is good news for buyers; it’s a good time for sellers to be the bank.  Many sellers in the Vail Valley and Eagle County do not need the cash at closing and therefore are in a position to be the mortgage holder/bank for a period of time while this financial mess gets straightened out. 

It is a win-win situation for the buyer and seller.  Seller’s receive income from an asset they own at a higher interest rate than banks are paying for deposits and in all likelihood, get a safer return than putting the money in the turbulent stock market.  The seller still owns the home while receiving income in the form of interest payments until the buyer pays off the mortgage or refinances at some point in the future when the financial markets are in better shape.

The buyer wins during these times because there is another lending option available, the seller.  Once the financial markets stabilize the buyer can secure permanent financing for the home.

Now is a good a time to buy; lots of inventory with serious sellers pricing their property at the current market.  As strong as the Vail Valley/Eagle County real estate market is, it is unrealistic to think property values will increase 20% or more every year.  So, now is the time to buy while values are flat, before the next run-up occurs.  

The trick right now is to find a home that is properly priced with a seller willing to be the bank.  To do that, you need to find a broker who knows where those opportunities can be found.  So, what are you waiting for, find yourself a good broker and get out there and shop around.

We are so lucky in the Vail Valley to have an economy that is based on scarcity of housing because of zoning restrictions and lack of buildable land. That being said, we have seen some tremendous 'run ups' in pricing in the past three years. If we did not have real estate 'cycles' no one would be able to afford a home here. But we are no different from any other resort town in the country. Prices have a way of evening out when there is a recession or other type of economic problem in the rest of the US economy.

Today we are faced with an ever enlarging inventory of housing mainly because of the national 'credit crisis'. There are customers out there who want to buy but can no longer come up with the downpayments required by the new guidelines of banks in this environment. Back in the late 80's, many Savings and Loans went out of business because of loose lending practices and today we see some similarities. However the bankers are smarter today and have cracked on low down payment loans. The result is that many a Seller does not have as many Buyers executing contracts because they can't get loans.

All of the above is a major reason that Buyers today have the upper hand in making offers on property they want to buy, and we at Gateway have the expertise to help you with your purchasing decisions and enable you to find the property where you can get the best price. Please call me, Judd Babcock, for help in this turbulent market. As Nichols points out above, we will soon see the disparity equal out and prices will start to climb up again.

An articled written by Johathan R. Laing in Barron’s July 14, 2008 edition provides information indicating a turn around in the real estate market is occurring.

The article points to declining inventories of existing homes and new single family homes, a decline in the average time a home for sale is on the market, and signs prices of homes are starting to rise.

The article also shows how different indicators are providing early signs of a turn around in the market place.  The article indicates a bottoming of the market in California which has in the past, been an indicator of what is in store for Colorado.  The article is attached below.

Here in the Vail Valley the stand off between buyers and sellers continues.  Buyers think or at least are hopeful the real estate market in Happy Valley will start to bleed soon.  Unfortunately that has not been the case and frankly I don’t think it is going to happen. 

We have seen seller’s cut the fat out of their prices (finally realizing the run up in ’06 ended) and bring them in line with what market prices should be.  Beyond that, I don’t see seller’s unloading real estate.  Despite all the gloom and doom reported by the press, things remain pretty stable in the Vail Valley. 

There are a lot of owners here who are not affected by doom and gloom and as long as the Vail Valley continues to be desirable to these owners, prices will continue to move upwards.  Why?  Limited inventory and strong demand helped along by our current County Commissioners who are doing a “masterful” job of stifling any new housing inventory.

So, if you are a buyer and are waiting for “blood to run in the streets”, you might want to look elsewhere because I think we are poised for another run-up. 

It's no secret Vail has a shortage of affordable housing for workers-to rent and buy.  now for the first time ever, town officials want to ask voters for more money to pay for new affordable housing units.  A ales tax increase, a mill levy increase and or a real estate transfer tax are being considered.

"We can go to teh taxpayers to get a dedicated funding source"Vail towncouncil man Mark Gordon said Tuesday. While no specific amount was discussed, finding an additional funding source would provide catch up opportunitues for Vail workers, according to the town's new strategic workforce housing plan, which is expected to be approved in September.

Such tax increases have been discussed before, but thi sis the first time one is being formally included in a housing plan, said Nina Timm, the town housing coordinator.

contact Gerlinde Debie at Gateway Land and Development for housing opportunities in the Vail Valley. 970.471.2293 or gerlinde@gatewayland.com