There is no question that the Vail Valley has always been a strong real estate market and many buyers have seen values of their properties continue to increase over the years. However, the world wide recession has finally impacted even the strongest markets, and Vail property owners are starting to realize that accelerating prices are no longer the norm.
There are a number of reasons that contribute to the demise of the once thriving real estate market. By far the most common answer is that we have more Sellers than Buyers, and when we do have a Buyer, the availability of bank loans has dried up dramatically. There is also a great amount of uncertainty in the national economy and a lot of people are still uncertain about the unemployment rate that has hardly gone down in the past two years. In addition, the international disturbances have seemed to increase such as the revolutions in the oil countries that indicate gas prices will go higher in the future. The stock market, which had been recovering, now seems to be backing down with the Japan disaster as well as with the oil crisis. All these uncertainties have created doubt in Buyers' minds about the future of real estate and especially in the second home market, which is based on discretionary income.
There are a lot of real estate brokers who will refuse to admit that values have gone down, but I maintain that the only way to sell property in this market is to show that you are willing to take a deep discount over your original asking price. Vail ski area continues to offer the best skiing in North America, if not in the entire world, and this fantastic valley brings in people from every segment of the country. However, no matter how attractive our amenities may be, spending discretionary income on second homes has become less than desirable. Therefore, in order to attract Buyers, our Sellers have found that price reductions are mandatory.
I maintain that, as in past recessions, values that have risen with seemingly no limits must always return to equilibrium. A lot of people have said to me that they can not believe the way prices went 'through the roof'' in the first half of this decade. There were properties in Vail Village that went from $1,000.00 per square foot to $3,000.00/sf, an incredible increase in a short period of time. Now today a lot of that bloom is off the rose. During 2010 sales at the Ritz Carlton's new offering were averaging $1,379 per sf, and at the Arabelle average prices were $1,351 per sf. The Solaris was quite a bit higher at $2,462 per sf. Also take into consideration that in Avon, the Westin dropped all of its prices between 35 and 40 percent in order to get rid of unsold inventory. Their average price was $650.00 per sf. In today's paper, the Penthouses at Manor Vail are advertised at 40% off. Some developers have chosen to take other steps to avoid price slashes, many are offering credits at closings, lifetime season ski passes, and prepaid HOA dues. Unfortunately, there are still some owners who just continue to hold out for sales at 2007 prices, and I believe that possibility is in the long distant future.
The good news for the Vail Valley is that cooler heads will continue to prevail and the Sellers who are willing to lower their asking price have been rewarded with quick sales. In 2010, the Vail Valley had transactions of over $1.5 billion, which was 67% over 2009. There were 1,250 transactions, which was a 33% increase over 2009. The statistic that tells the whole story is that in 2011 there was $86 million in sales which is one percent less than last January, yet there were 11 transactions more than last January. In my opinion, prices this year will probably start to level out as prices are more accurate reflections over true values. And th end result is we will have a much healthier and more realistic market than we have seen in twenty years. You can call me at Gateway anytime for an updated version of this prediction, and we will have current information on the best deals in the Valley.
970.926.6777 | 888.278.9601 | 280 Main Street Suite #C102 Edwards Colorado 81632
970.790.6777 | 855.790.6777 | 183 Gore Creek Trail Vail Colorado 81658