Our recent ski season ended up with a bang... both in a fun-filled final weekend, and in our real estate market! Throngs of revelers celebrated another fun-filled ski season, with our infamous World Pond Skimming Championships followed by a packed outdoor concert on Meadow Drive. It was a fun and fitting tribute to a season filled with powder and great memories... made all the more so by the great uncertainty that stared us in the face back in December!

One of the great misperceptions of the season past is that the Vail Valley real estate market came to a screeching stop... and that noone was buying property. While our transaction velocity and sales dollar volume have clearly taken pause since the events of last September, savvy buyers are beginning to return to the market. Since just the first of April, a $7.3 million condominium at Solaris was placed under contract. This was followed by what will likely be the largest transaction of the year when it closes, a $21.95 million home in Mountain Star!

The following list highlights properties listed at $3 million and above which have been placed under contract and in most cases closed since late February.

Bachelor Gulch - Skywatch single family - originally listed at $6,975,000 - sold at $5,800,000 / $904 sf
Bachelor Gulch - Daybreak Ridge single family - originally listed at $10,900,000 - sold at $6,750,000 / $985 sf

Beaver Creek - Market Square condominium - originally listed at $3,475,000 - sold at $3,100,000 / $1,016 sf
Beaver Creek - Greystone Townhome - Originally listed at $3,850,000 - Sold at $3,500,000 / $960 sf
Beaver Creek - Village Walk townhome - Originally listed at $7,250,000 - Sold at $6,100,000 / $1,336 sf

Cordillera (Ranch) - Graham Road single family - Originally listed at $3,200,000 - Sold at $2,920,000 / $399 sf
Cordillera (Valley Club) - Spring Creek Lane single family - Originally listed at $8,750,000 - Sold at $6,100,000 / $620 sf

Lake Creek/Pilgrim Downs - Pilgrim Drive single family - Originally listed at $5,000,000 - Sold at $4,000,000 / $446 sf

Lionshead - Arrabelle penthouse - Originally listed at $14,250,000 - Sold at $9,150,000 / $1,697 sf

Mountain Star - Wildwood single family - Originally lised at $21,950,000 / $2,195 sf - Under Contract

Vail Village - Solaris condominium - Listed at $7,300,000 / $2,889 sf - Under Contract
Vail Village - Vail Mountain View condominium - Originally listed at $3,795,000 - Sold at $3,200,000 / $1,678 sf

Red Sky Ranch - the introduction of a new project on Juniper Trail resulted in nine single family homes being reserved within the first three weeks, generally priced in the $1mm - $1.4mm range. More are sure to follow the arrival of the summer golf season.

Notable sales over the ski season most often reflected unique, one-of-a-kind properties... very motivated sellers... or both. The above activity bodes well for the summer selling season which is soon to arrive.

Looking ahead, the general concensus is that we may be witnessing a gradual turn in the national economy, as investors and consumers adjust to the new realities of the market. The same can be said in the Vail Valley, as more and more sellers come to grips with the fact that they must price their property for today's market, versus that of two years ago. With many buyers still waiting on the sidelines, and the "disconnect" which has existed between sellers and buyers gradually dissipating, we are well-positioned to have a solid second half to the year. Stay tuned!

Recent conversations with top brokers in the valley have confirmed my suspicions... showing activity has been holding its own as we move into the final weeks of the ski season. Always a harbinger of business to come, this is a very positive and perhaps surprising development.

Many of us have clients who have temporarily positioned themselves on the sidelines, watching the market and waiting for the right opportunity to make a move. Meanwhile, many of those buyers who have made offers over the past couple of weeks have been pleasantly surprised by the response! Discounts of 25% from original list price are the current average in the high end of the market, and depending upon the specific property and owner's motivations, are sometimes more. These buyers have astutely positioned themselves to take advantage of the current shift in our market, are buying property at an excellent value, in Vail terms, and will enjoy their real estate for many years with the knowledge that they made a sound long term acquisition.

I fully expect more of the same, and in fact, for this trend to accelerate as prices come more and more in line with buyers' expectations. It will be quite interesting to see how the remainder of the ski season, and in fact, the summer to come, play out in the Vail Valley's real estate market. Stay tuned for more!

Vail, Beaver Creek and Bachelor Gulch real estate, just like every luxury brand, is searching for its legs as we move toward the spring season. Whether Maybach or Marc Jacobs... Polo or Patek Philippe... Chanel or Château Lafitte... luxury brands around the world are experiencing a pause after many years of strong sales. The current times are certainly different than what we have experienced for the past twenty years... what might this mean to you?

How did 2008 turn out?

One almost has to divide 2008 into two separate periods... that prior to September and the months following. Leading up to the 4th quarter, sales of high-end properties continued to be strong, and in many pricing categories, were actually ahead of the record-setting pace of 2007. Yet this changed dramatically, as might be expected, the third week of September. The uncertainty that resulted from the unprecedented events of the final months of the year cast a pall over sales of luxury property world-wide, as buyers attempted to make sense of what was taking place and the impact it might have on their personal wealth. As a result, many who were poised to buy in the Vail Valley temporarily put their plans on hold.

Sales dollar volume ended 2008 down approximately 25% as compared with the all-time record of almost $3 billion established in 2007. At $2.2 billion in sales, we ended the year in similar fashion as in 2004. Yet in spite of the current concern about the market, look again at the number above... $2.2 billion in sales volume! Going back to 1989, we were excited about breaking the $400 million mark... and crossed the $1 billion threshold only as recently as 1997. Our sales volume has grown an average of 12.5% over the past twenty years, a strong testament to the desirability and attractiveness of our wonderful mountain community, and to the strength of the families who choose to own here.

How are things going now?

Following the financial debacle of late September, and the events which have unfolded since, we are just now beginning to decipher some noteworthy trends in our evolving real estate market.

Transactions are still occurring, albeit at a slower pace. Select, one-of-a-kind properties... those which come on the market once every ten-to-twenty years... have continued to sell. And those properties which are priced according to today's market, versus that of the past year or two, have also seen good activity.

The "disconnect" between buyers and sellers is shrinking, as many sellers are coming to the realization that the world really is different today than it was just six months ago. We are seeing listing price reductions of 10% - 20% on a regular basis, which in the high-end, often adds up to price reductions of $1 - $2 million. Of the seventeen properties listed at $1 million and more which have closed since December 1, 2008, the average sale-to-list has averaged 75%, with the median of 72%. As the ski season moves toward its close, and as sellers continue to acknowledge that pricing is key in today's market, we will continue to see aggressive price reductions. This bodes well for those looking to make acquisitions in our market.

Many buyers of substantial wealth are actively positioning themselves, planning to make a move when the time and opportunity are right. I have had several conversations since the first of the year with buyers who tell me (1) they have lost 30% - 40% - 50% of their net worth over the past year, yet notably; (2) they still want to buy in the Vail Valley. In many cases, these individuals have a long history of ownership in our community. Based on their personal experience, they recognize the many benefits... lifestyle, family, financial and otherwise, of buying in our market during uncertain times such as these. These are especially ringing endorsements for our market, and bode well for our continued success well into the future.

What does this mean to you?

A slowed market, though in our case far from weak, is often rich in opportunity. If you are a buyer, this may be the best chance to pick up a bargain (in Vail terms!) in many years, and for many years to come. You'll still pay millions for a new home on Forest Road, in Strawberry Park or on Daybreak Ridge, though in many cases, fewer millions than in recent years. The time is right to make offers... aggressive offers. You might be pleasantly surprised!

If you are a seller, the days of "testing the market" on pricing are long gone. Recognize that things really are different, assess whether this is the time for you to sell, and work closely with your broker to strategically position yourself price-wise against your competitors. Attractive, one-of-a-kind properties that are priced for today's world will sell. If you have owned for more than five years, and in some cases less, you will still very likely come out ahead at the closing table... something that investors in most other arenas can only dream about. Real estate in the Vail Valley has consistently proved to be a sound asset in challenging times, and as you have seen, a worthy addition to your investment portfolio.

What does the future hold?

In spite of the current economic conditions, the fundamentals of Vail Valley real estate remain sound. Three things that have driven our market over the years will never change... (1) the beauty of our mountains... the quality of our world-class skiing and other recreational opportunities... and the desirabily of our mountain lifestyle; (2) the limited number of opportunities to own in the Vail Valley, given the finite amount of land on which to build, and; (3) the dream of so many to be here.

Moving into 2009, there remains uncertainty as to how the market will play out in the short term. Yet those with a history in the Vail Valley know that, over the long term, premium brands such as Vail and Beaver Creek will be the first to bounce back, and are planning accordingly. They recognize that the current pause in our market will provide one of the best buying opportunities of the past several years. And based on their past experience, they are confident that this will be looked back upon as a time when astute buyers made wise and profitable real estate acquisitions. It comes back to the old "80/20" rule... the first 20% in will look very savvy, and the other 80% will look just a little bit late.

I welcome the opportunity to help you be one of the 20%.

What’s to come?

I look at the current economic uncertainties as having a nominal impact on the high end of our market. Looking back over the past twenty years, we have successfully ridden through storms that many pundits had predicted would derail our real estate market. Black Monday in 1987… the Iraqi invasion of Kuwait in 1990… the Asian financial crises in 1997… the tech market meltdown in 2000, the September 11 attacks… the outbreak of accounting/corporate scandals in 2002… and the outbreak of the second Iraq war. Each of these could have realistically been expected to have a hugely negative impact on Vail Valley real estate. Yet the overall trend in our market has been one of strong activity and growth. I expect the same will occur this time around, even given the current economic environment.

One interesting comparison to consider is as follows… in 1987, Eagle County tallied appx $251 million in sales and 1,326 transactions, which was considered a big year. In 2007, we accomplished $2.96 billion in sales, and almost 2,800 transactions! It will be fascinating to see where our future takes us.

In summary, Beaver Creek and Bachelor Gulch are essentially built-out, and Vail will soon follow suit upon completion of the multi-billion “renaissance” currently taking place. When combined with the growing world-wide demand for premium resort properties, our future remains very bright. While past results do not guarantee future success, I can say that all the pieces are in place to help ensure that we will enjoy many, many years of strong market activity.

posted by Led Gardner  # 4:41 PM 0 Comments