Park City & Deer Valley

Despite Troubling Stats, Park City Real Estate Remains Highly Desirable

Quarterly reports from the Park City Board of Realtors tend to emphasize the positive, and the 2010 End-of-Year Report released last week is no different even though people wishing for a quick market recovery will find it sobering.

That's because, said past-president Mark Seltenrich and new president Patrick Giblin, no matter how bad it is, Park City is faring better than the Utah average, which is faring better than the national average.

In other words, no matter how bad the news, it's still good news in comparison.

The bad news

"The outlook for 2011 is more of the same as what was seen in 2010," Seltenrich wrote in the report summary. "The market will continue to be very price sensitive it will continue to be a buyer's market ."

Median prices for all property types are down three percent from one year ago; mean average sale prices are down over seven percent, the summary said. Median prices for vacant land fell 50 to 60 percent in some areas, and 43 percent overall.

Sales of foreclosures account for more than one-third of all sales.

"Foreclosures will remain a major factor in the Park City market in 2011," the summary said.

In an interview Monday, Seltenrich said the mean average is down so low because high-end homes either aren't selling, or are selling for less.

An example of this is the King Road Estates auction last week at which no one bid higher than the value of the note on the home even though that amount was less than half the original asking price.

Giblin said the number of foreclosures in the market has been a "huge wake up call."

"It was hard to predict," he added. "We thought we were an island, a bubble in the sky."

Regarding vacant land prices, Seltenrich said "we must go through some pain to get to where we want to be."

Condominium sales are likely not better because financing continues to be a struggle, he said.

The total number of units sold is up from last year, but except for the past two years, there has not been so few units sold in over a decade even though there is more inventory in Summit and Wasatch counties now.

Lastly, the Heber Valley continues to experience the steepest sale-price declines and may not have bottomed out yet, they said.

Overall, Seltenrich said the area's real estate is, in many ways, still "bumping along the bottom of the market."

"We'll be seeing a little appreciation this year, but it will be small," he said.

Good in comparison

The board is not trying to hide or spin these facts, the two said, because much of it is good news when compared to the larger picture.

"The board tries to put that positive spin on things, and obviously there are a lot of negatives, but if we keep our noses to the grindstone and work together, the story in 2011 will be about pulling out and looking at the bright light at the end of the tunnel," Giblin said at the end of the interview.

According to the summary, total dollar volume in sales surpassed $1 billion because a large number of units sold for reasonable prices. That has only occurred six other times in history and is a 16-percent improvement over last year. Unit sales were up 20 percent over 2009.

Vacant-land sales were up 60 percent. Condo sales were up 22 percent. Single-family home sales were up over 26 percent and comprised 46 percent of all sales and 54 percent of total dollar volume, the summary said.

Property values in many neighborhoods appear to have bottomed out and are improving. There is reason to be optimistic about 2011, especially for single-family home prices, Seltenrich added.

Foreclosures and short sales continue to depress values, but the fact that they only comprise one-third of the market means sellers have adjusted to the new reality an important step to clear out inventory and to allow appreciation to begin again, Giblin explained.

What happened in the Park City real estate market in 2010 is simplified this way: prices came down and people are buying, they said.

That's good news, Seltenrich and Giblin said, because it speaks to the desirability of Park City real estate.

According to the National Association of Realtors, the number of sales in the West at the end of the year was down 1.5 percent.

According to Utah's Economy, a publication of Commerce Real Estate Solutions by Jim Wood at the University of Utah's Bureau of Economic and Business Research, the recession has so shaken Utah families that there is little appetite for homes.

"The lowest inflation and mortgage rates in 60 years, combined with 15 to 20 percent declines in home prices have done little to stimulate demand for housing," the newsletter said. "The current weakness is due primarily to a loss of demand."

Continued foreclosure rates in Utah which RealtyTrac.com has called some of the highest in the nation are only making it worse, it said.

But when the price is right, people are jumping on Park City real estate, Seltenrich and Giblin said.

"Prices are down, but not down that much," Seltenrich said.

Looking at graphs tracking the past 10 years, he would compare current sale price averages with the end of 2006 and early 2007 near the peak.

It also appears that the number of foreclosures in Summit County is in decline, the summary said.

Almost 400 more properties would need to sell in 2011 than in 2010 to get out of the units-sold slump, but the record set in 2005 was an anomaly and unsustainable, Seltenrich said.

Historically, Park City real estate appreciates at a five-to-seven-percent annual rate. There was a major dip around the time of the 2002 Winter Olympics; there was a steep increase in the middle of the decade, and then a sharp decline the last two years. But where Park City was in 2010 is really close to where it should be excluding the extreme peaks and troughs, he said.

"We're going in the right direction," he added.

Years from now, Seltenrich predicts, people will not look back on 2010 and 2011 as a dark period, but years of opportunity when they should have taken advantage of low prices and low interest rates.

by Andrew Kirk OF THE RECORD STAFF : The Park Record

For More Information on Park City and Deer Valley Contact:
Michael Lapay
Prudential Utah Real Estate
Mobile: 435-640-5700
Toll Free: 888-410-7653

mlapay@pureparkcityrealestate.com

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Lower Deer Valley area is located at the base of Deer Valley Resort. Today, there are older and newer constructions in this area of the resort. One of the renowned properties for investors is the Lodges at Deer Valley which houses some great rental properties. Buyers can choose from $600,000's up to 4 million for a ski-in/ski-out condo at Black Diamond Lodge.

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For More Information on Park City and Deer Valley Contact:
Michael Lapay
Prudential Utah Real Estate
Mobile: 435-640-5700
Toll Free: 888-410-7653

mlapay@pureparkcityrealestate.com

Half of West Side Sales in 3rd Quarter were with Cash

The Park City housing market is thawing and unit sales are up from last year, yet it's still hard to get a loan. Experts say this apparent paradox is partly explained by an increase in cash purchases.

Luxury real estate attracts affluent buyers so cash purchases have always been common in Park City, but according to data compiled Rick Klein at Wells Fargo Home Mortgage, the percentage of property bought with cash is way up.

According to the National Association of Realtors, 29 percent of real estate nationally in September was paid for with cash. On the West Side of Summit County, 50 percent was. About 35 percent of single-family homes, over 50 percent of condominiums and nearly 80 percent of land sales were paid for with cash in the 3rd quarter.

For perspective, Klein compares that to the same period in 2007. In three years, that's a 65-percent increase for homes, double for condos and up 150 percent for land.

These buyers tend to be a mixture of investors and people unwilling to subject themselves to the lengthy and rigorous lending process banks have developed. And sometimes those are the same people, he added.

These cash purchases are usually for distressed properties, which continue to threaten the health of the market, but their number is declining, Klein said.

"Is it elevated? Yes. Is it also coming down? Yes," he said.

About one-third of purchases in today's market are of distressed real estate, but the flip side of that coin is two-thirds are normal sales, he said.

The increase of cash sales is having an interesting effect on local mortgage brokers, he said. It's a sign of recovery, but it doesn't help people in his business.

The uptick in sales means buyers are recognizing the bounce off the bottom has occurred and prices will begin rising. But with half the transactions being done with cash, there must be an even larger number of people who would like to buy now but can't get the financing.

"There have been 344 credit policy changes," Klein said.

He was recently asked to talk about "changes in the industry." Klein said that's like asking Jonah how he liked his cruise.

This is hurting first-time home buyers the most, he said. With tougher scrutiny of credit, many American families are failing to convince lenders they're ready for home ownership. That's hard to regular people, mortgage brokers, Realtors and home builders.

If a breadwinner was unemployed for several months in this economy, some lenders are asking to see proof of new employment for six months before they'll consider lending. It's hitting people who are already down, he said.

The irony is that the trend is still moving the market in a positive direction.

Mortgage agent Lisa Lundquist with Axiom Financial's Park City office said any movement in the market is a good thing. People are putting cash into real estate instead of the stock market and that will help her in the long run.

Rich Sonntag, managing director of the Promontory Club, agrees.

With roughly 80 percent of the most recent land purchases made in cash, Sonntag said buyers are broadcasting a message that it's time to get off the fence.

Sure a lot of people are being left out in the cold right now, but as these cash buyers snatch up real estate they are stabilizing pricing. As lenders become more confident about their appraisals, they'll loosen lending restrictions and allow more people into the game, he said.

He also agreed with Lundquist about investing. Gold promoters describe the precious metal as a hedge against inflation, but so many people have bought recently that gold is experiencing a bubble. Real estate is the best hedge against inflation, Sonntag said.

Right now it's the smart money that's buying, he said, and that will have short-term and long-term benefits. Cash buyers are purchasing what they are most confident about reselling as soon as lending restrictions loosen, he said.

They are improving the market and will profit when it is better, he added.

"It's the best support for next year's market," Sonntag said.

by Andrew Kirk OF THE RECORD STAFF : The Park Record

For More Information on Park City and Deer Valley Homes Contact:
Michael Lapay
Prudential Utah Real Estate
Mobile: 435-640-5700
Toll Free: 888-410-7653

mlapay@pureparkcityrealestate.com

Prudential Utah Real Estate Park City

Recent Sales & Pending Sales

Updated November 8th, 2010

For More Information on Park City and Deer Valley Homes contact:
Michael Lapay
Prudential Utah Real Estate
Mobile: 435-640-5700
Toll Free: 888-410-7653

mlapay@pureparkcityrealestate.com

*This information contained here in was obtained from the Park City MLS and is deemed accurate.  However, we do not guarantee its accuracy and all information is subject to chagne without notice.

Realtors Insist a Slow Recovery is Still on Track in Park City Real Estate

Park City Realtors are taking issue with a Wall Street Journal article from Oct. 23 that argued more foreclosures will soon enter the market.

Local experts say the Oct. 27 Park Record article on the Park City Board of Realtors 3rd Quarter Report may have been overly rosy, but the national article was inaccurately pessimistic.

The WSJ article said the foreclosure scenario nationally is improving, "But the fallout from the crisis is beginning to be felt in real-estate markets across the country, particularly in places dominated by vacation homes and investment properties. Some of the worst-hit areas could be Western ski towns, because fall is the busiest time of the year for sales."

The justification was that governments are beginning to investigate banks' foreclosure practices, and that is motivating lenders to unload large numbers of distressed properties onto the market especially in resort towns.

The first item local Realtors take issue with is the claim "fall is the busiest time of the year for sales." In fact, said Jim Lewis from Summit Sotheby's, fall is the slowest time.

"This is our shoulder season; no one is in town," he explained.

The WSJ quoted a Park City Realtor from Summit Sotheby's saying banks were trying to unload property for below-market prices. Lewis said he's familiar with that situation, and that is indeed what was happening, but wouldn't call it typical.

"The trend is definitely favorable right now," Lewis said. "That doesn't mean there aren't going to be more foreclosures but the number of new homes coming on is definitely down."

Lewis said most of his statistics come from Rick Klein of Wells Fargo Bank. Currently about one-third of Park City real estate sales are of distressed properties, and that is serious, Klein explained.

"That statistic came from me and I was shocked," Klein said. "Foreclosures remain a strategic threat to price discovery."

They could still cause sale prices to drop lower, but the number of foreclosures in Summit County is improving, Klein added.

It's hard, if not impossible, to track the number of mortgage-payment delinquencies in a small area. It's easy to watch the number of Notices of Default. Those are declining, which is why local Realtors are optimistic about Park City's foreclosure market, Klein said.

"There is both optimistic news and reasons to be reserved," Klein added.

Jess Reid of Jess Reid Real Estate said he is reserved, but still expects recovery to continue "puttering along."

There are many buyers still "sitting on the fence," Reid and Lewis agreed. That's why recovery isn't happening faster. But it's a part of a natural recovery and is not a problem, they said.

"In my personal opinion, it has nothing to do with the freeze on bank foreclosures. It's just part of the slow healing we're going through," Reid said. "Full confidence levels are not back."

Steve Roney, head of Prudential Utah Real Estate, said he considers the foreclosures and short sales occurring to be a small portion of the overall market. He does not foresee any lenders unloading large numbers of homes on the market locally.

His optimism comes from the fact that Park City has been outperforming its ski-town competitors in real estate sales this year, he said.

Further evidence that market recovery is on track despite the large numbers of foreclosures is the success of some neighborhoods, Lewis said.

Promontory has had 110 sales in 2010. In Empire Pass, there have been 44 sales so far this year versus five during the same period last year.

"Last time I looked I didn't see any short sales on the 52 condominium listings in Empire Pass," he said.

Current sales momentum is enough to remove distressed properties from the market in a few areas, he added.

Kevin Shields, general manager at Westgate Resort, said his sales team has had great success. In the last three months 15 condos were sold. People are responding to marketing and have a sense of urgency to not lose out on great deals, he said.

Tom Bennette, a development attorney with Ballard Spahr, said he has both lenders and developers as clients. He doesn't see any signs of a worsening foreclosure market locally, he said. It may happen elsewhere, but not likely here.

Lewis said the situations in which banks are "dumping" properties that he knows of can be compared to bombs. They're few in number, but may make a big impact when and where they occur. Often the problem is bank analysts not listening to local experts about the local market, he explained.

by Andrew Kirk OF THE RECORD STAFF : The Park Record

For More Information on Park City and Deer Valley Homes Contact:
Michael Lapay
Prudential Utah Real Estate
Mobile: 435-640-5700
Toll Free: 888-410-7653

mlapay@pureparkcityrealestate.com