Park City Market Report - Summer 2009
The Park Record (Park City's local newspaper) published an informative article that I thought would be useful for our clients (see below).
My take on the market is that it is slow compared to our historical sales but is improving. During the first 6 months of 2009, we saw a dramatic slow down in sales with new properties coming on the market out numbering sales by 2 or 3 to 1. Recently (July & August) in our office, we've seen that drop to close to parity with new listings only slightly out numbering sales. But, those sales are occuring within specific price brackets and criteria.
Essentially, properties under $500,000 and over $2,500,000 are selling ... in between is extremely slow. I think much of this has to to with the availability of financing (for the under $500K sales) and the fact that most buyers over $2.5M are paying cash. In fact, more properties over $3M have sold year to date than all of 2008.
The problem with many condominum sales is that they are considered by lenders as condo-hotels. A condo-hotel is generally one that has a front desk that checks visitors/renters into the property -- just like in a hotel. There are a few local lenders that will make loans on these types of condos, but most major lenders won't (I can help with this ... just give me a call).
But, buyers are looking for deals and the properties that sell reflect that attitude. Basically, if the property is priced competively with the current market then it has a reasonable chance of selling. Some of that market price is driven by distressed property sales. The reality is that appraisers are now using short sales in their appaisals and those short sales are impacting what lenders will loan on a property -- thus, setting market value. Sellers who are unwilling to take current market conditions into account end up with their properties just sitting ... those that do, have a high likelyhood of a sale.
If you're a buyer, there are some real investment opportunities out there with both property prices and interest rates down.
If your a seller, make sure you set the price of your property to reflect the current market ... when we do a listing presentation, I'm always careful to provide the seller with the full spectrum of market conditions ... so, they can make an informed decision on where they want the price point for their property to be placed. This includes not only an anlysis of the price points of current transactions, but also where the buyer activity has been. (It is kind of like fishing ... if you don't have your line at the depth the fish are at, you won't get a bite.)
Read the article below and I hope it helps in your buying or selling decisions,
Nick Coleman
435.640.7781
Summit Sothebys International Realty
Mid-year realty report bleak for condos and vacant land
Single-family home prices still holding, increasing
by Andrew Kirk, OF THE RECORD STAFF
Posted: 08/11/2009 06:14:14 PM MDT
While real estate experts insist the bottom of the market is near, if not already past, the mid-year report from the Park City Board of Realtors shows sales were off through the first six months of 2009.
The Report
The board reported Friday that total real estate transactions in the greater Park City area, which includes Summit and Wasatch counties, totaled $317 million in the first six months of 2009, down about 50 percent in total sales compared to the same period in 2008.
The figure is down about 75 percent from the peak period of 2007.
Total transactions in the first half of 2009 fell to 403, down about 45 percent compared to the 731 in the first six months of 2008.
As a percentage of total volume sold, sales of single-family homes strengthened, making up 64 percent of all sales compared to 42 percent of sales in the same period in 2008. Condominium sales fell to 28 percent of the total volume in the first half of 2009 compared to 42 percent the previous year. Vacant land sales continued to decline.
Single-family home prices in Park City proper continued to rise, but again, board president Lincoln Calder said the numbers are skewed by low sales volume. The median sales price for single-family homes sold in the Park City limits during the first half of 2009 was $2.3 million, up 18 percent compared to $1.9 million a year ago. In the Basin, the median sales price increased to $729,000 in the first six months of 2009, up from $700,000 last year.
Meanwhile, single-family home prices fell in the Heber Valley 12 percent and in Kamas 9 percent. The median sales price for condominiums in Park City fell nearly 30 percent and in the Basin, 31 percent. Those sales were 95 percent of all condo sales in the two counties.
In Park City proper, only five parcels of land were sold in the first six months of the year, and their median price was 36 percent less than land sales in the first half of 2008. In the Basin, the median price for land fell 56 percent.
The Analysis
Calder warns that comparisons to 2007 should be taken with a grain of salt since that year also saw many transactions completed for sales that were negotiated during the previous two years.
The numbers for single-family homes are great news when compared with other resort communities he counted. Some of those towns are down 80 percent, he said.
The economies of Park City and the Wasatch Front have always benefited the community. Park City is a town where people can live and work year-round, making it an ideal place for a permanent residence, he said.
"Park City as a product is a great thing and that's our biggest strength," Calder said.
The decline in condo sales is largely due to the credit crunch. Many condos in Summit County are vacation properties of owners. Until buyers in other parts of the country begin to feel more comfortable about the value of their current properties, they're less willing to purchase new ones, he said.
Also, the lending requirements for vacation properties have become stricter. Some even refuse to lend if there's a chance the condo would end up in a nightly rental market. Just the hint that an owner might need outside help to make mortgage payments could upend a deal. Lending requirements were too loose before, and this is an instance of the pendulum swinging too far in the other direction, Calder explained.
Land sales are slow because there isn't a lot of available land left in Park City, he said.
Calder confirmed that declining median sales prices for condos is a general trend, and there's no way of knowing when the bottom has really been hit. But he thinks it was back in February of this year and he's optimistic.
Broker Jess Reid echoed those sentiments.
"I agree it's going to be tough the rest of this year for real estate. But we're on a comeback," he said Monday.
As volume and transactions pick up, a lowering of prices is a natural reaction as owners realize they need to match or beat what their neighbor got in order to sell, he said.
Over the next few months he said he'll be watching some newer condominium properties to see how well they sell. If the developers have trouble closing, that might prolong the pricing slump.