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2014-01-09 11:05:42
Is Now a Good Time to Purchase a Ski Property?

Park City - Deer ValleyThe recovery in the real estate market has been marked but interest rates maintain a steady upward trajectory. The most profound impact of this has been felt at the lower end of the housing segment with more and more first time home buyers being priced out of the market. According to the Mortgage Bankers Association, the average size of mortgage applied for, stands at a historic high of $270,000.

This means that investors with deep pockets and spare cash will be on the lookout for high value real estate properties to invest in. Luxury ski property is a prime candidate for this. Not only are such investments a lifestyle enhancer, there is long term capital growth to look forward to. According to the last Knight Frank index the average price of ski homes across the world averaged a growth of 4.6% in the twelve month period ending in June 2013. In particular the sales of ski homes in South Lake Tahoe grew at a whopping 20.9%. Aspen and Whistler in Canada respectively saw a growth of 7.4 and 6.3% in the same period.

Among the most sought after destinations for investment in ski resorts has to be Park City, Utah with its three world class destinations-Park City, Deer Valley and Canyons which have come into their own since the 2002 Winter Olympics were held in the Salt Lake City area. As a matter of fact the total value of real estate sales has more than trebled since then. While it is a good time to invest in Park City, the specter of rising mortgage rates does add an element of urgency. For instance steady increases in mortgage rates since January 2013 have already caused a more than $100 hike to the monthly payment against a long term fixed rate borrowing of $200,000. Even a one percentage point increase in the coming year would raise this by another $75.

Ski Deer ValleyInvesting in the Park City area now appears to have caught the attention of cash rich investors.   50% of all sales transactions up to the third quarter of 2013 were in cash. Going forward the prospects for further investment in this area continue to be favorable in light of a number of factors- the price of vacant land sale is on the ascendant, Vails Resorts has taken over Canyons Resort generating a very positive buzz, the availability of condo units in Lower Deer Valley and an expected appreciation in select single family neighborhoods.

The coming year will likely see a lot of investment in luxury ski properties not just from US investors but also from Europe and some of the new emerging centers of wealth. Now in fact is the time to snap up some prime luxury ski property.  It is peak winter season and one can make a realistic assessment of the luxury ski real estate market. For those who would not buy with hard cash, this is again an opportune time to buy, as the rising mortgage rates might make it a more expensive proposition in the coming months.

The important factor to bear in mind, when taking the decision to invest in property is the fact that the rise of ten year treasuries expected in 2014, albeit a modest one will mark the end of a six year long low interest regime. Therefore any investment decision made now will be relatively spared of the uncertainties that are sure to assail the market once the higher interest rates become a reality.

At the threshold of a new year that is expected to be a watershed one in terms of rise in interest rates, it may be a good idea for investors with spare cash to invest in luxury ski property. This is on account of the fact that this is a stable and secure sector that is the least likely to be buffeted by any turbulence that the emerging market conditions might lead to.

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