Real estate market entering new era

Location, construction soon may supersede square footage in setting price

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— David Baldinger Jr. is convinced Steamboat is about to broach a new real estate market segment where location and high construction values will supersede sheer square footage in determining price.

"It's something Steamboat has never had," Baldinger said.

Baldinger is a principal in Steamboat Village Brokers. He is talking about luxury housing of fewer than 3,000 square feet driving record prices per square foot.

The trend is being hastened by the ever-dwindling inventory of undeveloped land within the city's hard urban boundary. There's also a secondary trend in play, one Baldinger terms the "remodeling revolution."

It's especially evident in Old Town Steamboat where a casual tour reveals one homeowner stripping his older structure down to the framing studs in order to build an new home of high quality around the skeleton of the old structure. It's visible where the creek emerges from Butcherknife Canyon and a spectacular new home is being built.

The evidence can be seen in statistics for building lots in 2002 when compared with 2001, Baldinger said. Dollar volume and dollars-per-unit on single-family housing lots increased by 20.7 percent last year. The average price of a single-family home lot was $254,500.

"It shows that land is scarce and people are trying to buy it before it's gone," he said.

Michelle Avery of Coldwell Banker Silver Oak said a similar trend is taking place high above Burgess Creek Road in the Rendezvous Trails subdivision. More than one purchaser in the neighborhood has paid in excess of $1 million for a home and torn it down to build a new one. The homes have close-in access to the Thunderhead Express ski lift.

Avery is happy to see activity returning to a market segment she facetiously calls "No man's land."

"All winter long, we had activity in the low end and at the super high end," Avery said. "We're finally seeing that no man's land moving."

She is referring to homes priced between $500,000 and $800,000. Buyers in that price range were most sensitive to losses in the stock market and the downturn in the economy, Avery said.

In the past two months she closed a pair of sales between $800,000 and $850,000. In one case, the buyer had been heavily invested in securities and grew weary of watching his investments languish.

Developer and Realtor Jon Peddie is about to embark on an ambitious condominium project offering five ski-in/ski-out units on Ski Trail Lane.

"They're really meant to be a home, a family retreat," Peddie said. At 4,000 square feet, the Elkhorn at Steamboat units will be generously sized luxury homes. The project is still in the city planning process, but Peddie says he has reservation deposits from four prospective buyers who at least want to be in line to say yes or no to a sales contract.

Peddie's confidence is based in part upon the fact that "they're not approving and building any more ski areas."

Bob Bomeisl of RE/MAX Steamboat said he's noticed buyers being more discriminating in the past 12 months.

"The thing that's apparent is that people are really value conscious," Bomeisl said.

Two and three years ago, at the height of the buying frenzy, buyers were less inclined to comparison shop and scrutinize all the details of a particular property.

"Now they look at everything," Bomeisl said. "If it's a good value or they perceive value, they'll buy it."

Prospective real estate buyers who want good value should not be confused with bargain hunters, he added. Rather, the trend he's describing means that in market segments where there is a great deal of competition, buyers have the ability to pick and choose. They contrast older homes with the homes offering the nicest and newest features -- marble countertops, for example.

"People are comparison shopping even in the upper end," Bomeisl said. "They're looking at the quality of finishes."

If a home priced at more than $500,000 has tile countertops rather than marble, it may suffer. Buyers in that price range are particularly looking for lavish master bedroom suites.

"If a home was built seven years ago, it's aged in the market," Bomeisl said.

Avery is familiar with the trend Bomeisl is reporting. She recently had a listing client invest significantly in marble and granite finishes in order to support a listing price in the $275 per square foot range.

The home is close to the Sheraton golf course with enviable mountain views. But it would not have supported that price without the upgrades.

"If they had kept it older, no way," Avery said.

Peddie said a number of the homes listed on the market are put there by owners who don't feel any particular urgency, but are willing to sell for an attractive price when the market picks up. He cites the example of one client who purchased one half of a duplex for $620,000 and within six months sought Peddie's advice on whether he should put it back on the market for $750,000 just to see what would happen.

Avery's search of the database within the Steamboat Springs multiple listing service reveals the highest demand across all categories of homes in the city and its immediate surroundings is in the $200,000 to $500,000 range. During the past 12 calendar months, 282 of 363 listing sold.

In the range between $600,000 and $870,000 28 of 81 listings sold.

There were 21 sales between $1 million and $10 million, but that left 89 listed homes still on the market -- at least a five-year supply, Avery said.

As of this month, there were 14 homes, condos or townhomes priced higher than $1 million under contract. But that figure is skewed by the fact that at least five of those units have yet to be built, Avery said, making a closing more iffy.

Avery said the high end shouldn't deter people trying to build equity from a more modest a starting point.

"I think there's opportunity all the way across the board," Avery said. "The baby boomers are still out there, and owning a second home is a dream for a lot of people."

She cited the example of a client who purchased a Burgess Creek townhome for $245,000 two years ago, turned it over a year later for $287,000 and leveraged the proceeds into a unit at the Cascades for $350,000. When the requisite bank appraisal was performed, the Cascades unit appraised at $370,000.

"I look at this quarter and the next quarter as really big ones," Baldinger said. "In general, I would say the market in 2003 will repeat or exceed the market of 2000."

That translates into total sales topping $565.35 million.

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