A crew from Bader Burke & Company, based in Longmont, installs steel on the foundation for the community building at Barn Village at Steamboat this week.  The building is among a relative few construction projects going vertical in Steamboat Springs this month.

Photo by Tom Ross

A crew from Bader Burke & Company, based in Longmont, installs steel on the foundation for the community building at Barn Village at Steamboat this week. The building is among a relative few construction projects going vertical in Steamboat Springs this month.

Entry-level buyers are key to mid-range properties

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Realtors in Steamboat Springs were keeping a lookout for entry-level buyers this month, as the Routt County market showed signs of a late summer upswing.

During the two-week period from Aug. 6 to 20, records on file at the Routt County Assessor's Office reflect 20 real estate closings, not including timeshare sales.

There were some million-dollar-plus transactions, but the deals that may prove to pique the most interest of Realtors were the sale of a 650-square-foot condo on Anglers Drive for $164,900, and a Fish Creek Falls condominium for $199,500. Those are the type of sales that could be emblematic of entry-level buyers beginning to come back into the market, Realtors say. And in turn, they could set young families free to move up into single-family homes in the price points between $500,000 and $800,000.

Some Realtors report a dearth of those entry-level buyers, while others see signs that they're back in the game.

"We need entry level, first-time buyers," Coleman Cook, of Colorado Group Realty, told a noon gathering of the Steamboat Springs Rotary Club on Aug. 18. "All of us have buyers who want to take advantage of the current buyer's market and trade up to single-family homes. The problem is they need to sell their Stagecoach townhome to do it."

Cam Boyd, broker owner at Prudential Steamboat Realty, agreed that without first-time buyers to absorb entry-level townhomes and condos, it's difficult to sell move-up, single-family homes in the middle of the residential price range.

"We have an exodus of carpenters and other construction workers," Boyd said. "We don't have the people coming up," to purchase those homes.

Boyd's colleague, Lisa Olson, said she is seeing movement at the entry level. She cites the recent sale of a Sierra View condo in Oak Creek for $169,900 as a sign that things are loosening up.

"In that lower-end market, there are people wanting to move if the price is right," she said.

Olson stressed that with mortgage rates just above 5 percent, and the impending end of the federal tax credit of as much as $8,000 for first-time homebuyers - or homebuyers who haven't owned in three years or more - there is a narrow window of opportunity that will close Nov. 30.

Realistically, Olson said, homebuyers need to be under contract in early October to take advantage of the tax credit.

Veteran Realtor Randall Hannaway, of Colorado Group Realty, said in 20 years, he has not seen the convergence of market factors that the Routt County market is experiencing right now.

In other years, "we've seen a lot of inventory and high interest rates," Hannaway said. "Or, we see low inventory and low interest rates. But now, for the first time, I've seen really good supply - a 25 percent increase in inventory, which isn't radical, and almost historically low interest rates."

Local values

Olson, who with partner Beth Bishop scouts out values in the current market, cites three homes that are listed for sale at discounts of 23 to 25 percent from their 2008 selling prices.

They include a three-bedroom Timber Run condo that sold for $500,000 and is currently listed for $375,000.

Similarly, there is a two-bedroom Villas at Walton Creek condo that sold for $450,000 last year and is listed for $348,000, and a four-bedroom, single-family home in Bear Creek Subdivision that sold for $775,000 and is listed at $599,000.

Realtor Michelle Garner, of Prudential, told the Rotarians that a clear pattern has developed this summer.

"I can tell what's going to sell before it sells based on price and comparables," Garner said. "Properties that show the best in their price category," are the ones that sell.

"When I see them pop out, in a month or two, they're sold," she added.

Pricing within a product category to get prospective buyers in the door is essential to sales in this market, Garner emphasized.

"The (asking) price you want to arrive at is the price that will drive people into your home," she said.

Hannaway sees another trend driving people toward mountain town purchases - the inevitable ticking of the clock.

More and more baby boomers are reaching prime second-home-buying age every year, Hannaway observed, and those who can afford to consider a purchase in a Colorado mountain town are interested in pursuing an active lifestyle - they intend to ski, hike and mountain bike for a good long while. Boomers' own advancing ages create a sense of urgency, he said.

Now, there is pent-up urgency, and though he won't make a prediction, Hannaway is optimistic that when the Steamboat market comes back, it may come back with "a vengeance."

However, even more urgency for baby boomers can be created by the sight of their grandchildren growing up.

One of the primary drivers in resort purchases is a desire to gather extended families. In some cases, affluent buyers may even feel guilt about time they didn't spend with their families while building their careers and amassing their fortunes.

The awareness that their 12-year-old grandchildren are due to become increasingly independent teenagers any day could lead resort buyers to look in places they know will appeal to adult children and willful teenagers.

Bishop said second homebuyers aren't the only ones finding opportunity in this market.

"Teachers and nurses who haven't been able to buy for five years are able to purchase homes now," she said. "I helped two get their earnest money from the bank this month."

Comments

1999 4 years, 7 months ago

it's made our town what it is today.

dependent on real estate, development and building.

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greenwash 4 years, 7 months ago

Keep Dreaming all you starving realtors.It aint going to happen.

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1999 4 years, 7 months ago

i'm tired of real estate being the most important business in this town.

it's made it what it is today.

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papafu 4 years, 7 months ago

Help me out here. Let's say someone in there twenties has a job or jobs where they bring in 30k a year. They want to buy something in the neighborhood of 200k. Where do they come up with 20%(40k) down in order to get financed? Or even 10%(20k)? It seems to me that even those wanting to buy in at entry level prices need to have some really creative financing to get in the door. Are the banks and or mortgage companies in any position to help them?

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Steve Lewis 4 years, 7 months ago

I'll hope they extend the $8000 tax break for First Time Buyers.

NBC had some interesting new upticks in this past month's nationwide home sales performance relative to a year ago.

Product: <$ 100K........sales up 39% 100-250K................up 9% 250-500K............down 6% 500-750K................dn 9% 750-1,000K..........dn 11%

$1 Mill..............dn 23% $2 Mill................dn 32%

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Steve Lewis 4 years, 7 months ago

Huh. My post was truncated. I'll try again.

Product: <$ 100K........sales up 39% 100-250K................up 9% 250-500K............down 6% 500-750K................dn 9% 750-1,000K..........dn 11%

$1 Mill..............dn 23% $2 Mill................dn 32%

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Steve Lewis 4 years, 7 months ago

Product: <$ 100K........sales up 39% 100-250K................up 9% 250-500K............down 6% 500-750K................dn 9% 750-1,000K..........dn 11%

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papafu 4 years, 7 months ago

Help me out here. If a twenty something is making thirty something a year and is paying maybe 15-20% income tax, how much of a tax break is the twenty something really going to get when trying to buy an entry level piece of property that will help them afford the down payment?

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JLM 4 years, 7 months ago

There is almost no correlation between selling price and whether a purchaser is an "entry level" buyer. People w/ cash are availing themselves of bargains, such as they are. Read the comments by the Realtor closely and see that what is selling is, in fact, the best product at the best price --- the best of class at that pricing point. This does not signify that it is an "entry level" buyer. It does indicate an astute buyer.

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aichempty 4 years, 7 months ago

Windle,

Can't let your comment go by without a volley. I don't live in Steamboat. Never have. When I first moved to Routt County I had a down payment on a house that I paid under $120,000 for. I was not quite 40 at the time. I bought something I could afford to pay for because, well gosh, that's what realistic, responsible people do. If the only way I could buy a house here was to get a no interest loan, or an adjustable rate, I would not have moved here. That's how life is.

I also was forced to move away and lived in another state, working for over seven years at a steady job for which I was well qualified, until I could afford to move back.

At no time did I ever wonder whether I "deserved" to live in Routt County.

And, so now I live in Routt County and Oak Creek is closer to town than I am. Hayden is about the same distance, but with a better road (US 40) than I have to use to get to town.

So, maybe you'd like to climb down out of my face about it and realize that I have only suggested that others do what I've done in return for living in an affordable home (which I built myself, out of pocket, because I could not afford to buy the same thing built by someone else) in Routt County, Colorado.

Nobody gave me anything. I earned every dollar I spent to live here, and I lost a bunch of them trying to live in a place which, it turns out, I could not afford for the long run when I originally moved here.

So, don't give me sob stories about people in their 20s or 30s who haven't faced reality and figured out that you do, indeed, have to "pay the piper" to live here. I did what was necessary to earn the cost of my ticket, and not one cent of it came from making money in real estate or development, or the mortgage or banking business in Routt County or Steamboat Springs.

If the choice is to have a second job washing dishes in Steamboat Springs and live in constant fear of financial disaster, or to live elsewhere making a good living until you can afford to come back, then from my experience the second choice works a lot better. I already lived it.

If people want to live in Steamboat, then they should bring a lot of money. Expecting somebody else to make it possible for the voluntarily under-employed (those who could make a better living elsewhere, and afford a home elsewhere) to buy a house in a resort town is just wishful thinking. It won't work any better than trying to go back ten years and make different choices so you can afford to buy in this area now.

So, what are you going to do NOW so that you can buy a house here ten years from now? That's what you need to figure out, and stop blaming me for figuring it out ten years ago.

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Scott Wedel 4 years, 7 months ago

The financially sound way of buying a house is to save to get at least a 10% down payment. The reduced financing costs of having a decent down payment makes it truly worth saving to get a down payment.

The style of living in recent times of barely making the mortgage payment, putting living expenses on the credit cards and every few years refinancing into a larger loan as the house appreciated to pay off the credit cards is OVER. Banks are not going to refinance to anything close to 100% of property value.

Papafu, Somebody making $30K should not expect to be buying a $200K property. That person making $30K a year needs to be married with a household income of at least $50K.

Steve, The fundamentals of why the properties <$100K have improved is not that cheerful. It includes many properties that had been more than $100K. That segment was weak during the boom because lower income buyers were being allowed and encouraged to buy more than what their income could support. And less than $100K is pretty attractive to investors because it is easier to profitably rent than expensive properties.

And the article's idea that there are signs of life in the local market because something sold at $169,900 that other basically identical ones had consistently sold for $220s and peaked at $243K is pretty grim. The people that bought two years ago are down $60K in equity. The people that bought a few months ago are down $20K.

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Scott Wedel 4 years, 7 months ago

And the idea that there is a pent up urgency in boomers to buy here is ridiculous. The boomers I know are recalculating their financial future now that they've lost most of the equity in their house and while their IRA and company stock options have come back some, they still remember last winter when suddenly they had most of their retirement savings just crushed.

They are so many baby boomers with property here that would love to sell. Their vacation property can no longer be considered an appreciating investment. They would love to get rid off the second mortgage and cut their SB property losses, but there is no hope of selling at a decent price in this market.

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TWill 4 years, 7 months ago

1999 (and other pessimists)- If our town isn't going to be dependant upon real estate and development, then what do you propose we base our rurally isolated local economy from? Tee shirt shops, restaurants, selling cows? I agree that we have become overly dependant upon real estate appreciation. But if it goes away for much longer, we're going to need something significant to fill the void. Really, I'd like to know what alternatives you suggest.

We're a resort town. If you remove the real estate industry, then we might as well be Maybell or Bond with a bigger hill at the end of town. People love to vilify the real estate industry for some reason. We would be nothing around here without it though. What would be the "important business" then?

Its hardly just realtors that are affected either. What about the carpenters, plumbers and all the other hard working people with young families that are now being forced out now because of lack of work? It's not just rich, fat guys that get fed from the real estate/ development market. Get some perspective!

There is a very odd satisfaction people seem to get from others struggling. Why is that?

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aichempty 4 years, 7 months ago

It seems to me that some privileged people who have never had to struggle not only don't appreciate the value of hard work and sacrifice, but actually look down on those who are not lucky enough by chance of birth to be affluent. These are like the people who cut around a line of stopped traffic and then force their way back into the front. They're like some of the pretty girls with money who make fun of kids that are obese, not so pretty, or can't afford nice things. Sometimes that's just how it goes, and you have to deal with them because it's illegal to smack them when they deserve it.

I know what it's like to work for six months building a house and then have the realtor walk away with as much in commission as I made in profit. The value of a realtor to a seller can be enormous. At the same time, a realtor may put in a few hours or a day or two of actual work to make as much as the guys who worked for months.

I don't have the answers to all this, but I've learned how to deal with it and now I avoid situations where I work too hard for too little in return.

Steamboat is going to be a community where the residents either don't have to work while they're here, or they work for people who don't have to work or can afford to hire others. It's a service economy in the long run, and tourism is the product.

Construction workers go to where the work is. That's how it's always been. The answer is to become qualified to do something else where you can stay put. Might not be fair in the eyes of some, but that's reality.

I graduated from high school in a town of about 150,000 people, with a graduating class of 356. We recently had a reunion and the vast majority of people from my class now live in other towns, with most of them living in other states. This was a town with commerce, industry, a diverse economy, transportation, hydro power, etc. Regardless of local opportunities, most people went elsewhere for other opportunities.

Residency in a ski resort town is not a birthright. It's something that some people are born into and don't have to give up, but others are born into it and have to leave to support themselves. Others will never be able to afford it in the first place.

I really understand how much people want to live here, and how hard it is to get a foothold and stay. Unfortunately, it comes with the territory. It's a problem unique to a place where people feel entitled to live above their means.

I don't think we're going to change the town. What's left? The people will have to change and adjust to what's here. That's life.

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Scott Wedel 4 years, 7 months ago

Aic, I don't disagree with your description of 3 dimensions of the local economy. The idle rich, construction and service workers.

But another big and ever growing part of the local economy are those whose jobs allow them to work anywhere. That includes consultants, engineers and financial people. Their office is as easily in their house as it is in some office building. These people are well paid knowledge workers, but most of them are not rich.

And I think that real estate agents are like the travel agencies of 15 years ago. It will go from a 6% fee to a pay for services industry. If your house needs to be cleaned up and staged then you'll be advised to pay that fee. You'll pay for advertising. Already elsewhere you can pop up a map of properties for sale with street pictures and links to the local assessor's info for the property.

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TWill 4 years, 7 months ago

Well said Aich- I believe the "that's life" response is quite valid in this case. I understand that some people win and some people lose. But this town is funny like that.

I think that there are many people around here that grew up with a level privilege and education that gave them a superiority complex. It's a similar attitude you have regarding "working too hard for too little in return". That is certainly a legitimate way to live one's life, but if everyone abides by that philosophy, then very little will actually get done. Someone has to do the dirty work eventually.

Around here, we seem to have too many chiefs (or at least people that think they're chiefs because they were raised by a chief in a tee-pee someplace else) and not enough indians. The indians don't like the chiefs taking advantage of them and can't afford to stay anyway. But that's a whole other discussion about capitalism in itself- maybe for another day?

My message was a response to those that do not acknowledge all the opportunities that the development and real estate appreciation has provided to the Yampa Valley in the past decade. That applies to individuals and the community as a whole. Was there some greed and indiscretion along the way? Yes. But the overall community benefit of the real estate industry's growth outweighs the alternative.

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greenwash 4 years, 7 months ago

For Rent .... brynna larsons spec house she cant sell....only 2999 per month.how about a story on this house of cards.

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aichempty 4 years, 7 months ago

Scott,

Telecommuting is nice work if you can get it. I do some of that myself. You can't telecommute to your job managing a store or hanging drywall, however.

TWill,

You are right.

My comment about too much work for too little return was based on investing $50,000 of my own money, at risk, working for 6 months to build a house and then walking away with $68,000 (my 50 + 18 earned) and the realtor got $15,000. We employed several people in the meantime and pushed a lot of money out into the community (about $198,000 in labor and material) during the project, but making $3000 per month and then paying tax on it, plus social security, was not enough money to make it worth the risk and effort to do it again.

I am fortunate to have an engineering education and went elsewhere to live and put it to work for a steady paycheck. I went from working 60 hours per week to 40 and got an immediate $1000 per month raise to boot, plus vacation, benefits, disability and all that stuff. So that's what I mean about not working too hard for too little in return when I had something else I could do.

Yes, the dirty work has to be done. People who choose to be dirty workers or who have no choice are stuck with it. Right or wrong, I felt I had a responsibility to myself and my welfare in old age to go back and take an easier path which led to security rather than stay on the harder path that could have led to failure. It has turned out okay for me. I guess the lesson is that you have to know when to fold 'em around here, because you can lose everything if you're not careful.

The thing I do know, however, is what it's like to struggle and what it feels like to be on the dirty worker side of the equation. I have a much greater appreciation for other people now, and in a way, it was worth it.

I also have no patience with those who expect to come here with nothing to back them up and be provided with a job and a house and all that stuff just because they want to live here. If you weren't born with money or similarly endowed by fate, doing the dirty work for 20 years before moving to a place like this should be the expectation, not the exception. Paying the piper is what it takes, no matter where you got the money.

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Matt Helm 4 years, 7 months ago

Looks like we really need the Steamboat 700 to bring the value of our overpriced houses, that we can't sell or afford, down some more!!? Great plan!... We already have plenty of housing that is hardly used. Can someone tell me why we need more? I'm actually being serious even if I am sounding sarcastic.

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Scott Wedel 4 years, 7 months ago

Aic, My point is that telecommuters are the type of people that can afford to live in SB. SB is still comparatively small enough that it only takes a net gain of a few hundred telecommuters a year to have a decent growth rate.

Twill, Construction is a viable local business. It is going to be abysmal for a few years because of so much overbuilding in the past few years. As bad as things are now, I think it is going to get worse with the completion of One Steamboat and other projects while so few new projects are breaking ground.

But the myth that real estate appreciation is a viable business plan has been shattered. There were people that were living off of real estate appreciation. Those people have seen their golden goose get cooked. Their expected income is gone and now they are looking at losses.

Did anyone else notice the pair of local realtors that recently sold a Fish Creek Falls condo for $199K that they had purchased for $249K in 2007. Oops, lost $2,500 a month in value. Well, at least they practice what they sell, but it also goes to show that real estate agents are not experts in the direction of the market.

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aichempty 4 years, 7 months ago

Scott,

Yes, I agree with the telecommuting idea. I'm not sure this would be my first choice if I was free to move anywhere and telecommute. I'd be more inclined to live in an area like the Cumberland Plateau in Tennessee where you can buy much more home and land for a fraction of the price. The money saved would pay for a lot of ski vacations as well as for other vacations and hobbies, interests, etc.

As a matter of fact, my own home has doubled in value twice (according to the tax assessor and the comparables sold in my area) in 13 years, meaning that I've gotten 10% in appreciation on the average every year. The difference between people like me and people who have lost equity is that I wasn't buying someone else's inflated equity from a bid-up market with borrowed money.

Real estate and stock markets are always going to be cyclic. The thing for most people who work for a living is that a paid for home becomes an instant pay raise and life becomes much easier without the monthly debt to pay. If people can get into an affordable place at a young age, resist the urge to trade up too often and let inflation reduce the percentage of pay required to service a mortgage, the American dream will come true. If not, you end up in debt you can't pay or face retirement and reduction of income with big monthly expenses that make you a prisoner in your own home if you can afford to stay there.

Speculation always increases costs without adding value until the market collapses, and then people who took risks lending money lose it. That's what happened over the past year. People who lived on the profits from speculation better have saved a lot of it to tide them over.

I am not free to disclose the source of what I'm about to post, but I have information from a very reliable source that there are a lot of people in town who supplement their income from legitimate businesses with proceeds from trafficking. Like it or not, drug money has had a big role to play in Steamboat development and real estate over the years (going way back). Our drug-friendly society is one of the reasons that real estate costs have gone up far beyond the cost of constructing the buildings. People with tax-free cash have been able to leverage it into buying low-cost property that was later sold for big profits, and then those profits can go into more construction and sales, etc. I'm not talking about the "big" well-known developers, but individuals who quietly traded, built spec homes, bought low, sold high, etc., over the years aided by money from illicit business. When you have a good "square" job that everybody knows about, and don't live visibly beyond the means of that job, then money from trafficking can go into down payments and such that give people control of property that will appreciate, and that's how you get wealthy in real estate while laundering drug money.

(cont)

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aichempty 4 years, 7 months ago

(cont)

The Colorado "quit claim deed" is the most efficient method of laundering money ever devised. No reports are made to the IRS, and as long as you're paying your "square job" taxes and avoid audit triggers, you can get away with it forever -- at least you can around here.

My source also told me that a business I once purchased in town did more business out the back door than through the front door before I bought it. This only confirmed what I had already figured out during the time I owned the business.

So, unless you are aware of the underground drug trafficking business around here and how its proceeds have been leveraged into obtaining wealth in real estate, quietly, over the years, you can't understand the real reasons behind our local market conditions.

I will leave you with this. Some people involved in the real estate business have also been involved in trafficking, and that's a reason why some of them seem to live so well while the people building and buying the houses have to struggle to hang on. If there's any justice in this world, then some of those folks have over-extended themselves and lost the ill-gotten proceeds. It's not as good as seeing Bernie Madoff in prison, but it's not bad either.

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TWill 4 years, 7 months ago

That's a bit of a strech, don't you think Aich? I'm not saying that sort of thing doesn't occur around here. Steamboat does have a history and reputation. A few businesses or projects here or there might be supplemented by it.

But to consider it a major influence on the overall real estate market? Come on.

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freerider 4 years, 7 months ago

Steamboat is still a garage sale compared to VAIL, ASPEN, TELLURIDE....better buy now while you still have a chance or you will be living in Hayden , Craig , OC or gone down the road

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trump_suit 4 years, 7 months ago

Once again Aich shows us that absolutely anything can be blamed on drugs. His/Her blinders on the subject much be large indeed.

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aichempty 4 years, 7 months ago

trump,

If you knew the whole story, you'd be amazed and appalled.

It's called "racketeering."

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ybul 4 years, 7 months ago

So where do real estate prices go when interest rates go back up as foreign governments are not willing to loan money to the states. Rhetorical question, but as people now buy a house based upon payments, interest rates play a key factor in the value of a home and commercial real estate.

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aichempty 4 years, 7 months ago

ybul,

The ceiling on VA and FHA loans is over $400,000. I have found several times when moving from one state to another that real estate prices tend to be capped by that limit in areas where there is a transient population. Around here, you might see some of that until the existing inventory readjusts.

The prices will be a function of the insured loan limits and the buyer's credit score, employment and down payment. Around here, that means that people with a good job and a big enough down payment will find business as usual.

Some people will hang on to their property until prices go back up, and some places are more desirable to people moving in than others.

I originally moved here during a time when bargains could be had following the crash of the 80s. I think we'll see more bargain hunting over the next 2-3 years, and then things will get back to normal as the economy recovers.

Stock prices and values are climbing back up. The economy is readjusting and there's going to be more regulation to avoid the same thing happening again.

Honestly, this is a good time to sell out here and put the money into something nicer somewhere else. Most people around here could sell their property, move to equally desirable rural areas east of here, buy a nicer home and pocket the cash.

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Scott Wedel 4 years, 7 months ago

The current RE market is not being driven by interest rates.

The prospective first time home buyer went from 0% down and cash back at closing to 20% down, no credit card debt and savings just as local economy has slowed and is no longer clocking overtime pay.

The moving up buyer can find lots of attractive places to buy, but cannot sell current house except at such a low price that there is no money to buy the new house.

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aichempty 4 years, 7 months ago

Scott,

So, this means that people from outside seeking retirement or second homes will be in a position to bargain-hunt.

There are tons of good reasons to move away from big cities, and people who visit during ski season will tend to browse the real estate ads. I know of one trip like that which resulted in the purchase of three homes and two permanent relocations. All of the homes were of the "move up" variety during a time that starters were trying to find places to rent.

So, let's roll the ol' clock back to 1990 and watch the cycle go around again.

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Scott Wedel 4 years, 7 months ago

Aic, Yes, there will always be some visitors that purchase. Except now you cannot buy in SB and expect rent to cover the mortgage unlike the early 90s. And now the suggestion that the RE is an appreciating asset has also been blown up.

So some tourists will buy here, but it is less likely to be done as an investment, but as something they will use.

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aichempty 4 years, 7 months ago

Scott,

Correct. This is the time for people who are able to stop working or to have two homes they use regularly to buy one in the shadow of a world-class ski hill. That's why people move here. Tax wise and amenity wise, Steamboat beats every other ski town in the United States. Big hill, no crime, low state taxes, a peaceful rural area, relatively easy access compared to some other towns and the list goes on. It's a very desirable place for people to relocate, and if you take the whole population of skiers who can afford to have a home here rather than just have in "investment," our inventory could quickly be bought out.

Time will tell.

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ybul 4 years, 7 months ago

Scott, you are right the current real estate market is not being driven by interest rates. My question was what happens when interest rates climb, as a result of foreign governments pulling the plug on trying to peg their currencies to the dollar.

Things do change, and while the current market is driven by the economy. My question is that when interest rates do move back to more historic levels, what is going to happen to prices. Loan limits have an effect, however, if rates went from the mid 5's to the 7 -8 percent range, which is no where near what they were in 1980ish, where would prices go?

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