Glossary of terms
Home equity: Homeowners build equity in their real estate throughout time as they begin to pay down the principal on their mortgage. However, they also gain equity as market values increase. During the first part of this decade in Routt County, property owners saw their equity in real estate increase by six figures. In the space of five years, they had the ability to leverage their homes - that is to say, they could borrow against the equity in their homes to pay for college, buy a boat or take a European vacation, for example. It was newfound wealth, but a day or reckoning was just around the corner.
Appraised value: The run-up in commercial property values in Steamboat Springs during the middle part of the decade presented a challenge for some business owners. The sale of some modest commercial buildings on key street corners along Lincoln Avenue as multi-million-dollar redevelopment sites effectively caused a dramatic increase in the value of the ground beneath every downtown building.
The sale of buildings housing Rocky Mountain Wine and Liquor, the Harbor Hotel and Nite's Rest Motel and their subsequent demolition, served as comparables used by appraisers to place a value on similar properties. When it came time to reappraise downtown commercial properties for tax purposes, many property owners, some of them landlords, saw their property taxes increase dramatically.
Pre-construction pricing: The rapid appreciation of real estate values in Steamboat Springs attracted a certain number of speculative buyers less intent on owning a vacation home than they were on turning a quick profit. The idea was, that if a major project was going to take nearly two years to build, speculative buyers could put down a refundable deposit, or even a cash down payment and expect that by the time their new condo was completed, their equity would have increased sufficiently for them to sell the unit, pay a real estate commission and still collect a handsome profit. In some cases, the same piece of property saw two real estate closings in a single day.
The deal wasn't supposed to go down this way in the resort towns of the Rocky Mountain West.
The rising tide of affluent baby boomers was supposed to lift Steamboat Springs' vacation home market for years to come. And it did just that for the better part of a decade.
But the bubble has burst, and the future of the real estate development market in Steamboat and ski towns like it might never be the same.
From 2003 to 2007 the demand for vacation homes here encouraged speculation by investors who competed to get in on pre-construction prices. They were confident that by the time a new condominium project was complete, they could turn around and sell for a profit.
It was the best of economic times, and it was too good to last.
Ford Frick, the consultant who first gave voice here to the transformative power of boomers intent on retiring in the mountains, says the arrival of the next high tide may be years in the future.
"It doesn't bode well perhaps for the next four to five years," Frick said in late June. "I have to say, I don't think we're at the bottom. This is only eight months old. We've not seen the full (impact). I don't know exactly where the new normal is."
The financial fortunes of affluent people in suburban Connecticut, Texas, Illinois and California probably hold the key to the recovery of Steamboat's real estate market.
"Everybody is asking me these days, 'What's the market in the mountain towns?' I tell them, 'If you want to do a market survey, go to Greenwich, Conn.; Lake Forest, Ill.; and certain suburbs of Houston, Dallas and Los Angeles.' If these markets are strong, the mountain markets will be strong."
Frick knows that many of the people in those cities were working in the collapsed financial industries and that their neighborhoods aren't as flush with cash as they once were.
"The mountain real estate markets are driven by the top 5 percent of Americans in terms of income, maybe the top 2 to 3 percent," Frick said. "This recession was unlike most in that the economic downturn exploded from the top. It's right at the optimum mountain real estate market."
By the third week in July 2009, there was evidence that, at least temporarily, some of the people working in the financial markets again would reap the rewards of the boom. Goldman Sachs, Bank of America and even beleaguered Citigroup reported multi billion-dollar second-quarter profits, but analysts speculated that would be a one-time windfall attributable to billions of dollars in bailout money.
Frick is with BBC Research and Consulting and has built a specialty in mountain towns. He has worked for resort operator Intrawest - the parent company of Steamboat Ski & Resort Corp. - in Colorado resorts including Copper Mountain. He came to Steamboat in the late spring of 1996 to give the keynote address at the first Steamboat Springs Economic Summit and made a prediction about the future.
He told his audience here that for the coming decade there was nothing the Steamboat Ski Area could do to become the dominant force in the local economy. Instead, he said, it would be the real estate development industry, not ski resort operators, that would drive the economies of mountain towns. That trend would be powered, he said, by baby boomers in search of vacation homes, and their arrival would begin to transform towns like Steamboat Springs.
No reference point
Frick's prediction came true, and Routt County's real estate market reached unprecedented heights in 2007, topping $1.5 billion in sales and nearly doubling the record volume of 2005 in the process.
The 2007 numbers were helped along by several transactions in which outside interests paid $25 million or more for development land in Steamboat.
Seemingly everyone in Steamboat was trying to get in on the action. Between 2003 and 2007, the perceived value of even modest homes soared from $250,000 to $325,000, to half a million and more.
It was a classic seller's market, with limited supply - particularly for building lots - and over-heated demand.
In summer 2007, those typical $600,000 homes near Steamboat Ski Area, homes that would have appeared ordinary in a subdivision outside a major American city, were on the market for all of six to 12 days before going under contract.
By the end of July 2007, longtime Steamboat Realtor Ken Gold had labeled it a "buying frenzy for which I have no reference point."
For most of the 20th century, homes in Steamboat Springs have reflected the city's humble roots as a coal mining and ranching town. The grand Victorian homes of Aspen, Telluride, Breckenridge and even Ouray that were built by gold and silver barons can't be found in the Yampa Valley.
The early condominiums built for skiers in Steamboat were similarly modest. Examples include the slopeside condos at Storm Meadows and The Rockies.
Built in 1969, a one-bedroom unit in the Storm Meadows east building measures 590 square feet. A typical unit sold for $33,000 in 1998 and is valued for tax purposes today at $300,000.
A Rockies condo removed from the slopes but carrying the right to purchase a membership at Rollingstone Ranch Golf Club measures 524 square feet and offers one bedroom. It sold for $88,000 in 1998 and is valued at $228,000 today.
Steamboat Springs City Council President Loui Antonucci recalls that for decades after the Steamboat Ski Area came to prominence in the 1970s, Steamboat retained that modesty in its housing markets, even as prices sustained a steady climb.
A Realtor himself, Antonucci wonders where he would be had he not purchased his building lot when prices were favorable.
He came here from the East Coast as a young construction worker, bought into a downtown building and became a restaurateur without having planned it. With his business partner, he sold the business and the real estate, and later became a Realtor.
Antonucci purchased a lot in Fox Estates off Fish Creek Falls Road for $44,500 in 1993 after working with Realtor Dan Picaro.
"I had told Dan that the next time (prices) go down, make me buy something," Antonucci recalled.
When Picaro showed him the Fox Estates lot, Antonucci admired the views into Strawberry Park and didn't hesitate.
On a beautiful fall day, he told Picaro: "Write a contract." He built his home in 1996 and continues to live there today. That opportunity might no longer exist, even in the slump of 2009, when most building lots in the city are priced above $400,000.
"None of us could afford to go to the free market today and buy the homes we live in," Antonucci said.
Longtime building contractor Tom Fox has presided over the construction of many luxury homes this decade. He said that as recently as 20 years ago, the biggest homes in Steamboat didn't cost any more than smaller homes on a per-square-foot basis.
"For a very long time, we were building homes for $75 a square foot," he said.
He recalled when he and architect Joe Robbins collaborated on a new home for the late city councilman Dick Yeager in 1986. At 4,500 square feet, it was the biggest house in Steamboat. Yet it cost no more than $75 a square foot.
That modest standard was not destined to last into the 21st century. The cost of building materials went up, and Steamboat homes were being built to a more luxurious standard.
"All of a sudden, when it started, it just kept on going up," Fox said.
Residents become swept up
House of Cards: Losing a Home
Routt County's booming real estate market during the better part of this
decade attracted buyers of all sorts, many with an interest in capitalizing
on the investment potential of mountain resort property. Former Steamboat
resident Marcus Williams was no different. House of Cards, a five-part series by the Steamboat Pilot and Today, debuts Friday.
Marcus Williams was one of many Routt County residents who saw opportunity in the rush for retirement homes in the Rockies. He built a grand home and for years paid the mortgage by renting it for as much as $2,000 a night to vacationers. When guests were in residence, he either couch-surfed at a friend's place or rented a motel room. Vacation rentals more than paid for his mortgage.
Williams said he wasn't in it to flip the house.
"I intended to keep it for life," he said.
Williams' story may not be typical of how the mortgage meltdown washed up on Steamboat's shores, but it paints a vivid picture of how the arrival of retiring boomers has transformed a previously humble mountain town.
Williams' business plan worked well for about six years, until late 2008, when financial markets began to crumble and the stream of high-end vacation rentals suddenly dried up. To complicate matters, his relatively modest payment of between $4,000 and $5,000 on a five-year adjustable rate mortgage was due to reset at $7,750 a month.
He fell behind on his mortgage payments and the national bank that held them floundered. By 2009, he had been foreclosed on, lost his dream home and moved to a fixer-upper south of Boulder. The experience left him soured on ski country but defiantly looking forward.
"If I really wanted to be a slave to the bank, I could have paid for the house. Losing it was a choice. I just lost my taste for Steamboat," Williams said. "The equity is gone. You end up being a slave to the bank. Therefore there's no value. It should never have been foreclosed on."
Condominium projects such as The Rockies and Storm Meadows were built to provide luxury amenities - either ski-in/ski-out access or the right to buy country club privileges. But both were clearly built for people with modest expectations in terms of the actual living quarters. It was a different era.
Those expectations have ratcheted up significantly.
Robbins, the architect, looks back and says he thinks Steamboat housing changed permanently when Catamount Ranch & Club met with success in the marketplace.
"Catamount brought me the first clients that were international - they were people who could live anywhere in the world," Robbins said.
The Catamount development was undertaken by a group of developers who had already successfully created Cordillera above the little town of Edwards west of Vail. Catamount consists of two main components - golf course estate lots just south of Steamboat city limits and larger lots grouped around a restaurant and outdoor center on the shores of Lake Catamount, seven miles south of town.
When the developers introduced the golf course lots in 1999 at prices beginning at $350,000 and higher, local Realtors were skeptical.
But by May 2001, 24 of 25 lots had been sold and the 25th was under contract. The timing of the Catamount developers was good. Nobody could have known that the Steamboat market was headed for a post-Sept. 11 flat spot that would persist through 2002.
The sales history of Lot 4 at Catamount Ranch, which overlooks the 10th fairway, illustrates the sales histories of the building sites.
A couple named Barbara and Frederick Hudoff made the original purchase from the developer in February 1999 for $495,000. A decade after, when developed lots in Steamboat's family subdivisions are valued at $500,000 for tax purposes, the Hudoffs' purchase looks like a bargain.
The Hudoffs sold the lot 18 months later to a development entity, VGS Enterprises, for $725,000. VGS held it for five years before selling it for $1.35 million to Acanthus Design. Principals Nancy Jeffrey and Mary Litterman built a nearly 10,000-square-foot home on the lot, which is now listed for sale at $7.9 million.
It was at the same time Catamount Ranch began taking off that Marcus Williams made plans to build his dream home.
He had been patient, holding on to the lot for eight years before he decided to build.
Williams said he strapped on a tool belt.
"I hired subcontractors and built the house myself," he said.
He finished the house and occupied it in 2002 but continued working on improvements.
"I invested thousands in it every year," Williams said.
Vacation rentals were strong in winter and summer. The new people discovering Steamboat and looking at real estate provided a ready-made customer base for his expensive vacation rental.
In ski country circa 2009, granite countertops are now taken for granted and it's presumed that there will be a full bathroom for every bedroom.
A ski locker with benches, racks and cubbies isn't considered a luxury. But the electric boot driers might be.
Hostesses expect to entertain with commercial-grade kitchen appliances, and if there isn't a dedicated wine cellar, there should at least be a temperature-controlled wine cabinet in the kitchen. A pair of dishwashers permits one-step cleanup after a large dinner party.
Beverage refrigerators in the game room are paneled with the same hardwood facings as the cabinetry. A warming drawer for towels in the master bathroom adds a touch of luxury. A stacked washer and dryer set in the walk-in closet is a practical luxury.
The latest status symbol appears to be a canine shower, so that when Ranger returns from field and stream, there is a warm place to bathe his muddy paws.
In 2005, the gross dollar volume of real estate transactions in all of Routt County was a record $885.9 million. Stoked by limited inventory and a spreading national awareness that there were big profits to be realized by flipping mountain real estate, Routt County's market for million-dollar ski condos, rural estates and even modest family homes grew at a pace that stunned even veteran Realtors.
Confronted with the 2005 first-quarter sales volume of $97 million, Doug Labor observed that record figure came on top of an outstanding year.
"It was surprising because the first quarter of last year was so good," Labor said at the time. "To be up almost 50 percent from the first quarter of 2004 was pretty amazing."
For the next seventh months of 2005, the monthly dollar volume didn't dip below $80 million. And the summer and fall of 2006 were even hotter.
On the strength of five consecutive months of more than $100 million in sales from July through November 2006, the gross dollar volume in Routt County reached the unheard-of plateau of $1.12 billion. To put that number in perspective, the gross dollar volume for all of 2000, when Catamount Ranch & Club and Marcus Williams were making their play, was about $360 million.
Just the beginning
The display of dazzling numbers was just beginning.
The first quarter of 2007 accounted for $360 million, before May came along and did something Routt County had never seen before. May 2007's sales of $205.5 million marked the first and only time a single month had topped $200 million. The boom kept on rolling until the calendar year had reached $1.58 billion.
However, before the final tallies could be counted, veteran Realtors saw the market flatten in September and October 2007. It took another seven months before it really hit home that Steamboat's real estate boom had been caught up in the looming national financial crisis. By summer 2008, Williams also knew that his business plan had been altered.
"The summer season was a joke," Williams said. Adding to his woes was the knowledge that his mortgage was due to readjust.
Things were crumbling around him, but Williams proved nimble. Before he fell behind in payments and his credit was damaged, he went to the Front Range and purchased an inexpensive fixer-upper house out of foreclosure, through a different lender, and held on tight.
By autumn, with no winter reservations in the pipeline, he was confronted with the possibility of losing the house in Steamboat. He thinks that had his lenders been more willing to work with him, foreclosure could have been avoided.
Williams said he had intended to file for bankruptcy but the deadline passed while he was out of the country and his attorney didn't take the necessary steps.
After vacating the house in late winter, Williams returned in May 2009 to finish moving out. He held a multi-weekend garage sale to get rid of some of his accumulated possessions.
"I took four truckloads of stuff out of there," he said. "After being in there for 10 days, I was in awe of the house all over again. But that wore off."
Summer found him in Lafayette, remodeling his new home. The hot tub from his Steamboat mansion sat forlornly on the bed of his truck out front. But the resilient Williams, a native of Bermuda, was contemplating a bigger pool of water. He said he had planned to spend the summer in the Caribbean pursuing business interests in emerging economies there. Still, it was going to take time to get over the loss of his Steamboat home.
"It cost me thousands to lose my house. It wasn't free," he said. "What really hurt was that house was my baby."
Williams' story is just one of many like it in the summer of 2009 - just one example of how the Steamboat dream can crumble. As of July 24, the number of foreclosure filings in the office of the public trustee totaled 96, and the story was still unfolding.