Archive for Sunday, March 7, 2010
Photo by Tom Ross
The 15 luxury condominiums to be auctioned at The Highmark on Friday will include all furnishings. The auction, which will be monitored closely by the local real estate and development communities, could set the standard for what luxury condominium prices at the base of Steamboat Ski Area look like in the future.
Highmark condominiums auction seen as bellwether
Highmark sales could set bar for luxury condo prices at base of ski area
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Reserve auction prices at The Highmark will begin at $405 per square foot for the smaller units.
Steamboat Springs — The Steamboat Springs real estate and development communities will be paying close attention Friday when 15 luxury condominiums at The Highmark go on the auction block.
By the end of the day, it could become clearer whether prices for high-end condominiums close to the base of Steamboat Ski Area will readjust to something closer to $450 a square foot, or whether the Steamboat market will work its way beyond a project that continues through years of struggles and possibly even foreclosure.
“It’s a bellwether of what’s going to happen in the condo market at the base of the ski area and will probably trickle to downtown,” said Jim Cook, of Colorado Group Realty.
Developer Steamboat Ventures Ltd. intends to offer one condo at absolute auction (with no minimum) when The National Auction Group puts the project under the gavel at 2 p.m. Friday, then auction off the remaining units with reserve prices that begin at $405 per square foot, or about $627,000, and go up to $914,000 depending on the size of the condo.
Throughout 2008, the condominiums sold at prices from about $980 to $1,500 per square foot with sales beginning at $1.83 million and reaching as high as $3.1 million, setting a new standard in the market.
Another entity likely to be watching the results of the auction is New York-based Rialto Capital, which acquired $10 million of original construction debt connected to The Highmark as part of a $500 million debt portfolio that was bundled by the FDIC after the failure of Integrity Bank of Alpharetta, Ga. The FDIC closed the bank in June 2008.
A bumpy past
Development of The Highmark, originally known as The Chadwick, was prolonged with a couple of significant bumps in the road.
Original developer Richard Friedman broke ground in August 2003. Work ceased in January 2004 after Friedman said increasing construction costs had exceeded what his business plan allowed.
After the foundation of the building stood through a winter of inactivity, Steamboat Ventures stepped in to resolve some outstanding construction liens.
Steamboat Ventures shares members with Los Angeles real estate development firm Concord Wilshire Partners. Steve Sirang is a principal in both entities.
Steamboat Ventures also negotiated a $20 million promissory note secured by the assets in October 2005, which extended the original construction loan. Integrity Bank held the note.
Work on the building did not resume until September 2005 after the city of Steamboat Springs approved value-engineering efforts made to bring the project within financial constraints. The Highmark was finally completed in June 2008.
Cook, who was the original listing agent of the condos at pre-sale, then left the project. Despite the construction delays, he said last week that it’s a well-run project.
“It’s a great product. I had clients from Tallahassee stay this winter and they said the service was great,” Cook said. “I think it’s a good building. It was very expensive to build.”
On the other hand, Cook is representing Wells Fargo Bank in the sale of a foreclosed penthouse unit at The Highmark that is not in the auction. It originally sold on Jan. 25, 2008, for $3.172 million, with Wells Fargo financing 80 percent of the purchase price, Cook said.
“It’s probably going to trade at $1.2 million,” Cook said. “That’s quite a discount.”
Condos sold furnished
Since 2008, nearby slopeside luxury projects at Edgemont and One Steamboat Place began late in December 2009 to close on condominiums at prices above $1,000 per square foot based on contracts written in the latter half of 2007.
Highmark is a different animal — although it’s not ski-in, ski-out, it’s still within steps of the Steamboat gondola at Village Drive and Après Ski Way.
The auction condominiums will be sold with the furniture package included.
A Steamboat interior designer who didn’t work on the project estimated the value of the furnishings for the four-bedroom units at more than $100,000. The Routt County Assessor’s web page values personal property in some of the units at $55,000 for tax purposes.
The Highmark has been managed by Crescent Hotels and Resorts for about 21 months as a boutique hotel. A hotel management employee said this week that although the rental rates for the condominiums are steeply discounted in the slow seasons, the property was full during the December holidays each of the past two winters, with nightly rates for the penthouse units reaching $3,300.
The National Auction Group’s Shannon Lewis said about 100 prospective bidders had toured the property as of midday Thursday.
“We had hoped for more,” Lewis said. “It’s not as busy as we expected.”
Auction outcomes
The number of registered bidders won’t be known until the day of the auction, although a significant portion of them are expected to attend a catered cocktail party in the lounge Thursday night. In the meantime, anyone is welcome to tour the property daily between 10 a.m. and 6 p.m.
Lewis said registered bidders would be required to post refundable checks of $25,000, $50,000 or $75,000 depending upon the size of the unit they are focused on. Telephone bids will be accepted, Lewis said, but those prospective buyers will be required to take the extra step of actually depositing their checks into the escrow account of a local title company.
Purchasers will be charged a 10 percent premium over and above the successful bid amount.
The size of the registration checks aren’t likely to be a deterrent to serious buyers. One local Realtor who has a client registered for the auction said the buyers who bid on condos at The Highmark are apt to be cash buyers because the active nightly rental program at the Highmark makes it very difficult to borrow money to buy one of the units.
Cook said he was pleased recently to see that Bill and Kay Stuart, former owners of Market On the Mountain, have finally acquired the commercial condominium space on the ground floor of The Highmark. They sold the building site, which they had acquired from American Skiing Co., in a deal structured to give them a new location for the gourmet grocery, which they have since sold.
Cook said he is the leasing agent for the commercial condominium.
— To reach Tom Ross, call 871-4205 or e-mail tross@steamboatpilot.com
Comments
Scott_Wedel (Scott Wedel) says...
Leave it to Tom Ross to talk to the one realtor with a Highmark unit listing to analyze the real estate auction. What couldn't find anyone else with a greater stake in the auction being a success?
It will probably give an idea whether the recent sales at Edgemont and One Steamboat are because buyers think that is a reasonable value or because buyers signed a contract during the boom which they are being forced to keep.
The worst case scenario would be very weak pricing that convinces a number of other recent buyers of luxury units that their investment is hopeless and they start giving their units back to the bank. At this time, best case is avoiding worst case until next crisis such as Clocktower Condos.
March 7, 2010 at 10:19 a.m. ( permalink | suggest removal )
JLM (anonymous) says...
It is very unlikely that any of these units will sell at a reserve price of $405/SF plus a 10% buyer's premium.
March 7, 2010 at 12:03 p.m. ( permalink | suggest removal )
fredduckels (Fred Duckels) says...
In a true auction everything sells regardless of price, that is how interest is generated. In this case the "auction" term is used to generate attention. I suspect this will not be an auction by any definition.
March 7, 2010 at 2:16 p.m. ( permalink | suggest removal )
ybul (anonymous) says...
Guess that is why they are auctioning off one unit without a reserve, to see how they should price units in the future as they need them to sell.
March 7, 2010 at 4:50 p.m. ( permalink | suggest removal )
steamboatsprings (anonymous) says...
The Highmark has far more issues that described, has some bizarre floor plans and there is a lot of risk involved in purchasing a condo there since you don't know how many will sell and what will happen with several other owners that are delinquent on their mortgages so I wouldn't take an unsuccessful sale as a negative sign. This is a building with a very negative public perception for many good reasons.
A successful sale could indicate a good market depending on the prices but may also indicate that enough buyers didn't do the due diligence needed to really understand what they are buying. Under these circumstances any buyer is taking a significant risk and should be compensated by a pretty low price. This project was never worth the $1,300 a foot some units sold for, maybe $750 tops so the implied discounts that are being touted area mirage.
If you have cash and are ready for a bumpy road with many likely surprises its worth considering in the neighborhood for $400 a ft but if you are a typical Steamboat visitor I would be very cautious and really learn what is going on before making your decision. This one is not the value it may seem
March 7, 2010 at 8:40 p.m. ( permalink | suggest removal )
Scott_Wedel (Scott Wedel) says...
Of course an unsuccessful sale would be a negative sign. It would mean that units that a couple years ago were considered to have value at $1,000+ a sq ft are not considered to be a deal at less than $500 per sq ft.
There are so many luxury homes and condos for sale that the market needs some signs of life. Already looks like foreclosures could satisfy demand for a while. No credible case can be made that buying a luxury home is any sort of investment at this time because there can be no expectation of being able to sell anything for any reasonable price in any reasonable time frame. The only reason to buy now is because the buyer is going to receive personal enjoyment from using it.
I note that Warren Buffett whom owns realtys and large modular construction company, in his annual letter notes that overall housing is going to recover because the overbuilding is now being balanced by reduced construction, but that luxury homes is so overbuilt without demand that it will not recover soon.
March 7, 2010 at 9:24 p.m. ( permalink | suggest removal )
greenwash (anonymous) says...
As I stated in an earlier post.....I bet NONE will sell.If one does sell at auction it wont go to close.
In the good ol days every realtor in town would be lining up to buy and flip to some unsuspecting out of towner.
Where are all the realtors now???? Waiting tables.
March 8, 2010 at 3:41 p.m. ( permalink | suggest removal )
inmyopinion (anonymous) says...
greenwash- so what exactly is your point? we've all been listening to you say the same thing over and over agin for a few years now, and it's getting really old. If you do not like the fact that there are 369 Realtors on file with the Steamboat Springs Board of Realtors, perhaps you should move elsewhere.
March 8, 2010 at 4 p.m. ( permalink | suggest removal )
Scott_Wedel (Scott Wedel) says...
Or maybe if realtors don't live greenwash's comments then they'll move and make greenwash happy.
At least greenwash made a specific prediction that included a bet.
March 8, 2010 at 5:44 p.m. ( permalink | suggest removal )
greenwash (anonymous) says...
only 369? Looks like they are leaving town ....Good Riddence.
Inmyopinion , born and raised here DA.
March 9, 2010 at 6:33 a.m. ( permalink | suggest removal )
1999 (anonymous) says...
imho...it's the greedy realators who have ruined our tourist town. they created a town where real estate sales make the front page.a town where the news paper that has regular a real estate insert
it's sick.
we've sadly allowed the real estate market run and develop our town. it's time to take it back from these greedy punks
and frankly...i am pleased to see them struggle!!! I love it when i hear a realator say "i haven't sold any property in months and months". makes me laugh.
lets get back to being a tourist town insted of a real estate opportunity.
March 9, 2010 at 8:09 a.m. ( permalink | suggest removal )
Scott_Wedel (Scott Wedel) says...
1999,
Call SB a resort town instead of a tourist town and I'll agree with you. The difference is that people try to figure out how they can live in a resort town and only visit a tourist town.
The construction industry is going to be in ruins for years around here. 110 or so million dollar plus south valley estates is what, a 10 year supply, at the current rate of absorption. And how many are spec homes by a developer/contractor that is also going to lose their personal luxury home built during the boom?
A recovery is going to be tough because the idea that a luxury home is an investment has been destroyed. Buyers will no longer be able to consider a luxury home as an investment that has the bonus that it can be enjoyed. If you cannot sell it in a reasonable time frame at a reasonable price then it is not an investment. When the market has such a glut and the banks owning other luxury homes, it is going to be hard for a while for a person to sell one of these luxury homes.
March 9, 2010 at 9:12 a.m. ( permalink | suggest removal )
JohnFielding (John Fielding) says...
I do not know of many tourist towns where there is not a strong attraction for people to either become locals or at least buy a vacation property. Between the intrinsic appeal that draws the tourists and the opportunity to make a living from their trade it is clearly part of the package. If one also finds the location is family friendly and there is not too long a commute to decent accommodations the demand is even greater. We should be thankful that most of these factors still apply here, it is the basis of our highly prized quality of life.
March 9, 2010 at 9:21 a.m. ( permalink | suggest removal )
housepoor (anonymous) says...
John,
Make a living from their trade? That is the catch.
March 9, 2010 at 9:26 a.m. ( permalink | suggest removal )
1999 (anonymous) says...
okay I'll go with resort town...but lets PLEASE quit relying on the realators and developers to guide our economy.
March 9, 2010 at 9:30 a.m. ( permalink | suggest removal )
JohnFielding (John Fielding) says...
Maybe the definition of a tourist town is "nice place to visit but you wouldn't want to live there". That's not us yet but it we could achieve it.
March 9, 2010 at 9:34 a.m. ( permalink | suggest removal )
1999 (anonymous) says...
yes snowbow...the fact is we are now living the outcome of a community driven by real estate sales.
how many empty storefronts do we need?
the real estate persons answer?
more...we need more
March 9, 2010 at 10:51 a.m. ( permalink | suggest removal )
Scott_Wedel (Scott Wedel) says...
I think realtors and development certainly were a cancer to the community during the boom. The issue is that depending upon what is built and how it is sold affects the community. If you built and market modest single family housing then you get people more like the rest of us. If you build locked gate luxury enclaves where we are their serfs then that destroys the community.
March 9, 2010 at 11 a.m. ( permalink | suggest removal )
TWill (anonymous) says...
Scott- the problem is that without supplemental industry or alternative carreer options, "the rest of us" wind up either building or selling the luxury homes or serving the elite clientele that occassionally occupy those homes.
Otherwise, there are only so many jobs that can feasibly support ownership of even modest single family housing.
March 9, 2010 at 11:10 a.m. ( permalink | suggest removal )
housepoor (anonymous) says...
When you think about it, for the past 5-7 years we had 200-300 realtors making good money, some great money. The loss of that income is having big ripple effect on many businesses/workers in town from cleaning services to botox.
March 9, 2010 at 11:15 a.m. ( permalink | suggest removal )
TWill (anonymous) says...
That's right, housepoor. Then throw in depreciating home values and there is little incentive to build or improve what you already own. That same ripple effect blows right through the construction industry too.
The past two years has given most of us a first-hand lesson on just how real "the ripple effect" truly is.
March 9, 2010 at 11:32 a.m. ( permalink | suggest removal )
Scott_Wedel (Scott Wedel) says...
The collapse of the construction industry has had a big effect upon our economy. Cannot argue that. Trouble is, cannot wish for it to come back. What's worse, by building so much so quickly, it is going to take years to absorb the excess so that we could return to a normal sustainable level of construction.
We live in a time in which a good number of skilled people such as engineers, accountants, graphics designers and so on can chose to live where they wish. These people can chose to live in SB as well. They are not uber rich and they are working. That is the sustainable future of resort towns. Not fawning at the feet of the uber rich when they decide to visit their SB mansion.
The difference is in the business plan. Is the business plan to serve your neighbors with a good product at a good price? Or is the business plan to sell expensive exclusive stuff and hope one or two of the uber rich come in and buy tens of thousands of dollars of stuff? One creates a live place to live. The other creates a place where residents must go to nearby towns for basic needs.
March 9, 2010 at 11:35 a.m. ( permalink | suggest removal )
housepoor (anonymous) says...
So instead of focusing on developing 2000 more homes we should be pushing for faster\ cheaper broad band, tax breaks for light industrial\manufacturing and improvements to out our existing amenities(ski area, howelsen, haymaker etc.) to make our visitors experience more enjoyable. Funny haven’t heard much about the dreaded triple crown?
March 9, 2010 at 11:53 a.m. ( permalink | suggest removal )
Scott_Wedel (Scott Wedel) says...
next few year are going to be interesting or sad?
And I think by the time real estate comes back then it will be played by different rules. With free online maps listing homes for sale then it becomes ridiculous to pay tens of thousands of dollars to realtors to sell a house. Expert opinion of proper price should cost a few hundred dollars. Writing a sales contract should cost around $100 an hour.
Future is going to be more fee based with maybe an incentive percentage. So a $500K house might pay a realtor $5K + 5% on the amount above $450K. So if it sells for $500K then it'd be $5K fees plus 5% of $500K-$450K ($2500) for a total of $7500.
March 9, 2010 at 12:05 p.m. ( permalink | suggest removal )
TWill (anonymous) says...
Good idea Scott, but it will never happen like that. The Realtor voice is too loud and self-protectant on a national level.
What you say makes common sense, but the National Association of Realtors (NAR) will never let it happen.
March 9, 2010 at 12:16 p.m. ( permalink | suggest removal )
scottford (Scott Ford) says...
Scott W -
Well said. I appreciated your perspective and insights.
None of us can look into a crystal ball and predict absolutely what the future will look like 5 to 10 years from now. (At least I don't know anybody who can.) Although entertaining to speculate about the future all we know for sure is that will be different.
Although I do not agree with his philosophy, Friedrich Nietzsche said, "That which does not kill us makes us stronger." I think that as a community this is what is happening now. This place has a proven resiliency that has survived a host of economic challenges in ways that surprises many folks.
March 9, 2010 at 12:41 p.m. ( permalink | suggest removal )
1999 (anonymous) says...
when i bought my house i worked WITH the owner to buy without a realator.
we split what would have been the realtors commision. she was able to lower her price to make it more affordable to me
the realator began calling us both haraasing us saying" the deal was going to turn out badly, we didn't know what we were doing blah blah blah". it was quite commical. she called the seller far more ofetn than she called me. the seller almost called the police on the realator.
we both learned together what we needed and worked together.to get it done.
i couldn't be more pleased and would do it again.
we were both quite pleased with
March 9, 2010 at 12:41 p.m. ( permalink | suggest removal )
JohnFielding (John Fielding) says...
Some of these trophy homes around the valley are already morphing into something more attainable. Unable to sell, some are rented to roommate groups.
Ever want to live in a mansion? This might be your chance.
March 9, 2010 at 12:41 p.m. ( permalink | suggest removal )
1999 (anonymous) says...
when i bought my house i worked WITH the owner to buy without a realator.
we split what would have been the realtors commision. she was able to lower her price to make it more affordable to me
the realator began calling us both haraasing us saying" the deal was going to turn out badly, we didn't know what we were doing blah blah blah". it was quite commical. she called the seller far more ofetn than she called me. the seller almost called the police on the realator.
we both learned together what we needed and worked together.to get it done.
i couldn't be more pleased and would do it again.
we were both quite pleased with
March 9, 2010 at 12:42 p.m. ( permalink | suggest removal )
Scott_Wedel (Scott Wedel) says...
TWill,
except that realtors cannot control the process. A lawyer can offer property transaction services and the realtors cannot stop that. The realtors have their MLS, but the online maps are making that irrelevant.
The real impact of that sort of change is going to be on the part time realtors that do little other than selling the spec home they built and so on. There won't be the money or savings for part time developer/flipper to justify being the agent as well. Full time realtors can adjust to fee based easily enough because their pay per hour is still reasonable and they'll be collecting advertising and showing fees from the sellers that want an unreasonable amount for their property.
March 9, 2010 at 12:44 p.m. ( permalink | suggest removal )
TWill (anonymous) says...
We're getting ahead of ourselves, don't you think? Let's get some properties to actually close with real buyers and sellers first, then we can fine-tune the commission structure.
For the time being, we need people to have the means and the confidence to purchase a home (from entry level to luxury). Adjustments to the current lending market are what will accommodate that.
The other details will be sorted out down the line.
March 9, 2010 at 1:14 p.m. ( permalink | suggest removal )
housepoor (anonymous) says...
twill, you're right. It is the lending enviroment that will continue hold back the housing market. Higher interest rates are right around the corner which will hurt prices further but they also might loosen lending a bit.
March 9, 2010 at 1:41 p.m. ( permalink | suggest removal )
1999 (anonymous) says...
TWill...why do we NEED to sell houses right now?
March 9, 2010 at 1:47 p.m. ( permalink | suggest removal )
TWill (anonymous) says...
What we NEED is business activity (money changing hands). The stagnant climate we have right now is good for no one. Even people that have money don't feel comfortable enough to spend it.
Business activity doesn't have to be in the form of selling houses, but that's a good place to get the ball rolling.
March 9, 2010 at 2:25 p.m. ( permalink | suggest removal )
Scott_Wedel (Scott Wedel) says...
It would be good to sell houses right now. I doubt it will happen. I don't see selling houses as the road to recovery for the local economy.
The market has had record low sales volume for over a year. Not only well under the volume of the boom years, but half of the volume of the years preceding the boom. The lack of volume has lasted long enough that it can no longer be considered a fluke resulting from the financial crisis of Sep/Oct 2008.
Sure financing is tough, but it was not that easy in 1998-2005. Thus, I think the problem goes far deeper than it being harder to get a loan.
I think the real problem is that the whole concept of a resort home in SB as being an enjoyable investment has been blown to shreds. What is the value of a property if there are virtually no sales and large inventory? No particular reason for one of the few that is able to move here at this time to consider buying when there are so many options and so many properties becoming bank owned.
And all of the activity generated by local contractors buying lots and building, and from real estate agents buying "deals" to flip has gone to zero. The ones with the inclination to do that have been crushed.
The nightly and longer term rental market has been flooded with options and rents have decreased while vacancies have skyrocketed. When Central Park Management starts running move-in deals in MARCH then the rental market is softer than the finest pillow. Go through Hayden, Oak Creek and Craig and find out how many rental houses and apts are vacant and the owner has given up running an ad in the paper.
The future is going to be a long grind of gradual improvements to the local economy. First, we are going to lose a lot of local businesses that were over leveraged and needed business to be at boom levels to have a viable business model. It is harsh, but a needed step because that leaves the stronger better businesses surviving that are able to profitably grow into the voids left by the bankruptcies.
Second, there will be the work anywheres that will decide to move here because this is a nice resort town. They won't be as worried about the resale price because they plan on staying for years. They will not be buying the mansions, but are more likely to be in the "attainable" price range.
Third, the excess supply will allow creating some real deals for tourists. Some of these South Valley mansions will become compelling vacation rentals for two or three families willing to share. The owners plan will be to rent it for 5-10 years and then remodel it into a luxury home again to sell (one thing is for sure, won't be much south valley luxury home construction for many years). So maybe SB can once again be a good place for families to take vacations. (I think too many fell in love with the idea of wealthy baby boomers and stopped caring about vacationing families).
March 9, 2010 at 5:25 p.m. ( permalink | suggest removal )
toboyle105 (anonymous) says...
The mansion boom of the 20's is much like this boom. What will become of these tributes to excess as energy prices continue to increase and the cost to insure, pay taxes and maintain outpace inflation. Are they the cut up condos of the future?
You've got to love greed. There are the winners and the losers. Hopefully SB does not become the big loser because of the greed of the few.
March 9, 2010 at 8:43 p.m. ( permalink | suggest removal )
ybul (anonymous) says...
SB might come out very well, it probably will have affordable housing, plenty of commercial space for creative business which do derive their income from the valley and probably some affordable apartments from some condo complex in the future.
While the luster fades on one thing, it begins to shine on another.
Wayne Gretzky said he was great because he went to where the puck was going to be. So much of what happened here was because everyone was running to where the puck was and could not see where it was headed. Foresight as to what one believes is going to happen is what is needed. There are vast opportunities here, just not where we used to look for them.
March 9, 2010 at 10:52 p.m. ( permalink | suggest removal )
greenwash (anonymous) says...
What happenend to REMAX realty anyway?
Come on Tom , tell the whole story.
March 10, 2010 at 6:23 a.m. ( permalink | suggest removal )
vanguy (anonymous) says...
Please allow me to offer an objective observation regarding the Highmark Auction and true market value as it relates to public record.
My goal is not to endorse or condemn real estate as a way of living, nor to endorse or condomn second homeowners, developers, growth, etc. Rather, my goal is to present an interesting discrepancy in property value data relating to the Highmark Auction.
if buyers choose to purchase at the Highmark auction, they will pay a 10% brokerage fee in addition to the sale price. A hypothetical sale at $500,000 will go on public record as a $500,000 transaction, based on the contract price of $500,000. The bank (seller) will receive $500,000 in proceeds from the transaction; yet the buyer will actually pay $550,000.
Let's assume this hypothetical property is 1,000 sq. ft. The transaction records at $500 / sq. ft., the seller received $500 / sq. ft., yet the buyer actually shelled out $550 / sq. ft. for the property.
Now look at this same hypothetical transaction as if it were listed in the MLS and the seller were paying a typical brokerage fee of 6% (...in this scenario, the brokerage fee is always included in the recorded sale price)
The hypothetical sale at $500,000 will go on public record as a $500,000 transaction. The bank (seller) will receive $470,000 in proceeds from the transaction; and the buyer will pay $500,000.
My purpose for bringing attention to this is simple. If anyone purchases a property at the Highmark Auction, I am concerned that the property's recorded sale price may be LOWER than the buyer actually pays.
The public needs to know what the actual total cost to the buyer is, and thus, the true market value of the property.
A variance of 10% in the recorded value of any property is pretty significant. Maybe the Pilot, the Clerk and Recorder, or the Assessor can provide the public with some clarification on these procedures.
March 10, 2010 at 9:16 a.m. ( permalink | suggest removal )
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