Don’t expect dramatic improvement in the real estate market in 2012, but there’s reason to hope for a return to more normal appreciation in the value of homes by the middle of this decade.
That was the message speakers at the 2012 Colorado Group Real Estate Roundup delivered to an audience of more than 200 industry professionals and interested members of the public in Steamboat Springs this week.
“We’re not out of the woods, but we should be back to normal appreciation within four to five years,” keynote speaker Pam O’Connor said.
O’Connor is the CEO of Leading Real Estate Companies of the World based in Chicago. She said that before the rise of the real estate bubble began to expand in the middle of the past decade, real estate on a national basis was appreciating at 3.6 percent a year, before rising to 10.4 percent in the midst of the bubble. Since the bubble has burst, the value of real estate has been depreciating at an annual rate of 7.1 percent.
O’Connor, whose company provides services to 500 independent real estate brokerages — like Colorado Group Realty — that prefer to retain their local brand, was quick to point out that Routt County’s market is notably different from the national market.
“Have you ever heard of a national weather report?” O’Connor asked. “There’s really no such thing as a national real estate report.”
Colorado Group Realty Realtor Chris Paoli supported O’Connor’s point in a presentation that preceded hers.
“Pricing will continue to be difficult in 2012,” Paoli said. “It’s not like we’re going to see the market come roaring back. 2012 will be touch and go. It will be three to five years before we get back to something of a normal level.”
Paoli presented charts that showed the changing prices, both in terms of average sales price and price per square foot, for two sets of entry-level townhomes, then for one of the most visible luxury subdivisions in the market, the Sanctuary.
The Stagecoach Project I and II townhomes that sold for much lower prices in the 1990s had rocketed to an average sales price of $255,000 in 2007, increased to $262,000 in 2008 and still held up at $250,000 in 2009. The average price per square foot for the townhomes was $250. But in 2010, the average price of those townhomes fell to Earth at $69,657.
It’s a similar story in Steamboat, where the 30-year-old and very livable Whistler Village Townhomes have dropped by more than half since 2007 in terms of average sales price and price per square foot. Whistler Village was delivered to the market during the heart of the savings and loan crisis in 1980-81. The two-bedroom townhomes are big enough for a couple to start a family and are close to Whistler Park and a playground. Whistler Village Townhomes have turned over frequently in the past three years.
In 2007, the average sales price had zoomed to $295,000, which translated into a cost of $315 per square foot. Paoli observed that the price still was $215,000 in 2009 and $187,000 in 2010, and $191 per square foot. But with a number of distressed sales, the prices dropped steeply in 2011, to $122,651 and $129 per square foot.
The trajectory of prices is different in the luxury Sanctuary subdivision along Fish Creek and bordering Rollingstone Ranch Golf Course. Average sales prices peaked at $2.8 million in 2008 and slid steeply to $1.9 million in 2009, and $393 per square foot. The average price in 2010 was $1.7 million, and $364 per square foot. And while the average price rose to $1.9 million in 2011, the price per square foot decreased slightly to $346.
“The local market today is in a strange place,” Paoli said. “In 2007, prices were up and away with homes selling for $500 per square foot and $750 per square foot. Nobody could figure out what houses were really worth. Now we’re seeing a similar thing at the bottom of the market.”
Paoli said he’s observed sales trends in the high-end market that don’t add up. He cited the recent sales of two homes in Catamount Ranch, one for $433 per square foot and the second, a home that was of significantly higher quality, which sold for $330 per square foot.
“What we’re sensing,” Paoli said, “is that the market was getting bifurcated. Older homes were selling at too great a discount to newer homes.”
To reach Tom Ross, call 970-871-4205 or email tross@SteamboatToday.com