Thursday, February 14, 2013
Steamboat Springs A sudden burst Tuesday of real estate contracts on homes in Steamboat Springs with list prices from $875,000 to $1.3 million gave the local market a healthy jolt.
The location of the seven homes that went under contract in one day stretched from the neighborhoods south of Walton Creek Road to Fish Creek Falls Road, Tree Haus and Old Town. Realtor Jon Wade, of Colorado Group Realty, said he had clients sell an Old Town home and purchase another.
Realtor Cam Boyd said the contract signings were condensed in part because prospective buyers exercised kick-out clauses — meaning the contracts fell through without the prospective buyers' earnest money being jeopardized — and then swooped back in days later to revive them.
Wade acknowledged that to see that many homes go under contract in the upper middle of the price range in February represents an anomaly but also says something about a changing dynamic in the local real estate market.
“This level of activity won’t be repeated this week or month due to limited supply, but it convinces me even more that this part of the market is turning and supply isn’t going up much for a while,” he wrote in an email.
“We’ve seen the right signs for six months or so in that part of the market,” Wade said. "We’re down to such a low inventory right now, we’re stabilized pricewise. You have 16 homes in that price range (at the mountain, in the Fish Creek neighborhoods and Old Town), and seven or eight are really desirable. As inventory comes down, pretty soon we’re going to have to build, and sooner than people are thinking.
“Our challenge going forward is inventory. In the next year or two — or if you ask the builders, three to five — it’s going to make sense to build.”
One of the challenges, Wade said, is that building lots remain priced higher than a “well-done house on the lot would bear.”
Boyd said new construction in the price range realistically wouldn’t begin as long as homes still are selling below replacement cost.
“That price range is getting pretty short on inventory,” he agreed. If it’s under $2 million, it’s pretty active. If it’s under a million, it’s even more active.
The issue, he said, is that right now, those homes are selling at prices below the cost to buy a lot and build.
“I don’t think it’s going to stimulate construction because all of those are being sold well below replacement cost,” Boyd said.
Gradually, Boyd said, buyers will have to move further up in price to find a home that meets their expectations, and prices will move up accordingly.
“People are watching our market and are trying to grab something that’s nice, that works,” Boyd said. “When the low hanging fruit is gone, they’ll have to reach higher in the tree.”
To reach Tom Ross, call 970-871-4205 or email tross@SteamboatToday.com