Barn Village at Steamboat prices sliced in half
51 unsold lots remain in the mountain-area subdivision in Steamboat Springs
May 30, 2010
Steamboat Springs — The mountain area of the Steamboat Springs real estate market has seen the sale of just five building lots in the past 12 months, and the developers of Barn Village at Steamboat have responded by cutting in half the prices on their 51 unsold lots.
That means the smallest single-family lots that once were listed at prices from $484,500 to $599,000 now are on the market for between $242,250 and $299,950.
Developer Bob Comes said the price cuts are not a sign that he and partner Eric McAfee are in financial trouble.
"We just had our senior financing extended and feel fortunate that we do have the capital reserves to weather the storm," Comes said.
He acknowledged that they are eager to reduce their carrying costs.
"It's a big number when you don't have absorption," Comes said.
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Listing broker Chris Wittemyer said he and Comes realized to get any response from buyers, they had to drop prices to make the lots competitive with existing homes in the $1 million to $1.3 million range. It's a price point that has seen some activity this spring as high-end buyers shop for relative bargains on existing homes.
"We're cognizant that there's only been a limited numbers of sales," Wittemyer said. "We asked ourselves, 'How do we make (Barn Village) the leading contender for people purchasing a lot at the mountain?' We needed to make this compelling. This summer is going to tell a lot."
Comes said he and McAfee want more than anything to see some activity at Barn Village.
"If no one's building, it doesn't leave a good impression," he said.
If the price drops stimulate contracts, Comes said, the prices will be revised upwards again.
"We'll ratchet the prices back up as soon as we get some absorption," he said.
Wittemyer observed that single-family building lots at the mountain have not reflected the price reductions in other products in the overall market. His research of the Steamboat Springs Multiple Listing Service supports that point.
Of the 82 lots sold in the loosely defined mountain area south of Fish Creek and east of Pine Grove Road, 82 lots have sold since May 2006, Wittemyer said, with an average sales price of $665,000. Of the 82, only eight sold for less than $400,000.
A variety of Realtors observed during the height of Steamboat's real estate run-up in 2005 to 2007 that it was the price and scarcity of undeveloped land that was pushing all real estate prices higher.
The dramatic percentage price drops at Barn Village could be the first sign that land prices at the mountain are poised to fall.
Barn Village holds 51 of the 115 lots listed for sale in the mountain area today, and before the price cut this week, there were only three lots listed for sale for less than $300,000.
Today, there are 30.
Making sense of lots in '10
Wittemyer said the new prices were set with a longstanding lending axiom in mind. He said when making construction loans, banks typically don't want to see the cost of the land exceed 20 or 25 percent — 30 percent at the most — of the total cost of the new home on the land.
Wittemyer said at $255,000 for one of the smaller lots in Barn Village, a buyer could reasonably expect to build a 3,000-square-foot home at $250 per square foot and come out with a final cost of a little more than $1 million.
For new product in a location on a creek, yet close to shopping and dining, and with a completed amenity building including an outdoor swimming pool, that should be a product that's competitive with existing single-family inventory at the mountain, Wittemyer said.
Steamboat Springs building contractor Jamie Letson, of Letson Enterprises, said it would be possible to build at the mountain for $250 per square foot if the owners became actively involved in keeping the costs down.
"People can work with a decorator and find nice finishes that are economical and please them," Letson said. "You can go with natural stone, or you can go with a beautiful ceramic tile. You have to do your research. If you want to spend more on your finishes, you can work with an architect or draftsman to design a simple, functional house with simple rooflines that costs less to build."
Avoiding irregular roofs that might require steel beams, for example, creates room for upgraded window trim, hardwood floors and energy efficient heating systems, Letson said.
Everything changed in '08
Barn Village was built on the former More Ranch bordering the south bank of Fish Creek immediately behind the More family's historic barn. The ranch is set above the elevation of Pine Grove, and the city park created around the barn establishes a buffer that makes the neighborhood feel somewhat secluded.
The least expensive lots in Barn Village are less than 0.2 acres. They include seven that sold for full price — $450,769 all the way up to $577,500.
"This isn't good news for existing owners," Wittemyer acknowledged. "I talked to one owner who was philosophical about it and said he'd rather see activity here, and I talked to another who wasn't so philosophical."
There are 16 larger lots on the east end of the project bordering longstanding homes on Memphis Belle Court and Robert E. Lee Lane. Among those are five that are very close to Fish Creek on a secluded cul de sac with a massive boulder retaining wall. Original prices for those were as high as $1.2 million. Today, a 0.46-acre lot away from the creek is listed for $412,500.
Wittemyer has a vivid memory of Labor Day weekend 2007, when Barn Village conducted a reservation event and secured refundable deposits on all of the lots.
"I had backup reservations two and three deep on every lot within 48 hours," Wittemyer said.
However, the developers weren't able to go to hard contracts until early 2008 when they got their final plat. By that time, prospective buyers had begun to drop out.
— To reach Tom Ross, call 871-4205 or e-mail email@example.com