Developer: Trends show better housing market on horizon in Steamboat
June 13, 2010
Steamboat Springs — The developers of Alpine Mountain Ranch and Club brought in reinforcements and rallied the troops here Tuesday, using historical data to make the case that when the mountain resort real estate economy turns around, it will be "Steamboat's turn."
Co-developer Bill Butler told an audience of more than 200 Realtors, bankers, architects and builders gathered in the Strings Pavilion that if the economic recovery that he thinks already is under way follows historic trends in the ski town markets, Steamboat could be poised to build on the momentum it had in 2006 and 2007, before sales plummeted.
Among the speakers was David Belin, of Boulder-based RRC Associates, a research company with a strong focus on the ski and snowboard industries and vacation travel.
Relying in part on data analysis by Belin, Butler observed that mountain resort real estate historically has resumed a resort upward trend in post-recessionary periods. He draws confidence, he said, from the fact that the Steamboat market has given up less ground in terms of average sales prices than resorts such as Vail; Jackson, Wyo.; and Park City, Utah.
"There is a common trend line among resort communities," Butler said. "They gather momentum very slowly, and they take off. For me, the trajectory of pricing is most important once a community takes off. … It's my belief that Steamboat has been a late bloomer. A definite change may have happened (here) in 2007. Will Steamboat and Routt follow the historic path of other communities? If so, when?"
In Butler's view, two significant attributes support Steamboat's ascendancy in an economic recovery. First, he said, the local market experienced the price breakout in 2007 that all mountain resorts reach as they are more elevated in the public consciousness. Second, during the recession, prices did not recede as much as they did among Steamboat's peers.
"I believe the plotted data points to a place having been discovered," Butler said.
Butler's colleague Andy Daly, the former president of Vail Resorts, said he thinks among Steamboat's greatest assets are its excellent medical facilities and relatively low elevation at 6,700 feet, offsetting the vulnerability that aging baby boomers feel.
Daly pointed to community institutions from the agriculture and mining industries, to the weekly pro rodeos each summer, the Strings Music Festival and the Steamboat Springs Winter Sports Club as assets that set the local real estate market apart.
Belin, a director at RRC, has designed guest research projects for clients including Steamboat Ski and Resort Corp. and the Steamboat Springs Chamber Resort Association.
Looking at the historic post-recessionary trends in seven ski towns, Belin said, he found a pattern.
"In all communities, average sale price began to rise no later than one year following the conclusion of the recession," Belin said. "Most of those markets peaked in 2007, 2008."
With the recession having officially ended in late spring 2009, he said, a recovery could be impending.
Steamboat's average sales price tends to track closely with Breckenridge and Keystone, Belin said, but it climbed higher in 2008 (greater than $700,000) than did the Summit County resorts. It stayed above Keystone in Breckenridge in 2009, though it dropped more steeply. The average home sale price in Steamboat was about $625,000 compared with a little less than $600,000 in the comparable ski towns.
Aspen showed the most resilience between 2008 and 2009, Belin said — the average sales
price climbed to more than $3 million. Vail's average transaction price remained almost double that of Steamboat's during the decline, but in terms of movement in time, Vail gave up about two years of growth while Steamboat gave up about one year.
"Most mountain towns saw a 2.5-year correction," Belin said. "Steamboat dropped 1.5 years. Vail's average price fell below 2007 levels. Steamboat's average price in 2009 was similar to Vail's in 2004."
Realtor Jon Wade, of Colorado Group Realty, said after the presentation that he thought Belin's reliance on average transaction amounts to forecast the recovery fails to take into account buyers' shifts away from mid-range properties during the downturn. With low overall transaction volume and a preponderance of the sales clumped at opposite ends of the spectrum — very high and entry-level — he suggested that the average transaction price might be skewed.
Although Belin's research suggests that mountain towns rebound no later than a year after the end of a recession, he also acknowledged to his audience that in terms of properties sold, Steamboat entered the real estate downturn later than other mountain towns.
"In most communities, the number of units sold peaked in 2005," he said. "Steamboat maintained its units sold through 2007 before dropping in 2008."
In a similar vein, Coldwell Banker Silver Oak Realty owner Karen Beauvais asked whether interval sales of vacation condominiums were reflected in the average sale price statistics, and he responded that they had been scrubbed from the data.
Realtor Joanne Erickson, also of Coldwell Banker Silver Oak, pointed out that the Steamboat market has seen 45 bank-owned properties and asked the panel, "When do these short sales clear up?"
Bill Reid, vice president at Alpine Mountain Ranch and Club, told Erickson a rebounding market would absorb distressed properties quickly.
"History shows that inventory gets eaten up pretty quickly if the attitude" of buyers has turned around, he said.
Butler is the chairman and CEO of Corporex in Covington, Ky., not far from Cincinnati. His company builds high-rise apartment buildings and hotels, among other projects. Reid told the audience that Butler's company completed three Hyatt-brand hotels this spring and began construction in May on the $80 million Fitzsimmons Village hotel and office complex along East Colfax Avenue, close to Children's Hospital in Aurora.
Butler said in addition to building hotels, his company manages hotels, and business at those properties tells him that corporations and affluent people have returned to spending money.
He said he thinks the buildup in capital among individuals and banks creates an inertia that's difficult to resist.
"We watch money supply closely as an indicator of recovery," Butler said. "If there's money, it will find a place to work. The money supply is building up. There is private capital bulging on the sidelines.
"Will the breakout growth curve continue in a parallel path to what we saw (earlier) in Aspen and Jackson? Or will the recession throw cold water on the process? A slow recovery in the mortgage markets could be a factor that slows us. The answer depends on our attentiveness and our community acting together."
Asked after the presentation why the ideal buyers for estate lots at Alpine Mountain Ranch haven't come off the sidelines this year, Butler answered simply: "Timing."