Real estate industry sees slight increase in land movement
February 27, 2011
Steamboat Springs — Could a modest uptick in sales of building lots signal a modest resurgence in construction in Steamboat Springs?
Colorado Group Realty colleagues Jon Wade and Chris Paoli see positive signs. Jim Cook isn't so sure.
"2010 was definitely a better year than 2009," Cook said, "but we won't really turn things around until well into 2012. We have too much inventory to absorb before construction comes back, especially for commercial buildings."
Colorado Group released its 2010 statistics last week, and although the numbers of lot sales in the downtown/Fish Creek area and at the mountain area are small, the change on a percentage basis caught the company's attention.
The spread-out downtown and Fish Creek neighborhoods saw three lot sales in the 18 months beginning July 2009 and only one more in the first half of 2010, Wade observed. Then, in the final six months of 2010, four sales popped up with an average selling price of $597,625 and an aggregate value of $2.39 million. The total dollars were skewed by the high selling price of $950,000, but the low of $295,000 balanced it out.
"It's expensive to hold land (because of higher property tax rates for undeveloped land), and we'll probably see two-thirds of those buyers build in the next couple of years," Wade said. "I think this means we'll see a little more building a little sooner."
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Paoli reached a similar conclusion about lot sales at the ski mountain for different reasons.
"The lot sales are the most interesting thing about 2010 to me," Paoli said.
After logging just four lot sales in 2009, the mountain bounced back with nine lot sales in 2010, four in the first half of the year and five in the final six months. And in the third and fourth quarters, the average days on market for the lots sold came down from 296 in the first half to 142.
After showing dozens of million-dollar-plus homes, Paoli has developed a thesis that the number of quality high-end homes on the market isn't as large as most buyers perceive. He takes the late surge in lot sales as a sign that buyers are becoming anxious and are acting on their desire to move to Steamboat by taking matters into their own hands.
"That's the psychological progression people go through," Paoli said. "They start out thinking, 'I can build for less than the replacement cost.' After they've looked at a lot of homes and they get frustrated, and they want to be here, the next evolution is to buy a lot and build the home you really want."
Year over year
In terms of comparing the 2010 real estate market with the 2009 market, Wade thinks it's more telling to compare the first half of '09 with the first half of '10 and, similarly, second half to second half.
"It's still valid to compare all of 2010 to all of 2009, but our market sees a good deal of seasonality. Locals and soon-to-be locals tend to come out in the spring, and in the fall, we see more second-home action," Wade said.
The second half of 2009 saw 12 single-family home sales, and there was a modest increase in unit volume to 14 sales in the second half of 2010, but the dollar volume on those two comparable periods jumped nearly 36 percent from $13.8 million in the past six months of 2009 to $18.7 million in 2010.
— To reach Tom Ross, call 970-871-4205 or e-mail tross@SteamboatToday.com