Steamboat real estate inventory dwindles in niche markets
July 14, 2012
Steamboat Springs — Within specific price points and product categories, there are signs the Routt County real estate market is turning. The change is particularly evident in the city of Steamboat Springs.
Analysis done by Realtor Dean Laird, of Colorado Group Realty, reveals that inventory is scarce in three diverse categories, and the cost of entry into the market is up.
Laird said he easily could go out and find market niches where there is an oversupply of homes, but his current analysis is based on experience showing property to clients and being a little surprised himself.
"I've had people come in from out of town, particularly looking for low-priced condos, assuming we were still a distressed market and find out that in their particular search they had missed the bottom of the market," Laird said. "But they're still close. If you miss it by 10 percent, it isn't that bad."
Those three products include two-bedroom condos at the ski mountain priced for less than $200,000, single-family homes with three or more bedrooms priced for less than $500,000 from the mountain area to downtown and condos at the ski area with three or more bedrooms priced for less than $1 million and built after 2004.
In the single-family home category described by Laird, there have been 100 sales in the past 12 months. However, the number of active listings is just 15, a sign that unless new properties come on the market fitting that set of criteria, the market is likely to absorb the inventory.
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The lowest asking price for a home with three or more bedrooms for less than $500,000 in July 2011 was $250,00. A year later, that number is $299,000.
Laird said understanding the single-family home market in these terms is complicated by big variations in quality, lot sizes and other attributes of a home.
The last statistic doesn't necessarily indicate that prices are on the rise, but the floor is higher than it was 12 months ago.
It's a similar story in the category of entry-level, two-bedroom condos at the mountain, where there are 11 units currently listed after there were 91 sales in that category in the past 12 months.
A year ago, it was possible to consider one of those condos at $85,000. The lowest price today is $134,900. That's an increase of 85 percent.
The pattern repeats for buyers looking for newer, larger condos at the mountain. The lowest asking price today for a three-bedroom vacation condo is $345,000, compared to $263,900 a year ago. That's up by 31 percent.
Realtor Doug Labor, of Buyers Resource Real Estate, has made a science out of understanding the health of the market by tracking how quickly inventory is absorbed. The absorption rate is a way to measure the market's fluctuations relative to supply and demand, he said.
Absorption rate is calculated by the number of purchases (demand) in a quarter and dividing it by the number of listings, which represents supply in the same time frame. The higher the number, the more active it is.
Like all real estate markets, Steamboat's goes up and down, Labor said. He has looked at three market cycles: 1995 to 2002, which mostly saw slow and steady growth; 2003 to 2008, which saw unprecedented growth rates before collapsing; and the current cycle, which began in 2009.
The all-time low absorption rate came in the first quarter of 2001, when it was just 3 percent, according to Labor. History demonstrates that before real estate prices rise, the absorption rate must recover.
The absorption rate increases first, then the average price increases, Labor said. Average prices peak about five quarters after an absorption rate peak.
"With this recession that we're in, it might take longer periods of time for the overall market to recover," Labor said. "But when you segment it out, we're seeing some improvements."
Labor said that since the record-low absorption rate in early 2009, that number has been improving slowly but steadily, a sign that prices could begin to turn around. It's entirely possible, he said, that improving prices within one niche could spill over to other market niches.
"I have clients who've come to the realization they aren't going to find something they like in their target price point, so they're going to have to adjust" their expectations, Labor said, or maybe even let go of something else in order to meet their expectations in Steamboat.
To reach Tom Ross, call 970-871-4205 or email tross@SteamboatToday.com