Posted: July 01, 2008
Q3 Real Estate Report: A tale of two regions
Contrasting conditions mark Front Range, West Slope towns and resortsBy David Lewis
Location, location, locale, locality, locus, loci: Any way you put it, there is much truth to the notion that, of all potential variables, the specific spot where a dwelling lies makes the greatest difference in its sales value, as this tale of two Colorado cities aptly demonstrates.
On one hand we have Aspen, a lovely spot with a beautifully restored downtown where it is not unusual to see new condominiums sell for $3,000 per square foot. On the other hand, we have Pueblo, a lovely spot with a beautifully restored downtown where it is not unusual to see new single-family homes sell for $100 per square foot.
Really, aside from a movie star here and there, what’s the big diff? Everything, is all.
That’s why ColoradoBiz metaphorically hurled a few darts at a map containing an image of the beloved rectangle we call Colorado and then called real estate professionals in the locations, locations, locations where they landed. The variety of responses and the variation in conditions was breathtaking.
A tour of Colorado real estate can be a matter of dizzying contrasts. To simplify matters some, we’ll divide the state into three categories: resort areas, which are doing great; the Front Range metropolises, which have been hit hard; and smaller cities, which seem to be more than holding their own, notably but not exclusively those on the Western Slope.
One common economic condition is affecting nearly everyplace in Colorado: the subprime mortgage mess and its unpleasant implications for the real estate business, which range from foreclosures to lower prices and slowing construction growth.
Here’s one description of that crisis in action: "We’re seeing quite a few foreclosures," says Bill Schwabe, president of Schwabe Real Estate Inc. in Pueblo and a veteran of 24 years in the real estate business. By the same token, "It’s a buyer’s market so prices are good, and with the low (mortgage) rates, buyers are getting some good deals right now."
Here’s a second description of that so-called "crisis" in action: "We’re not in a completely isolated bubble here. Yes, it’s having an impact certainly — the subprime mortgage losses and that kind of stuff," notes BJ Adams, owner of BJ Adams & Co. Real Estate in Aspen and Snowmass Village.
"Now, foreclosures are not going on in our market ... and that has not changed. What has in fact happened in our market is that even the people who have the wherewithal to buy — and most of our clientele has not been impacted by what’s going on in the rest the country — their psyche has been shaken a little bit. They’re just not sure what lies ahead, and when you don’t have tremendous confidence in the immediate future you might dither a little."
The upshot of such shaken confidence in Aspen and Snowmass Village?
"I wouldn’t say it’s a seller’s market, but I would say it’s a more balanced market," Adams says. "But that also depends on the neighborhood you’re looking at. Where there is some competition, where there might be a condominium complex with three- or four-bedroom condos for sale more or less at the same price — with that dynamic you might be able to buy a little bit better than you could have a year ago. But if you’re trying to buy a ski-in, ski-out house, for example in Snowmass, they’re hardly ever on the market, and you are going to pay record prices."
Oh, but Aspen/Snowmass Village must be some kind of freak exception, correct? Hardly. Vail, currently in a building boom, is seeing real estate prices that might eclipse those of the Aspen-Snowmass area by a smidgen. Resort town Realtors themselves can hardly grasp how great it is.
"It’s amazing," said one in Vail, who asked not to be named. "I sold something yesterday for full price. Sellers want full price here; it’s just unbelievable. Obviously, they don’t read the newspapers. I’ve got another big deal going, and the seller won’t budge. The buyer is from Wall Street. He goes, ‘Is the guy deaf, dumb and blind?’"
Now we zip back to Pueblo, where Bill Schwabe says of his colleagues, "There is some attrition. A lot of the experienced agents will weather this — we’ve had a lot tougher markets. There is still a lot of activity; we had markets in the 1980s when there was no activity, and we had double-digit interest rates. The nice thing about this market is that people can still afford to buy a house, so there are still buyers out there. There are just more sellers than buyers right now."
Fort Collins? Same story.
On the upside, "The biggest thing that we can go back and look at is that in the last five years on average we’ve seen roughly a 2-plus percent increase in sales," notes Matt Evans, broker-associate with Fort Collins Real Estate. "We didn’t get that big spike that a lot of people got two, three, four years ago, so we didn’t have the big drop."
Yet, "We had one of the highest foreclosure rates in the country for a little while, and that came with the downturn in the economy nationwide," Evans says. "It takes a while to get through that, but we’re starting to see fewer."
How about Greeley and northern Weld County? Says Chalice Springfield, CEO of Greeley-based Sears Real Estate: "We’ve had a couple of tough years here regarding the foreclosure market. Weld County certainly has been in the spotlight with regard to foreclosures and bank-owned properties. I think we’re going to have another record year for foreclosures, but we’re hoping we’re at the tail end rather than the front end, like many states in the nation."
Speaking of which, the crummy markets of the coasts, the Front Range and elsewhere are also having an impact on Western Slope residential sales, if not too much of one.
"We do see some retirees buying here. We used to see more, but now that they’re having trouble selling in California or different areas, there don’t seem to be as many retirees (here)," says Sharon Vaughn, broker and part-owner of Coldwell Banker Homeowners Realty in Grand Junction. "We do see people moving over from the Eastern Slope, but again not as many, because I think the market over there is a little softer than it was."
Otherwise, the Mesa County market is doing just fine, thank you, largely due to the upside of the economic quagmire in which we find ourselves, namely the energy boom.
"We are very busy right now. The market is good — it’s not like it is in the rest of the country. The price range in the lower-end market is hot, stronger than the high end," Vaughn says, although higher-end homes in the $300,000-and-up range are also moving well.
Salida, Trinidad maintain appeal
Yet communities don’t have to be in either the resource belt or the resort belt to be doing well in residential sales. We’ll offer two examples: Salida and Trinidad, communities seemingly doing a sterling job of making the most of their natural and historical assets.
Salida has pulled off an improbable triumph: turning itself into a center for artists and art galleries, sort of a Greenwich Village-on-the-Arkansas, as well as profiting from the recreational opportunities there.
"Salida is really a pretty sophisticated town as mountain communities go," says Petra Zwingers, broker-associate with Salida-based United Country Premiere Brokers. "A lot of people move here out of choice. In the last few years we have been immune to general downturns in the real estate market that the nation has experienced because we are still at an attractive price point for second homes, and for people who come from the Front Range, from Denver and Castle Rock.
"We’re still seeing an influx in town of homes being purchased by Coloradans who use them as weekend getaways, or investing in town homes as rentals. Plus, there’s a lot of construction going on and a lot of planned downtown projects. For example, a lot of the old downtown buildings have been purchased and remodeled."
Salida actually has made a comeback, Zwingers says, from "the time during the drought when the fires in our area were pretty bad, and sales slowed, as you can imagine. In 2002 to 2004 we had quite a drought, a record, and forest fires, but over the last two or three years it’s recovered," to sales increases of perhaps 6 percent annually.
Like Grand Junction, Trinidad’s economy has benefited from energy exploitation — methane gas drilling in this case. And, like downtown Salida, Trinidad also has benefited by renovating its historic downtown. This has led to some national notice, such as True West magazine’s designation of the town as No. 3 of the "Top 10 True Western Towns."
"The Trinidad market stays pretty steady in terms of growth year-over-year," says Rick Johnson, co-owner of United Country Scenic West Properties. "Because Trinidad has been a little bit isolated we’ve never experienced the spike of speculation that you’ve seen in other parts of Colorado. Also our banks in this area are conservative, so we’ve never really had the speculation that goes on from that end."
Danielle Rollo, broker-associate with Southern Colorado Realty, calls Trinidad stable.
"We’re holding steady," she says. "The old part of Trinidad has a lot of older homes, and they’re still reasonably priced. I would say the average price of a home here is probably about $140,000. And then we have the newer subdivisions where the houses are upwards of $200,000 to $600,000," including Cougar Canyon Golf Resort Community, which boasts a Jack Nicklaus-designed golf course.
Meanwhile, back in Snowmass Village, Scott Calliham is director of sales for Related WestPac Real Estate, developer of Snowmass’ 18-acre, $1 billion, 1 million square-foot Base Village development.
How’s it going?
Put it this way: He’s sold $200 million worth of units since January. This figure includes pre-sales of units in the Snowmass Little Nell and Viceroy condo hotels, which will not open for two years or more. The Viceroy is selling for between $1,700 and $2,500 per square foot, and it is about 55 percent pre-sold. The Little Nell is about 65 percent pre-sold, at close to $3,000 per square foot.
"This environment is pretty incredible. It is market-defying," Calliham says. "Apparently there is a crisis, but it has not permeated into our little village."
David Lewis is a freelance writer based in Denver.