The Top 10 Tips for Buying Mountain Property

Mountain Life
Avatar:
Author:
Publish date:
Social count:
0
Mountain Life
SKmp398c.jpg

Mountain property buyers are a diverse bunch, interested in everything from time-share studio units to giant mountain homes. But one thread shines through all the trends SKI is tracking for 1998: convenience.

Generalizations can be risky, but this much is true: As a group, buyers in today's mountain markets don't want the vacation-property hassles that their parents endured. Working couples and families often have more money than time, which means they'll pay to spend all their vacation time vacationing.

The market has responded with a variety of choices. Notable among these is a quiver of innovative time-share approaches, including American Skiing Company's quarter-share program (see "The Definitive Guide to Buying Mountain Property," SKI December 1997); the first-ever time-share project for luxury homes in Telluride; and the guarantee at Snowbird that you'll always get the week you want. Access is another form of convenience, fueling the demand for good, close-in property, such as Beaver Creek's Bachelor Gulch.

Though buying mountain real estate can be a smart investment, some skiers just want a familiar place to go skiing with their kids. Consider these 10 tips and trends as you enter the spring and summer buying season:

Buying On The Fringes
From a luxury development near Santa Fe, N.M., to the former ghost town of Ophir, Colo., to the hamlet of New Portland, Maine, snow enthusiasts are discovering that good resort property often is not in the resort.

Las Campanas, a golf course development outside New Mexico's state capital, uses the relative proximity of Santa Fe Ski Area¿about 24 miles away¿as a selling point. In Ophir, near Telluride, workers and second-home buyers alike are finding value in a townsite that was laid out by miners in the 19th century and all but abandoned 25 years ago. Today, 100 residents have brought the moribund community back to life, and property prices are rising¿one one-eighth-acre parcel sold for $100,000 in 1997.

As is the case in other regions, Maine broker Carol Hatch says she is seeing more customers interested in stretching their dollars by buying at a distance. One example: She has a four-bedroom Cape on the market for $55,000, 30 minutes from Sugarloaf. The same property within 3 to 4 miles of the base would go for $85,000, she said.

"More and more people are looking for a ski property to be more than just a ski property," says Hatch.

Buying In The Middle Of It All
Between the Beaver Creek and Arrowhead villages lies a big chunk of private mountain property called Bachelor Gulch. Development of this land has created a feeding frenzy in an already hot market. During the past two years, 103 single-family lots, about two acres each, were sold through four lotteries, drawing 285 bidders. Prices ranged from $500,000 to $1.5 million; resales have been running from $650,000 to $1.8 million. In late December, the first 32 units of a planned 400-plus unit development in Bachelor Gulch Village went on the market; 13 sold in the first day at prices from $950,000 to $2.5 million.

About half the lot buyers already own property in the Vail-Beaver Creek area, says sales manager Tom Vucich, and they know the value of the project. "People are recognizing that there's a very limited supply," says Vucich (970-845-2300). And there are few other North American locales with the potential to create ski-in, ski-out, village-to-village properties. "The concept we're marketing is pretty unique," says Vucich.

High-End Time Share
Time share is back, but this is not your parents' condo. The American Skiing Company's popular quarter-share projects, spreading through the ASC's New England resorts, are being emulated for the first time on the West Coast at Kirkwood, Calif. (209-258-6000), recently purchased by the Telluride Ski & Golf Company. Owners purchase one-fourth of a specific condominium and get 13 weeks to use, rent or trade.

For more upale time shares, The Mountain Chateaux in Telluride's Mountain Village (970-728-4454) offers one-eighth or one-tenth shares¿at about $160,000 a pop¿in 2,600-square-foot trailside log homes. Owners get up to six weeks of use and pay $3,750 in annual dues (for taxes and maintenance). One building is subscribed in this novel approach to time sharing a single home; two more are under construction. Eventual buildout: eight homes, more if demand warrants. Typical buyers are affluent 30- to 50-year-olds who can afford to buy the whole house, but don't want to maintain it when they're absent.

In Utah, the venerable Cliff Lodge at Snowbird (801-742-2222) recently renovated a wing to create the Cliff Club, offering traditional time shares in units ranging from 1,360 to 1,680 square feet, at prices from $9,000 to $38,000, depending on what week is purchased. Sales in the first fiscal year are expected to hit $17 million¿a surprise to owner Dick Bass, who had originally planned on half that amount.

Mature Investments In Mature Resorts
Big players in the resort industry look for vacant land they can develop. Then there's the opposite side of this coin for an individual buyer: resorts that are effectively built out. Aspen, Vail and Whistler are three good examples. In each case, there is land available, but it's located away from the base or regulations limit supply. Result: Prices can be astronomical, but good returns are likely if you can afford the market.

There are, however, no guarantees. "People do lose money here, because they often pay a number that is not justified," says Scott Bowie, partner in The Aspen Appraisal Group (970-925-8987). But Bowie concedes that there is upward pressure on the Aspen market.

"What really appreciates in real estate is land," notes AAG's year-end Aspen/Snowmass Market Review. "Houses tend to get older, less fashionable and outdated, where at least in Aspen land prices march on. The general trend in the market is up and, over the long term, it appears to average approximately 1 percent per month."Because property values can be inflated, buying property at a built-out resort takes extra smarts. But the buyer who gets in has a piece of an established, internationally known product that demands a premium.

Guess Where The Giants Will Buy Next
Many ski areas thriving in the shrinking resort pool fall under the aegis of the major conglomerates: Intrawest, Vail Resorts, American Skiing Company and Booth Creek Ski Holdings. When the big boys buy, they invest tens of millions of dollars in amenities; that rising tide tends to lift all real estate values. The pickings are slimmer than when resort consolidation started in the early Nineties, but the big players aren't sated yet.

"What they're looking for in general terms is at least a minimum of 300,000 skier visits annually, and I think they'd prefer 500,000," says Jerry Jones, a Vail-based ski area broker. "That and developable real estate."

Purgatory, Colo., might be a good buy, Jones said. It's got the land, the skier numbers and is in a hot four-seasons resort area. But it's far from a major market, interstate or good airport¿all important attributes. Winter Park would be a great acquisition, but the City of Denver isn't likely to sell it.

Which resort will be snapped up next? If we knew, we'd buy. "You want to be there," says Drew Meredith, president of Whistler Real Estate, "when they push that button and the money takes off."

Buying As An Investment
As investments go, resort real estate is a contender, if you hit it right. In the hot areas, the general trend lately has been up. Several factors conjoin for happy investments: a good mountain, year-round appeal, easy access, limited real estate supply and significant upgrade funding in the pipe.

"Demand for high-end destination vacations is growing, and it's growing rather significantly," says Michael Berry, president of the National Ski Areas Association. Result: more demand for a scarce resource.

In the most developed resorts¿Vail, Aspen, Beaver Creek¿land is scarce and real estate prices have become astronomical. Locales with the most appeal are those recently purchased in whole or part by owners with redevelopment plans in mind and bankers in their pockets, places such as Copper Mountain and Steamboat in Colorado; Kirkwood and Mammoth in California.; Snowshoe, W. Va.; and Canada's Panorama.

Resort developers are careful not to draw a direct link between their investments and appreciation of surrounding real estate, since that's considered bad form by governmental watchdogs. But when the first goes up, history has shown that the second tends to rise, too. Consider Quebec's Mt. Tremblant. New condominiums there sold for about $190 CDN per square foot in 1992; five years later, after $440 million CDN in development and amenity investments led by Intrawest, that price had almost doubled.

Not Buying As An Investment
Real estate is hot. It's a great investment that can make you lots of money. But some people put quality of experience before financial considerations. "It really enhanced our lives immensely," says Paul Schwartz, who bought a Jiminy Peak, Mass., condominium in 1989. "All of us¿the kids, the family¿became closer. We have done things we never would have done."

Buying resort property as a family amenity is a tradition that dates back to the 19th century, when wealthy New Yorkers acquired luxurious "camps" in the Adirondacks or White Mountains. And some things haven't changed¿at least not much.

Like many buyers, families seek places where they can play year round. They tend to fall into two categories: new parents who want their kids to grow up playing in the out-of-doors with them and empty-nesters who hope their college-age or older flock will come back to roost regularly if they can offer a fun, attractive location.By and large, these folks don't rent out their properties much or at all. They don't crunch the numbers on appreciation and don't need to be in the hottest resort. They're buying relatively close to home and reveling in the familiarity of their chosen abode.

Buying In Canada
If you go over the border, you stand to save a bundle (if you're American, at least). The strong U.S. dollar means buyers paying in greenbacks get Canadian property at roughly a 30 percent discount. Savvy U.S. buyers are looking to Whistler, Tremblant, Canmore and other Canadian resorts; because most of the buyers in those areas are Canadian, prices are not targeted to foreign purchasers. Bottom line: Your dollar goes farther with George Washington on it.

"Three years ago, Americans represented less than 5 percent of the purchasers," says Paul Dalbec, owner of Dalbec Real Estate in Mt. Tremblant. "I think 1998 is going to be the year we see the most Americans." There are good resale properties in Dalbec's portfolio of offerings for as low as $100 a square foot Canadian¿about $70 in U.S. currency.

Some Americans shy away from Canadian real estate because of the relatively high tax burden: 25 percent of rental income goes to the government, and capital gains are taxed on a floating scale depending on your tax bracket. While buying is relatively easy, selling can whittle down your profit. The upside: Canadian taxes are generally deductible on your U.S. federal tax form.

Shopping By Video
Technology is all the rage in real estate. Agents can't seem to get on the Internet fast enough (see "Window Shopping The Web," page 108), and some resort cable systems feature a local real estate channel. One twist that can help buyers: Put your agent to work with a video camera.

"Videos work with serious buyers who have shopped the market and want to focus in," says Fern Baird, owner/broker at Powder Beach Realty in Salt Lake City. Baird says videos of condominium units are an effective sales tooi Areas Association. Result: more demand for a scarce resource.

In the most developed resorts¿Vail, Aspen, Beaver Creek¿land is scarce and real estate prices have become astronomical. Locales with the most appeal are those recently purchased in whole or part by owners with redevelopment plans in mind and bankers in their pockets, places such as Copper Mountain and Steamboat in Colorado; Kirkwood and Mammoth in California.; Snowshoe, W. Va.; and Canada's Panorama.

Resort developers are careful not to draw a direct link between their investments and appreciation of surrounding real estate, since that's considered bad form by governmental watchdogs. But when the first goes up, history has shown that the second tends to rise, too. Consider Quebec's Mt. Tremblant. New condominiums there sold for about $190 CDN per square foot in 1992; five years later, after $440 million CDN in development and amenity investments led by Intrawest, that price had almost doubled.

Not Buying As An Investment
Real estate is hot. It's a great investment that can make you lots of money. But some people put quality of experience before financial considerations. "It really enhanced our lives immensely," says Paul Schwartz, who bought a Jiminy Peak, Mass., condominium in 1989. "All of us¿the kids, the family¿became closer. We have done things we never would have done."

Buying resort property as a family amenity is a tradition that dates back to the 19th century, when wealthy New Yorkers acquired luxurious "camps" in the Adirondacks or White Mountains. And some things haven't changed¿at least not much.

Like many buyers, families seek places where they can play year round. They tend to fall into two categories: new parents who want their kids to grow up playing in the out-of-doors with them and empty-nesters who hope their college-age or older flock will come back to roost regularly if they can offer a fun, attractive location.By and large, these folks don't rent out their properties much or at all. They don't crunch the numbers on appreciation and don't need to be in the hottest resort. They're buying relatively close to home and reveling in the familiarity of their chosen abode.

Buying In Canada
If you go over the border, you stand to save a bundle (if you're American, at least). The strong U.S. dollar means buyers paying in greenbacks get Canadian property at roughly a 30 percent discount. Savvy U.S. buyers are looking to Whistler, Tremblant, Canmore and other Canadian resorts; because most of the buyers in those areas are Canadian, prices are not targeted to foreign purchasers. Bottom line: Your dollar goes farther with George Washington on it.

"Three years ago, Americans represented less than 5 percent of the purchasers," says Paul Dalbec, owner of Dalbec Real Estate in Mt. Tremblant. "I think 1998 is going to be the year we see the most Americans." There are good resale properties in Dalbec's portfolio of offerings for as low as $100 a square foot Canadian¿about $70 in U.S. currency.

Some Americans shy away from Canadian real estate because of the relatively high tax burden: 25 percent of rental income goes to the government, and capital gains are taxed on a floating scale depending on your tax bracket. While buying is relatively easy, selling can whittle down your profit. The upside: Canadian taxes are generally deductible on your U.S. federal tax form.

Shopping By Video
Technology is all the rage in real estate. Agents can't seem to get on the Internet fast enough (see "Window Shopping The Web," page 108), and some resort cable systems feature a local real estate channel. One twist that can help buyers: Put your agent to work with a video camera.

"Videos work with serious buyers who have shopped the market and want to focus in," says Fern Baird, owner/broker at Powder Beach Realty in Salt Lake City. Baird says videos of condominium units are an effective sales tool for would-be buyers who have visited the area and want to buy there, but have not found the right unit. When one comes on the market, she films it and sends the tape to her client, who can then make an informed decision from afar.

"I open closet doors, I video paint blemishes, cracks in the walls, everything," says Baird. "It's an excellent tool if people are familiar with the area and they're just searching for the right unit."Do: According to Baird, you should visit a condo complex first, and make any video-based decision contingent upon a building inspector's report. Don't: Call an agent and ask him or her to film a property just because you're curious to see what's on the market.

Buying In Year-Round Resorts
Vacation homes are high on Americans' wish lists (number one, according to The Roper Poll), but they're a more serious purchase than they were 20 or 30 years ago, when a family might have used a ski condo for a few weeks annually.

"Generally, we're finding folks want to have their home generate some revenue to offset the expense of ownership," says Jay White, vice president of sales at Crystal Mountain Resort in Thompsonville, Mich. "The buyers we're running into today are aware. There's an awful lot more in publication about resort ownership. Every other week you read something about it in The Wall Street Journal."

The need for rental income is pushing buyers toward year-round resorts, which offer more attractions and greater rental possibilities. Numbers at Crystal Mountain resort, which includes a golf course and is only a few miles from Lake Michigan, are typical of a nationwide trend at year-round locales: In 1994, the resort's real estate office logged $5.1 million in sales and resales; last year, that figure was up to $8.6 million.

Corollary trend: easy-to-use properties. Condos and other managed properties appeal to families who don't want to come up to shovel the walk or change the storm windows. "It's the carefree lifestyle," White says. "When we come, we want to play." tool for would-be buyers who have visited the area and want to buy there, but have not found the right unit. When one comes on the market, she films it and sends the tape to her client, who can then make an informed decision from afar.

"I open closet doors, I video paint blemishes, cracks in the walls, everything," says Baird. "It's an excellent tool if people are familiar with the area and they're just searching for the right unit."Do: According to Baird, you should visit a condo complex first, and make any video-based decision contingent upon a building inspector's report. Don't: Call an agent and ask him or her to film a property just because you're curious to see what's on the market.

Buying In Year-Round Resorts
Vacation homes are high on Americans' wish lists (number one, according to The Roper Poll), but they're a more serious purchase than they were 20 or 30 years ago, when a family might have used a ski condo for a few weeks annually.

"Generally, we're finding folks want to have their home generate some revenue to offset the expense of ownership," says Jay White, vice president of sales at Crystal Mountain Resort in Thompsonville, Mich. "The buyers we're running into today are aware. There's an awful lot more in publication about resort ownership. Every other week you read something about it in The Wall Street Journal."

The need for rental income is pushing buyers toward year-round resorts, which offer more attractions and greater rental possibilities. Numbers at Crystal Mountain resort, which includes a golf course and is only a few miles from Lake Michigan, are typical of a nationwide trend at year-round locales: In 1994, the resort's real estate office logged $5.1 million in sales and resales; last year, that figure was up to $8.6 million.

Corollary trend: easy-to-use properties. Condos and other managed properties appeal to families who don't want to come up to shovel the walk or change the storm windows. "It's the carefree lifestyle," White says. "When we come, we want to play."