Ken Libby, a realtor in Stowe, Vt., recalls the boom years early this decade, when home prices rose 25 percent annually and a house sold on the day it was listed. “Everyone from Boston to Baltimore was buying property in Vermont,” he says. “I’ve been in this business 30 years, and I’d never seen that before—and probably won’t again.” Then came 2007’s mortgage crisis. Sales plummeted.
After years of rising prices, ski-town real estate has cooled. Sales were down as much as 50 percent across all resort markets in the first half of 2008. At the hottest destination resorts, such as Aspen and Vail, Colo., and Park City, Utah, prices have held firm—and even increased slightly. But deals can be found in smaller, second-tier resort towns.
“We’ve had a big slowdown,” says Michael Hughes, a realtor at West Virginia’s Snowshoe Resort, where properties were selling for 20 percent below asking price in early 2008. “It’s a great time to buy,” says Hughes, who sold a two-bedroom slopeside condo in 2008 for $200,000. The same property would have fetched $250,000 a few years earlier.
Buyers who took on adjustable-rate mortgages at the height of the bubble are seeing their premiums jump, and many are selling their ski vacation homes. Stricter lending policies, however, have created a scarcity of buyers, Hughes says, so properties are sitting.
A downturn was inevitable, says James Chung of Reach Advisors, a New York consulting firm that does real estate market research for the ski industry. “The resort market could not be sustained,” he says. “People aren’t buying stupidly anymore.”
With the U.S. housing market in turmoil, Jane and John Carey figured 2008 was the ideal time to buy their dream vacation home at Wyoming’s Jackson Hole resort. The Wilmington, Del., couple found a five-bedroom, multi-story condominium in Teton Village that was listed for $1.8 million, and negotiated the sellers down to $1.6 million. Hardly a steal, but in a resort where the average single-family home sold for nearly $2 million in early 2008, the Careys believe they got a better deal than they would have at the height of the real estate boom. “We’ll see in a year whether we jumped too soon,” says Jane, a college administrator whose husband is a banker.
Prices have remained high in Park City, Breckenridge, Colo., the Lake Tahoe area and other premier Western destinations because these communities are typically surrounded by federal holdings. “There is only so much buildable land in the mountains,” says Park City realtor Dennis Hanlon. “It’s simple supply and demand.” The average sale price in the Park City region was well above $700,000 in early 2008, he says.
Another factor keeping prices stable in affluent ski communities is that many sellers have the financial assets to wait for the right offer and reject low-ball bids. “You don’t see foreclosures here like you do in the primary-residence market because our buyers were not getting into creative financing,” says Lake Tahoe realtor Brett Williams of Agate Bay Realty. “We don’t have panic sellers.” The median sale price in Tahoe is down 2 percent in 2008 to $831,455.
Prices have also been buoyed by an influx of foreign buyers who are taking advantage of the weak dollar to scoop up plum properties. “We get a new contact from out of the country every week,” says Libby, in Stowe. He was in the process of selling two homes to British citizens, aided by the strength of the pound. One of the British families was buying a 6,000-square-foot home for $1.6 million. The average sale price in Stowe, by contrast, was about $450,000 in early 2008—up slightly from a year earlier.
Likewise in Aspen: “We’re getting a lot of interest from Asians, Europeans and Eastern Europeans,” says Sarah Woelfle of Aspen Sotheby’s. Not to mention Russian oligarchs. Moscow real estate is now among the world’s priciest, making real estate elsewhere a relative bargain. In the past year, Russian billionaire Roman Abramovich has purchased two Snowmass, Colo., homes for a combined $48 million.
Jason Long of the Long Group in Breckenridge says he’s never seen so many foreign buyers in Summit County. “They’ve seen the prices run up in Aspen and Vail, and they’re looking for the next locations to buy.” The average sale price of a single-family home in Summit County was $838,000 in early 2008, an increase from $799,000 the year before. Townhouses and condominiums were selling for about $450,000.
Another trend is the increase of cash sales to affluent buyers eager to avoid the hassle of obtaining a mortgage. “That tells me people are uncertain about the stock market, and they are looking for a place to park their money,” says Jack Stout of Jackson Hole Properties.
While prices are holding at premier resorts, they’re softening in outlying communities such as Victor, Idaho, just over Teton Pass from Jackson. Public relations consultant Chris Denny bought a 2,300-square-foot log home in Victor for $390,000 in early 2008. The home had been on the market for more than a year and had been listed for $450,000. “I got a great deal because it was builder-owned, and the guy had to sell,” Denny says. “I had him in a headlock.”
The good news for buyers is that the days of 20 percent annual appreciation are over. “Sanity has returned,” Woelfle says. Even so, mountain homes are still beyond the reach of most, especially at elite locales. In Aspen, the average single-family home sold for nearly $6 million in 2007. “We’re talking about a fortunate demographic,” Chung says.
A veteran ski-town real estate analyst, Chung gets asked all the time where to purchase property. “My advice is always the same: Buy where you will use it.” People should stop thinking of ski homes as investments, he advises. “If you’re buying strictly to make money, resort property is not the smartest thing to do. But if you’re buying ski property because you plan to use it, then there is no better way to spend your money.”