The Year From Hell made its mark on resort property from coast to coast, with sales volume down by a third and prices falling by 5 to 20 percent in many ski towns. Even before September, the demise of the dot-com industry and the plunge of the stock market scared many buyers away. For now, the frantic pace of the previous two years, with bidding wars and instant sellouts, is definitely over.
Developers who overbuilt are shelving future projects until they can clear out excess inventory. Many hoped that would happen in the fall¿typically a busy time for the industry¿when skiers stake out new digs and rush to close escrow before the snow flies. But 9/11 put a hard freeze on new transactions. For more than two months, phones stopped ringing, people stayed home and brokers wondered if the bubble had finally burst.
But Americans are made of sterner stuff. In fact, the catastrophic events seem to have given buyers a new resolve to make life-changing decisions they've been putting off for years. Inspired by continuing low interest rates, softening prices and a decent selection of properties at some resorts, buyers were trickling back into the market by year's end. That isn't a normal pattern, especially for December, since most people don't make big-ticket purchases around the holidays. The trend is by no means a stampede, but realtors are cautiously optimistic that a more robust market could return by the third quarter of 2002¿just in time for next winter.
Meanwhile, there's a window of opportunity for people who've been sitting on the sidelines, especially in the West, where inventories and listings are greatest. You can now haggle for a better deal in places such as Park City, Utah; Telluride, Colo.; Keystone, Colo.; Steamboat, Colo.; and Lake Tahoe, Calif. Condominiums that are 15 to 20 years old represent the best bargains, especially if you don't mind a fixer-upper, and sellers may yield 5 to 10 percent¿or more¿on their asking prices. For brand new condominiums, developers are holding off price increases, at least until mid-year. In some cases, they are offering incentives such as free activities vouchers, waivers of transfer fees and upgraded amenity packages.
In the East, while sales were slow heading into the season, largely because of a persistent drought, the major resort areas of New England are not exactly bulging with listings, anyway. There's been little new construction, and the largest player, American Skiing Company, has sold most of its quarter-share units at Sunday River, Me., and in Vermont at Killington and Mt. Snow.
Most brokers say that the events of 9/11 will in the end reinvigorate the second-home market. "We're seeing a process of reverse migration¿away from the cities¿and there's no question that people are more security-conscious than ever," says Peter Pinkham, who has owned a brokerage for 35 years in North Conway, N.H., a town close to five ski areas. "I hear all the time from people who don't want their kids to go to school in the city. They're ready for a change in lifestyle," adds Pinkham.
If you're in the market for mountain property, you can find deals in a variety of areas. Look for resorts that have high inventory and soft markets. Or resorts that have large tracts of undeveloped land, where the best strategy may be to buy a lot and build your own home. Or mature resort communities with older condos or homes that can be renovated. Also, look for unsold units in new developments that have been around for six months or longer. Chances are, the builder will offer incentives to make a sale. Resorts that are further from drive-up markets (metropolitan areas) may be less expensive. And in the West, studio and one-bedroom units are frequently discounted because most buyers want more square footage. But the cardinal rule of location, location, location still stands: Sellers with premium sites¿those next to the slopes or with spectaccular views¿aren't likely to come down in price.
What's in store for 2002? If real estate continues to be regarded as a safe haven for investment, and if interest rates remain low, business could pick up dramatically at mountain resorts, especially toward the end of the year. That's why now is a good chance to buy, before prices go up. "People have concluded that the stock market is no longer such a wonderful thing, that while real estate investment may not have annual double-digit growth, it offers capital preservation and long-term growth," says Chris Coyle, owner of Prudential Big Sky/Bozeman Real Estate in Montana. "And more than ever, buyers are looking for a variety of recreation in quiet, secure towns."