Tuesday, April 7, 2020

Vail announcement starting to impact local real estate

Low-hanging fruit seeing most activity at the moment

by Mark Reaman

Call it the Vail bump. While not out of the stratosphere, the local real estate market appears to have had at least a mild jolt since the June 4 announcement that Vail Resorts was under contract to purchase Crested Butte Mountain Resort later this summer. The deal is expected to close sometime in August. Local real estate professionals have seen more inquiries than normal since the Vail news was released but they expect the big bump to come after the deal is closed and improvements to the ski product are implemented.

“There most definitely has been an uptick in interest from buyers who are obviously motivated by the Vail announcement,” said Dan McElroy of Coldwell Banker Bighorn Realty. “In the last two and a half weeks we put 11 properties under contract. The downside to that is that it appears that sellers are seeing stars in their eyes and are either inclined to ‘jack up’ the price or stay firm on their list price. Keep in mind, while all sellers want to maximize their net proceeds, some sellers have more urgency in a sale and may be motivated to sell because of other factors and see this as an opportunity to have their property sell without having to reduce the price.”

Bud Bush of Bluebird Real Estate agrees. “There has been an impact especially in undervalued sectors, $250,000 to $500,000 properties like condos and Pitchfork homes,” he said. “The lower the price, the higher the impact but it is too early to have statistics. But since inventory is low, prices are certainly firming.”

Red Lady Real Estate’s Molly Eldridge said a “handful of listings” decided to raise their prices after the June 4 announcement but concurs with Bush that the lower-priced units are moving first. “As far as I know, none of those properties that raised their price immediately are under contract yet. In the first week after the announcement all of the least expensive units at the Grand Lodge went under contract,” she said. “Other than that we continued to see lower-priced condos in Mt. Crested Butte go under contract quickly but that was already happening. We have all received a lot of phone calls from current and past clients asking for our thoughts on what this means for their property values, if they should sell now, if they should wait to sell, if they should raise their asking price, if they should buy now, etc. But we are in our sixth year of prices going up; this announcement will ensure that this continues.”

Jesse Ebner of Signature Properties said while the Vail announcement is having an impact, the summer season is just naturally busy as well. “I have seen an increase in general inquiries and a lot of questions being asked about what the future holds,” Ebner said. “I have had a couple investors call asking questions but at this point it is all speculation since the deal isn’t official and we really don’t know what Vail plans to do with the ski resort. If things solidify with the purchase late summer and Vail presents a plan for their next steps, i.e., improving the infrastructure of the resort, increasing flights into the Gunnison Airport, etc., then I expect things to change in the real estate market.

“Overall, we are seeing steady activity that is typical and consistent for this time of year,” Ebner continued. “As soon as the news broke, listing prices started to change and rise on only a handful of properties. The days of lowball offers are gone and buyers must present their best offers to sellers in order to get the deal. Sellers have been more hesitant to accept an offer that isn’t full price or close to it. However, we have been experiencing multiple offers and ‘bidding wars’ all year, well before the Vail announcement. Some sellers have pulled their listings off the market and others are increasing prices but I would say it is more like 5 percent to 10 percent increases on a small percentage of overall listings, which again is pretty typical for this time of year.”

Longtime Crested Butte real estate agent Charlie Farnan of Bluebird Real Estate sees plenty of changes coming with the Vail move and said he has definitely experienced an uptick in questions and inquiries. “The local, guest and second homeowner confidence index is high. I believe there will be decisions influenced and made as a result of the announcement. Buyer confidence will elevate and sellers may raise their price and expectations as a result,” he said. “There will be an immediate spike and increase in activity, offers and contracts. The long-term benefit is where the community, ski area, locals and guests will be positively impacted. We will see immediate changes at the resort like the point of sale system and possibly how they scan passes and lift tickets. Over time Vail will improve the skiing product, the marketing outreach, the pass product selection/distribution and the configuration and makeup of the base area and parking lot. The short term has the buzz, excitement and the spikes, while the long term increases the confidence, the stability, the strength in the market and the long-term capital improvements.”

According to Ebner, there are still 117 single-family homes for sale from Crested Butte South to Mt. Crested Butte, with the lowest priced home at $567,000. The median price, she said, is $1,397,000, with 32 of those homes priced below $1,000,000. “The condo market in Mt. Crested Butte has certainly picked up since the announcement, with the most action at the Grand Lodge,” she explained. “There are 12 under contract there and prices are going up a lot, since that building is included in the deal.”

Bush said buyers are more interested in local real estate as a result of the news but aren’t overreacting. “Since our economy is mostly driven by the resort, the depth of experience and financial strength of Vail resorts can only help all of us, at every level of employment in the valley,” Bush concluded.

McElroy is on the same page. “Folks are definitely talking about it and I think the upshot is that it will have an impact on the market similar to when the Callaways and the Muellers purchased the ski area. We are seeing some of that right now,” he said. “What we expected to happen and is in fact happening is the entry level properties across the board and base area condos, the so-called ‘low-hanging fruit,’ have the most action. The thought, I think, there is that Vail will be concentrating on improvements to the resort and as a result the real estate most to be affected by those improvements will see the biggest jump in activity. What you will see in the future is optimistic sellers putting their properties on the market at higher prices as sort of a test as what they might be able to get.”

Eldridge expects the major move from a Vail purchase to come after it actually closes and resort improvements are made. “Our market has been improving for years and we all were anticipating a busy summer selling season already,” she said. “I think we will see the impact of the Vail purchase in a year or two when the improvements to the ski area have been made and our winter season gets back to where it should be.”

Farnan agrees with that longer view. “The impact is one of firming up the value index. There is more confidence in the value of the real estate products across the board,” concluded Farnan. “We were expecting a busy summer regardless of the announcement—now we can expect a long-term stable and upwardly moving market, economy and vibrant community.”

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