The Crested Butte News Serving the Gunnison Valley since 1999
Empty lots selling and commercial speculation, too
Last week, the Crested Butte News looked at upcoming construction in the valley. This week, we take a look at real estate and what might be in store this summer.
The real estate market is on the up and up in Crested Butte, though area real estate professionals seem to agree it’s growing at a slower and steadier pace than it did before the market crashed in 2008. Growth is also spreading outside the town of Crested Butte. Areas like Crested Butte South, Buckhorn, and Mt. Crested Butte are seeing increases in sale prices, a reduction in inventory in lower price ranges, and movement in land sales.
Upward trend across the valley
Benson Sotheby’s International Realty agent Channing Boucher says the local real estate market noticeably stabilized in 2012. From Almont to Crested Butte, sales volume totaled about $100 million that year. In 2013, that figure rose to $150 million, and in 2014, local real estate transactions reached $165 million. Residential property sales accounted for more than $130 million of that total.
And while sales grew at a slower rate in 2014 than in 2013, Boucher attributes that to a rise in prices. “What’s happened, finally, is home prices are starting to rise. Sellers are starting to push prices up, and people are demonstrating a willingness to pay the replacement cost and higher,” Boucher said.
That trend has been going on in town for a couple of years, where buyers have already been paying more than the replacement cost, or the cost to build a home, in part due to higher land values. But it’s spreading to other places, too.
According to real estate broker Gary Huresky, also with Benson Sotheby’s International, sale prices for single-family homes in Crested Butte South have jumped in the last year and a half, and it’s difficult to find single-family homes under $500,000. “You could buy something in the $300,000 range literally 18 months ago, and now they’re completely gone,” Huresky said, adding that it makes sense given the rising real estate market in town.
“The main driver in our market is town,” Huresky explained, “and when town is busy and prices are steadily increasing in town, it’s a trickle out. Not a real rapid trickle out but it definitely affects areas like Crested Butte South, Larkspur, Buckhorn, and Mt. Crested Butte. The other thing that’s affecting our market is that people can work remotely. There’s a big rise in families that have moved here.”
Empty lots starting to sell
As the inventory of homes—especially lower-priced homes—has shrunk, land values have started to rise in some places. According to Huresky, a Crested Butte South lot that would have sold in the $40,000 range 18 months ago could now sell for $50,000 to $70,000. “Lot values [in Crested Butte South] are on an upward kick since you can’t really buy [single-family homes] under $500,000,” Huresky said.
Molly Eldridge, owner and broker at Red Lady Realty, said low inventory in general is also driving that trend. Across the upper end of the valley, there simply aren’t as many options on the market. That’s making vacant lots more attractive.
“While we’ve seen improvement in the last two or three years in the market overall, land hadn’t seen much action until the last six months or less,” Eldridge said, noting that land sales have been seen across the area, including Mt. Crested Butte. And while values aren’t necessarily booming, they are exhibiting a slow and steady growth.
Joel Vosburg, realtor with Keller Williams, says that in Mt. Crested Butte in particular some homeowners are taking advantage of historically low land prices and buying neighboring lots to preserve their views. “One pretty significant thing happening is that people are buying the open lot next to them or across the street to preserve open space,” he said.
Boucher believes vacant land is a good buy right now, especially taken in conjunction with buyers’ willingness to pay more for a home than it could cost to build. With $60,000 lots in places like Crested Butte South and Buckhorn, it could be possible to build for less than a sale price.
“Land is a good buy because if you can buy a piece of dirt and endeavor to build—which takes more energy, effort and time—if you pick the right lot, you can beat the market, so to speak,” Boucher said.
Though he and Huresky noted that building tends to be a more popular option for locals than for second homeowners, and Boucher indicated that it’s harder to get a loan for vacant lots. Banks prefer to give construction loans in conjunction with the vacant lots.
Commercial speculation
Keller Williams’ Vosburg says that one other area seems to be making a return to the market: developer speculation. He noted several examples in Mt. Crested Butte that indicate developers are getting back in on the action.
“There is activity on high density properties in Mt. Crested Butte, with actual speculation going on,” he said.
A Columbine Hill property just went under contract and the new owner plans to build on spec. And there are other high density lots under contract as well, including Villas Summit. A portion of the development known as ‘Phase 5’ recently went under contract within a week of being listed.
“It’s not just individuals. Developers are starting to creep back into the market,” Vosburg said.
Condos lagging
The one area of the real estate market that has remained flat over the last coupe of years is condo sales. Chris Kopf of Coldwell Banker Bighorn Realty says with the condo and townhome market, “There was a dip in 2012, but it kind of flattened out and we haven’t seen much increase in that product.”
That doesn’t mean, however, that there’s been no activity. Eldridge noted condo sales in Mt. Crested Butte have been quite busy this winter, where “There is very little on the low end of the market so those condos generally sell quickly.”
Kopf also noted what he calls a dip in luxury homes. “In our market, I think of a luxury home as the $1 million mark. We saw a little dip in luxury homes [in 2014] but I don’t give that much credence.”
Right now, there are nine properties under contract with an asking price over $1 million. And while the actual sales prices are likely to be slightly lower than asking prices, Kopf sees those contracts as a good sign for that part of the market.
2015 is looking good
While it’s difficult to project exactly where sales totals will land in any given year, 2015 appears to be off to a good start. Year to date, Kopf said, 35 properties have sold from Almont to Mt. Crested Butte. Last year, 32 properties sold during the same time period.
“If you look at what’s under contract, it’s about double last year,” Kopf said. This time last year, 21 properties were under contract for a total of $12.1 million. This year, there are 47 properties under contract for $26 million.
And while the improved market is a welcome change for many, some buyers are wishing they’d purchased sooner. Molly Eldridge said for the most part, purchasers in Crested Butte don’t need to buy—it’s something they want to do. If they don’t find a home in their price range they can wait. But a lack of inventory paired with slow and steady growth has given some people a sense of remorse.
“Because the market is improving, we’re certainly seeing buyers wishing they had bought earlier,” Eldridge said. She’s also noted an increase in buyers from the Front Range. “There have always been second homeowners from the Denver-Boulder area, but it’s significantly more now.”
Eldridge and Kopf both attribute that trend to increased advertising along the Front Range by Crested Butte Mountain Resort, the increasingly heavy traffic jams along the I-70 corridor, and the general buzz about Crested Butte. There are simply more Front Rangers visiting the area, which translates to more Front Rangers interested in real estate.
Some unknowns remain
One factor that could affect the local real estate market is falling oil prices. Crested Butte is a second homeowner market and, as Kopf noted, some of those second homeowners make their money in oil and gas.
“If those folks feel like they’re not able to continue to do exploration or development or get production of the wells that they drilled, then they may turn those wells off or may not be taking oil out of the ground or profiting,” Kopf said. “The majority of our market is second homeowners.”
While that remains to be seen, one thing that seems likely is this market will grow more slowly and steadily than the big boom of the 2000s. “Ten years isn’t that long ago. Most of us, whether we were here or anywhere in the United States, remember the pain we went through nationally,” Boucher said. “Anybody could get a loan. It’s really hard to get a loan these days, and that’s ultimately what’s tempering the market.”
Perhaps Huresky hit the nail on the head when he said, “We’re in a steadily increasing upward trend, but I don’t think it’s going to go crazy overnight.”
