By Ryan Stafford August 1, 2006.
Quick appreciation leaves some buyers out in the cold.
Now that we are ending the summer some clients are still where they started off the season or, are in an even worse position. This summer has been the season of the low-end condo boom and cheap land grab. With the anticipation of another boom period in Steamboat Springs buyers have been clamoring over condos priced under 300K and any type of land they can get their hands on.
Bidding wars have been quite common in the condo market and many properties have been selling for greater than their asking price. The Stagecoach land grab is in full swing with building lots disappearing faster than snow in springtime. I would expect to see a slow for both of these phenomena. Both of these niches can only sustain so much appreciation before they price themselves out of their market. I have witnessed several buyers just get pinched out of their price range because of such rapid appreciation. They are unable to keep up because their income levels have only risen a few percent and some of these property values have gone up fifty percent in the last 12 months. I have already seen a large number of price reductions heading into the fall months. These however are a drop in the bucket from the high-flying initial selling prices that were greatly inflated.
A lot of this frenzy is due to comparable sales in development helping to determine asking prices. For example, if an individual spends money on a remodel and marks up the price accordingly then that is a justified price. The problem arises when others in the development see what their neighbor has done and thinks they deserve similar returns. This type of thinking has two flaws, first, they never consider looking at the fees that are represented in the costs of the transaction. A property that sells for 250 K has 15 K in costs so the seller truly nets 235 K. Another issue is when the definition of remodeling is left up to interpretation. The seller who truly does a quality job on a property can expect to see that return when they sell. When a seller just tries to put lipstick on a pig and ride the coattails of their neighbor that does nothing to help the values of a neighborhood and makes comparing prices more difficult.
Not to worry all of this is expected in a very hot market. Buyers and sellers just need to be informed and not get caught up in all of the hype. Steamboat Springs is poised to see steady appreciation for the next several years and the next wave of new development is set to bring the quality level and the prices to new heights.
High Mountain Sotheby’s, 708 Lincoln Ave, Steamboat Springs, CO 80487 PH/970.846.5943 Email/ryan.stafford@sothebysrealty.com Ryan Stafford, Realtor/Editor