Are local real estate values catching up to Vail, Aspen?
Real estate investors will be looking at Utah and Park City for the better part of the upcoming decade, according to Park City real estate professionals. Compared to fellow resort towns, Utah luxury property has a lot of catching up to do.
While housing values have flattened out in areas like Tennessee and the Virginias and Ohio, the hot markets California, Seattle, Las Vegas are still going strong.
Commerce CRG Broker Mike Sloan, a statistician for the Park City Board of Realtors explains that Park City is simultaneously in tune with the housing trend of the resort communities in the Intermountain West, but continues to be undervalued in its own category.
"As we continue to be strong, [other resort towns] continue to be strong. It seems like we’re always lagging behind," he said. "And that’s not necessarily a bad place to be."
Park City is also not being affected by interest rates, according to a recent release from Coldwell Banker Real Estate Brokerage. Money entering the market for the payment of the purchased real estate is from 1031 exchanges or through cash payments.
More so than any other part of the state, and like other resort areas, very affluent people come into the area buy through 1031 exchanges, which, according to Sloan means that they sold the property somewhere else and are deferring the gain on that by putting it into new property. Those kinds of investors don’t need loans, he explained they can afford to pay millions in cash.
Park City is unique in its proximity to a large metropolitan area. Whereas Salt Lake is a 30-minute drive, the drive to a major city from other comparable resorts is more than double that commute.
"If you go to Aspen, you can’t commute to Denver, so our town is a totally different kind of a feel. When you go to Aspen, it’s still up in the mountains and isolated," Sloan said. "A lot of people, while they like the accessibility, they don’t feel like they’ve gotten away [when they come to Park City,]."
Sloan notes that market values are tied to supply and demand and the surge in real estate price is, in part, due to a depletion in inventory. Two years ago, Park City had the equivalent, based on then current sales volume, of a seven-and-a-half-year supply of homes valued in excess of $1.5 million a piece. Based on the sales of 2005 transactions that totaled more than $2 billion Sloan calclulates Park City now has a two-year supply.
"That may sound like a lot, but not really," he countered. "If it weren’t for the fact that we have a lot of pre-sold properties that aren’t even out of the ground yet, that two-year supply would be less."
Steve Webber, manager of Park City’s Coldwell Banker Office, and a real estate professional in Utah since 1977, calls the real estate market in the past few years, "historical." Many investors have made a lot of money in Park City by "flipping," the real estate term for buying and selling to turn a profit, he says.
Already he reports his brokerage has sold $5-million houses, with $5 to $10 million being at the highest end of Park City’s real estate market.
"We’re in a real estate market that Utah hasn’t seen for many years, and that is, inventory comes on the market and it sells it no long builds up and saturates," he explained. "This has been the most historic real estate market I’ve seen."
According to Webber, investors have turned to Park City because of two factors: the 2002 Olympics and the Internet.
An increasingly tech-fluent public is now able to take virtual tours on Web sites, which means there’s more comparison-shopping going on between markets. A few years ago, most people had to physically see markets to compare them.
"With the information age, people can go on the Internet and tell rather quickly what they can get for their dollar and it drives them here," Webber said. "They can go inside properties through virtual tours and really see a lot of property and get a good feel for what they are."
According to Webber, Park City will likely ride the real estate boom for the next five years, but declines to make any promises.
"It’s kind of tricky right now to say. Today’s market is changing very rapidly. Everyday people think the market is changing," he explained. "Are we going to catch up to other resort areas? I think eventually, sure. There are a lot of factors, though. Some of the Sun Valleys and so forth, are just out of real estate and we’re seeing some of that as well."
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