Park City housing market making adjustments
After the Park City Board of Realtors released the first quarter real estate report for Summit and Wasatch Counties in April, there were concerns the record-breaking numbers would crash by the third quarter with prices soaring, inventory declining and sales dropping well below the marks made by the previous year.
Yet, now, after PCBOR released the third-quarter numbers earlier this month, those concerns are being put to rest, at least for the moment, despite a market bubble bursting nationwide.
The same trends have continued from the first quarter to the third in Summit County, with overall home prices still on the rise, but with sales significantly lower than in 2005, following the course of selling fewer homes at higher prices.
As of Oct. 23, there had been 2,167 properties sold in 2006, while there had been 3,055 sold this time last year. In spite of the drop in sales, the average price per home has risen over $180,000 from an average price of $507,070 to $688,900 this year.
Seaton Prince, MLS director for PCBOR said it’s simply the market’s inertia keeping itself going in the same direction as the first quarter.
"It’s the continuation of the progression of the market," he said. "We went so long without the market moving and then all of the sudden we had this explosion where any property that was out there was gone in an instant. We watched our inventory plummet."
Because of that lower inventory, Prince said the market has decreased in supply, but not in demand.
"You’re seeing those prices still moving up, although you have also seen the numbers slow down on the number of sales," he said. "As you’re looking at that you see sale prices going up and the number of sales going way down, it might seem odd — so much so that when The Wall Street Journal read it they called back and asked if we sent the right numbers."
Despite any inherent problems that arise in such a circumstance, Prince said the market is "still an incredibly healthy market for both buyers and sellers right now." He also said that because the market is doing as well as it is, more people are beginning to sell, which is replenishing the number of listed homes.
"Inventory is climbing quite a bit higher, but the basic premise, that the inventory is low and the desirability is taking the price is up, is still correct," he explained. "But both Park City and the outlying areas beyond Park City are getting their own equilibrium."
Even with the higher prices, sale prices are averaging 96.88 percent of the list price, so sellers are getting close to what they want.
"In none of our areas are our sellers getting too much knocked off their asking price buyers aren’t able to talk the price down too much which is one reason why sales have slowed down as the market reaches its equilibrium in each area."
Betty Brown, PCBOR president, said she believes the market is steady and doing well for every type of home and in every area of Park City.
"I think we’ve seen an even appreciation across the board," she said. "Single-family homes, condominiums and lots have increased in value and are maintaining that value."
Park City, which is part of the Rocky Mountain Resort Alliance, compares its numbers to other nearby resorts such as Aspen, Vail, Sun Valley, Telluride, Steamboat Springs and Jackson Hole rather than to other cities of similar size across the nation.
She added that when a homeowner places a house on the market that is similar to another home sold recently in the area, they often want to sell for the same price. Often, she said, it will sell for three percent less because the market is adjusting. Brown said Park City was undervalued before the Olympics, but once people discovered Park City’s accessibility, low crime and unemployment rates, and world-class snow, the market has been on a tear.
"Prior to the Olympics we were so undervalued," she said. "Before a few years ago, a $700,000 home in Park City would have cost $2.2 million in one of the other resort towns, but now the average price of a home in Park City is $1,004,000. I think we just were not discovered as soon as the others were discovered."
Although Park City has seen a dramatic increase in the housing market, Brown said it is not likely to crash any time soon.
"We have all those constant values and those aren’t going to change," she said. "What we’re seeing are some slight corrections in our market. You see those slight adjustments being made. It took people so long to realize we were undervalued and when we were, the prices went up extremely fast, but now we’re showing some stability. I believe in our market. We’re holding our own quite well. I like our numbers."
According to PCBOR, as of Oct. 23, there were 2,127 properties on the market with an average asking price of $1,073,466. The average asking price for a single-family home was $1,751,711, multi-unit $1,224,833, condo $844,912 and vacant lot $833,559.
The average time a home has spent on the market before selling is 141 days and the average list price for sold houses was $649,753. The average sale price of homes in general was $629,462 and the average asking price of unsold homes was $893,131.
As for the future of the Park City housing market, Brown said to expect adjustments, but not a "bubble burst." She said it id hard to predict what fourth quarter numbers will be like because it’s impossible to foresee problems that would push sales into 2007.
"I think some of our fourth-quarter numbers will be pushed over into next year, so I don’t know where we will end up," she said. "We have some product in the pipeline that can be delayed due to construction and weather concerns that would be reported as a sale at the start of 2007 rather than at the end of 2006."
"In a synopsis, I think its really obvious that our numbers of units sold have decreased because the price has increased," she said. "It offsets each other nicely. It helps everything hold its value. I think we’ll continue to do well."
Editor’s note: This is the first in a three part series analyzing the third quarter report put out by the Park City Board of Realtors. The following two pieces will be area-by-area reports for Park City and surrounding territory.
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