Park City real estate cushioned by high-end sales
The bubble may not have burst, but, the velocity of its growth over the last few years has slowed.
"We’ve been expecting, in the last half of 2006, that there will be a real estate bubble that would burst," said Andrew Volkman, president of Frontier Bank and the board of directors of the Park City Chamber/Bureau. "The (bursting bubble) hasn’t really happened, but there have been slight declines."
Nationwide, "applications for mortgages have leveled off, properties under contract are declining and inventories are starting to decline," said Matt Green, president of the Park City Board of Realtors.
Real estate agents however, aren’t following the same path as the real estate sales.
According to Green, there were about 450 agents in 2003. Now there are 1,078 Realtors in Park City. Last year, Green said, 4,000 homes were sold, which leaves only four sales per agent.
Park City hasn’t seen the same real estate declines compared to the rest of the country, but it still has mirrored the trend in its own way.
Volkman presented statistics that supported this idea at the Chamber/Bureau’s annual Economic Forecast Luncheon on Feb. 2. He said, nationally, the total volume of dollars spent on housing was down 17 percent while the average price of a home went up 2 percent. Locally, the dollar volume was down 13 percent while the number of transactions came down 33 percent. At the same time, the average price of a home in Park City went up 31 percent to $739,000.
"All those things lead the national economists to say we may have bottomed out or come to close to bottom," Volkman said. Regarding the local trend, he said, "It may have come in for a soft landing."
Even though Park City’s homes saw a huge increase in prices over the last few years, compared with other resort communities, Park City has one of the best values associated with it.
"It’s an excellent value," Green said. "The prices are less than Aspen, Jackson Hole, Telluride, Vail and Whistler."
David Irwin, vice president and director of marketing for Hamlet Homes, has observed a similar change in the Park City market. Hamlet Homes has been selling Bear Hollow, a luxury townhouse community on S.R.224.
"I can’t say in the short term that it will be rosy," Irwin said. "I almost feel like there’s somewhat of a brick wall that people hit."
In Irwin’s experience, he thinks consumers are hesitant to buy homes because of the drop in prices and number of sales.
"From what I’m hearing and seeing, out-of-state residents are coming to ski and they’re not as excited to buy. The euphoria has gone away for the moment," Irwin said.
Irwin doesn’t want to mask the reality of the market, as he thinks some people do.
"From what I’ve heard, there are some of us that are portraying things as everything is all right and things aren’t bad. They are masking the reality that it has slowed down," Irwin said.
But at the same time, he doesn’t foresee a crisis.
"That doesn’t mean that Park City isn’t a good place to own property," Irwin said. "No one can tell you when there will be an increase in prices. You just can’t time it and you shouldn’t try to time it."
While Park City saw a drop-off in home sales from 2005 to 2006, last year was still a banner year.
"It was still the second highest volume on record," Volkman said. "It was still a really good year even though it was way down from ’05. We are still seeing some appreciation on prices, there is still a lot of buyers in town. It’s not as hot as it was it was two years ago, but it’s still a good market."
Volkman said there is not a huge oversupply of homes across the country, which will continue to keep interest levels low, which, of course, is attractive to buyers.
"It’s not going to be a rose garden for sellers this year, but, for the first time in several years, (buyers) will see a more normal market and will see an opportunity," Green said.
Irwin says this is the time to buy low, instead of waiting to guess another upward market trend.
"(Buyers) are afraid. Now that prices have stabilized or dropped, they should be jumping on the bargains," Irwin said. "It’s a very rear view mirror mentality. The speculative investment decision of ’05 is gone. I want to buy when things are not up."
Green agrees. A slowing market favors the buyer.
"There’s more negotiation room," Green said. "There are better opportunities for buyers and more opportunities to buy."
The decrease shouldn’t dissuade buyers or people who want to live in the area from purchasing a home.
"The real reality is, things have slowed down and this is the perfect time to buy, knowing that everything is cyclical and we’ll have another run," Irwin said. "While there may be short-term decrease, in the long-term, there’s always an upper trend."
Eric Nelson, of Commerce CRG, presented facts of a large population growth in the area.
At the current rate, "Summit County’s population will be 132,000 people in 2050," Nelson said. "With that growth there’s going to be some problems."
Not only will that rate bring extra traffic to Park City, it will also bring more jobs and commuters to work here.
While agents obviously want to sell more homes in Park City, some of them are worried about too much growth in Summit County.
"We need to be careful about the mindless, haphazard growth," said Irwin, who resides in Park City.
Irwin warned that as more people want to own homes in Park City, the congestion will counteract the reasons why people moved here in the first place. He doesn’t want Park City to "lose its soul."
"Do we really want it to grow? Is that going to have a large backlash? It’s a catch 22. We just have to be as conscientious as we can be, which I’m sure the city officials are doing."
Green thinks there are ways to manage the growth.
"One of the main things we sell is lifestyle," Green said. "As the area grows that lifestyle is going to change, which makes it more important as citizens to understand that and control and plan the growth. Those types of efforts will drive up value."
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The Park City lodging industry in recent weeks experienced an uptick in projected occupancy numbers during the dates of the Sundance Film Festival, but the figures remain depressed from a typical year during the largest special event on the city’s calendar.