I have some real concerns about the Copper Mountain real estate market
Just a month ago, I wrote a post called The Scoop on real estate in Copper Mountain Colorado. In that post I was pretty upbeat about the market, despite terrible reports from other parts of the country for more than a year now. I did express some concerns for the middle part of the price ranges, and I talked about how many Sellers have been way too optimistic, and although I didn’t use the it, greedy might have been a good word to use.
A couple of days ago, I looked at the number of sales for this year so far, and compared them to the same time last year. What I found was that sales for the first 3 1/2 months at Copper Mountain were down by 45% from the same period a year ago! That is a huge decrease, and it is double the decrease of 22% in the rest of Summit County as a whole. Projecting that decrease through the rest of 2008, we could end up with only 58 sales this year, compared to 115 for 2007. What I have seen is not so much that there are fewer Buyers, but that there are fewer Buyers willing to pay 38% more than a similar property sold for a year ago. We have reached a point of price resistance, and that seems to be $550 per square foot. The only newer, two bedroom condos at Copper that have sold for more than $500,000 are in Passage Point, where they are bigger, and Copper One Lodge, which is just steps from the lifts. In Tucker Mountain Lodge and Taylor’s Crossing, many Sellers have tried, but to date, none has been successful (except for one extra large, two bedroom, lock-off condo that sold for $526 a square foot).
Realtors are often accused of creating overheated markets by suggesting prices that are too high to the Sellers they are working with. I really have to take issue with that, as I have seen both good and bad markets, and consider my job to be interpreting the market to Sellers and Buyers; not creating it out of whole cloth. I look at past sales, then the trend in the market at that time, and offer up my suggestion to the Seller. Sometimes it is accepted and often it is not. Sellers almost always think their home or condo is worth more than I think. I am much less emotional about it and am able to look at very concrete things like square footage, upgrades or lack thereof, and amenities.
My interpretation of the market today (and it could change tomorrow!) is that Sellers should be pricing at or very near similar units that have sold within the last six months. A condo with ski slope views is not comparable to one with highway views, but as long as location is taken in to account, the condos themselves are all pretty similar in buildings of the same age. Buyers are very cautious, asking for past sales and looking hard for value. Of course, unless the purchase is cash, an appraisal will be required by the lender. Because of the recent mortgage mess, I find that loan officers no longer know who the appraiser is and therefore have no control over how the appraisal is done. Appraisals are ordered by an entirely separate department and it is intentionally kept at arms length. With no pressure exerted by loan officers, Sellers, Buyers or Realtors, appraisals are going to be based very firmly on past sales. If the appraiser doesn’t find the value, the Buyer won’t either. And if I don’t find the value, a Buyer will not either.
The sales numbers I am seeing at Copper remind me a lot of the market of 2001 and 2002, when condos were selling for 7 to 15% less than people bought them for just a year or two prior, when they were brand new. The big difference is that today we don’t have the inventory levels we had then. Instead of 160 units on the market, we have about 58, and in order to have a declining market, you need much more supply than there is demand. We have a little more supply, but not the three year inventory we had back then. In the first half of 2002, the only way to sell a condo at Copper Mountain was to sell for much less than Sellers wanted to get. When you are standing at the end of a long line of condos for sale, the only way to move to the beginning of the line is have the lowest price. It is not that bad today, even though the sales numbers are similar at this point in the year. We don’t have the speculators in the market now that we did then. We do have a few sellers that are ”motivated”, but for the most part, second home owners can afford to hold onto their properties until prices improve again. It is not as if they have been transfered to another city and have another home to buy.
In the last downturn at Copper, there were some Realtors who thought they could artificially prop up the market by arbitrarily pricing everything high so that Buyers had no choice but to pay the prices. Of course, it didn’t work, and it won’t again. Sellers who want to sell will reduce prices until someone sees the value and buys it. No matter how bad the economy, there are always people on the lookout for a bargain. My advice to Sellers is; if you want to sell your Copper Mountain condo, price it to sell. If you are interested only in getting a premium price for it, take it off the market if it hasn’t improved by July and put it back on when the market starts heading up again. Buyers, get out there and buy, because the plateau in prices is a great time to get your Copper condo, and perhaps you can find that deal you are looking for.
More posts that might interest you;
Ten years of Summit County home prices
Ten years of Copper Mountain condo prices
The Center Village at Copper Mountain
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