Latest Real Estate Trend: Sold but Not for Long…..

9295ParCt-Exteriors-05Anyone who pays attention to real estate trends knows that inventory is at record lows which is driving an increase in prices and creating somewhat of a panic among buyers.  (See my post from last week for the actual Park City statistics  insert link).  People who are seriously looking to make a purchase are frustrated by the number of multiple offers and homes that are sold before they even hit the multiple listing service.  There is an impulse to make an offer and “tie up” the first house that meets most of the buyer’s needs, even if that house doesn’t have everything the buyer wants.   Does this strategy make sense?

On today’s Park City multiple listing service there were 3 homes, including one of my own listings, that returned to active status after a failed sale.  The buyers of my listing paid for an inspection, radon test, and appraisal.  My guess is they spent no less than $1,000 for this due diligence.   The sellers were reviewing their options for finding a place to move into.  At the end of the due diligence period, the buyers backed out.  My listing was off the market for over two weeks.  My sellers are facing the reality that they need to “sell their house again”.  The buyers, who are not my clients, must also start over and find a new place to live.  The title officer, transaction coordinator, and all the other ancillary people involved in this transaction completed a lot of work that turned into a waste of everyone’s time.

An agent in my office remarked that he had sold one particular listing three times, with multiple offers each time.  Clearly the present strategy of tying up homes and then deciding if the buyer really wants to buy it is a losing strategy for everyone involved.  As a buyer’s agent, I would discourage a buyer from this strategy.  As a listing agent, I am going to work harder to ensure that a buyer is in love with the home before we take it off the market.

What are your thoughts on this issue?

Why Moving Up NOW Makes Perfect Sense

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Two years ago my clients, Dr. and Mrs. Smith (not their real names, but the rest of the story is factual) purchased a condominium at Bear Hollow Village.  They paid $485,000.  They used the condominium for the past two summers and for family ski trips.  They donated a week at their condominium to various auctions.  When they weren’t using the condominium, they rented it.

Just before last Christmas, Mrs. Smith told me that she really wanted a single family home when her family visits Park City during the summer of 2013.  Her kids are active in sports and want a yard.  We listed the condominium and found a buyer in about 30 days.  We had multiple offers and sold the condominium for $490,000.

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Just before the condominium closed, Mrs. Smith and I looked at some houses together.  She likes the Silver Springs neighborhood because of its large lots, mature landscaping and access to the Park City trails.  I showed her the home pictured above. We were the first of six showings scheduled that day and that was before the sign even went up in the front yard.  I told Mrs. Smith that she needed to write an offer immediately if she wanted that house.

That night the Smiths were under contract to buy the home.  When Dr. and Mrs. Smith applied for their loan, they learned that even though the home is worth nearly $100,000 more than the condominium, their payments are going to lower!  They are getting the house they want and their out of pocket expense each month is going to be less.

This may be the perfect time to move up.

Adventures in Southern Utah

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One of the unexpected advantages of having a Park City residence is the driving distance to Southern Utah.  Southern Utah looks a whole lot different than Park City.  The ancient geology is visible to even the most casual observer.  In my opinion, the ancient geological history combined with more recent Native American artifacts create a unique stillness that I have not experienced anywhere else, except for maybe Sedona, AZ.  The red-orange color of the rock is known to be one of the most neuro stimulating of colors. It enhances creative thinking and problem solving.  The red-rock monoliths of Southern Utah are also famed to be life-transforming and soul-nourishing.

There are several national and state parks in Southern Utah.  I had the pleasure of heading south two weekends in a row last month.  My first trip, in celebration of a birthday, was to Red Mountain Spa in Saint George.  Red Mountain Spa is adjacent to Snow Canyon State Park.  Snow Canyon boasts white sandstone cliffs of both white and red rock with black lava rock and red sandy washes.

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My girlfriend and I enjoyed a peaceful and restorative weekend in St. George.  It is exactly a 4.5 hour drive from Park City, straight down Highway 15.  The excellent food and activities at the spa combined with the incredible Snow Canyon backdrop turned this easy girls’ road trip into an experience equivalent to small slice of heaven. I’m definitely going back.

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The weekend after I visited Red Mountain Spa, I traveled to Moab, UT with my family.  It was a business trip for me.  We stayed at the Desert Hills Bed and Breakfast, which I will be listing for sale on March 1, 2013.  February is considered off season in Southern Utah, but the snow on the red rocks created a beauty all its own.

Moab boasts two National Parks, Arches and Canyonlands as well as Dead Horse State Park.

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Since we had already been to the two National Parks on prior visits, we decided to check out Dead Horse State Park, an intimate park with absolutely incredible vistas.

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While Moab contains the same beautiful red rocks as St. George, there are many more activities for the adventure seeker in Moab.  River rafting, slick rock mountain biking, helicopter tours, climbing, canyoneering, jeep tours, golfing, and hot air ballooning are just a few available activities.

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Moab is also about a 4.5 hour drive from Park City.  About an hour outside of Moab is the town of Green River.  This is river rafting central during the season.  A glance at Trip Advisor [live link] made it clear that Ray’s Tavern was the place where we should stop for lunch.

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We ate the best hamburgers I have ever eaten in my life!  The meat was fresh and they were char-broiled to perfection.  Perhaps it was also the surprise of going to a dive in the middle of nowhere and eating some of the best food ever that made Ray’s so enjoyable.

If you leave for Southern Utah mid-day on a Friday, you can spend an enjoyable weekend in Red Rock country.  The people are super nice and the vibe is very different than Park City.   Southern Utah is a great place to escape to in April and May, when the snow begins to melt in Park City, but the weather is still a bit frigid.

I hope I inspired you to hop in your car and travel south.  I highly recommend you check out Desert Hills Bed and Breakfast if you are looking for a great place to stay in Moab.  You might fall in love with Moab and the Bed and Breakfast so much that you’ll want to buy it.

Tactics for Navigating Today’s Real Estate Market

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According the chart above which shows sales absorption, the number of properties sold in today’s market is skyrocketing compared to the bottom in 2009.  With that incredible increase in absorption of inventory, one would expect a subsequent increase in prices.

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As the chart above shows, prices are still relatively flat.

This is a new market dynamic for buyers, sellers and real estate agents and requires a few navigation tactics:

Sellers

Today’s record low interest rates tempt even cash buyers to obtain financing.  Such loans are contingent upon the property successfully appraising at purchase price.  Guess what the appraisal is based on?  The last 3 comparable properties that sold.  Although I have been able to locate buyers willing to pay more than the last sale for my listings, the appraisals have been challenging.   After getting their hands slapped during the real estate meltdown, appraisers are unwilling to go out on a limb and appraise a property for much higher than the last sale.  Sellers, you need to be aware of this when you price your property.  I will fight for my sellers by writing appeals link to the blog I wrote on appeals last month but there is no guarantee I will be successful every time.

In some neighborhoods, prices have not yet stabilized.  I listed a condominium this past November and two months later, the comparable sales picture changed.  A few comparable condominiums in the last two months sold for less than those sold in the 6-month period we used to price the listing.

Necessary tactic: Price according to the last comparable sales; not higher.  If your home is on the market for more than three months, re-examine comparable sales and be willing to adjust your price accordingly.

Buyers

If you have been out looking at property, you know there are few available properties in excellent condition and priced to sell.  Chances are that you are not the only buyer who realizes a good property when it comes along.

Necessary tactic:  Don’t submit a low ball offer!  Avoid the multiple-offer scenario and come in with a strong offer along with a pre-approval letter or proof of funds.

Park City’s Newest Restaurants

Lori Harris, owner of Mary Janes on Main Street; Nancy Tallman, Hilary Reiter, Director of Marketing and PR at Sky; Linda Lovelace
Lori Harris, owner of Mary Janes on Main Street; Nancy Tallman, Hilary Reiter, Director of Marketing and PR at Sky Lodge; Linda Lovelace
Although Park City is blessed with a plethora of fine dining options, as locals we are spoiled and love it when we have new choices.  Hopefully, you will have an opportunity to try one or both of these new restaurants, located at Park City’s “Sky”, on Heber Avenue in Park City’s historic district.

Table One at Sky (Formerly “Easy Street” at the Sky Lodge)

A 24-foot communal dining table serves as Table One’s center piece where guests can mingle and get to know one another.  “Traditional” seating is also available.  The cuisine is cutting-edge and the setting is a beautiful, contemporary room with an open kitchen.  Chef Kevin Dalebout moved to Table One from the highly rated Mariposa at Deer Valley Resort.  His cuisine is artfully prepared, and the dinner menu includes locally sourced “mountain fare” such as venison, rabbit and rack of lamb.

Table One is also open for breakfast and it’s definitely the most beautiful breakfast space in downtown Park City.  There are hearty offerings, such as housemade buttermilk biscuits and gravy, a breakfast burrito with chorizo and queso fresco, along with lighter options such as house made granola, yogurt and fresh fruit.

Tavern at Sky (Formerly “Easy Street’s Downstairs Bar at the Sky Lodge)

For lunch, après ski and late night drinks, check out Tavern.  This British-inspired gastro pub serves hearty, high-end pub fare complimented by an impressive list of 55 imported and microbrew beers and 25 wines by the glass.  The setting is cozy and intimate.  British Chef Ashley Chapman studied under the renowned Gordon Ramsay, and offers a unique seasonal menu perfect for Park City’s mountain winter.  The menu offers locally sourced items such as Utah Trout and Bison Cottage Pie.  With valet parking (or skiing in on the town lift), it’s easy to get in and out of Tavern for a quick lunch.  Although the room is so warm and cozy, you may not want to leave.

Ultra-Luxury Real Estate Sales Trends in Park City

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It is amazing to me that in a town the size of Park City, 17 single family homes listed above $5 million sold during 2012.  Twelve of those transactions disclosed the sale price on the MLS and five did not.  The average list price of the 17 homes was $7,453,000.  The average disclosed sale price was $6,150,000.  The average list/sale price ratio was just above 90%.

 

It is interesting to note that some of these homes were on the market for, literally, years.  One home, listed at $19,500,000, was originally listed at $21,000,000.  Another home, listed and sold for $11,225,000, was originally listed at $17,000,000.  When it comes to ultra-luxury homes, the list to sale price ratio is not indicative of the deep discounts taken off the original list price.

 

Although we have seen an uptick in the number and sale price of luxury homes in Park City, the sense of excess, which characterized the boom years of 2006 and 2007, has not been visible in most of these sales.  The ultra-luxury buyer senses an opportunity to purchase a fantastic home below replacement cost.  This buyer will walk away rather than overpay.   Worn out ultra-luxury sellers, who have had their homes on and off the market for years, are willing to take their losses in exchange for the freedom of moving their money to more profitable investments.  Some of these luxury sellers wanted to take their losses prior to the end of 2012 to offset capital gains in other ventures.  First American Title Company in Park City noted that December 31, 2012, was the busiest day of closings in their firm’s history.

 

And the trend continues….an agent in my office just received an offer on a $9,000,000 listing in Park City.

Save Thousands of Dollars and Heartaches – Use a Buyer’s Agent

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The photo above was taken last week as the new Directors and Officers of the Park City Board of Realtors were sworn in.   (I am wearing all black.)   Every single realtor in this photo is an excellent buyer’s agent.  But why do you need one?  It is so much “easier” to buy a home without silly contracts and negotiations.  How much value do real estate agents add if you already found the property you want to buy?

In a word, plenty.  Below are 4 things that can go wrong with a “do it yourself” approach:

  1. You are paying cash so you think you don’t need any contingencies.  That means your earnest money goes non-refundable the minute the seller cashes the check.  What if you find out that Mr. Seller doesn’t have clear title to the property?  There could be a mechanic’s lien from a contractor Mr. Seller forgot to pay 5 years ago, or worse.  Maybe Mr. Seller doesn’t legally own the property.  What if you find out there is an easement that runs through the property? What if you find out the boundaries of the property are not where you thought they were?  Oops.  If you figured any of this out before closing then all you lost was the earnest money.  If you figured it out after closing, you have a big legal mess to clean up.
  2. You added a due diligence contingency and the property checked out.  Your earnest money is non-refundable.  You didn’t do a final walk-through because you live out of town.  After closing, you notice the property is not in the same condition as it was when you purchased it.  A pipe froze and flooded it.  What recourse do you have?
  3. You closed on the property quickly and let Mr. Seller stay for an extra month or two so he could find a rental.  Mr. Seller doesn’t own the property anymore and doesn’t care if his dog has an accident or his friend spills red wine on your carpet.  What recourse do you have?
  4. After you close on the property you find out that it has flooded several times.  The neighbors tell you that Utah Disaster Clean Up was at the house twice last winter.  You didn’t ask for a Seller’s Disclosure and Mr. Seller never mentioned any of this.  Now you have mold.  What recourse do you have?

These are examples of typical problems good buyers agents deal with on a regular basis.  I sold 20 houses last year.  Most non-real estate agents do not complete more than one real estate transaction in a single year and do not have the training, experience, insight or access to the documents that trained real estate agents have.  Any one of the above examples could easily cost way more than a buyer’s agent commission (which is typically paid for by the seller anyway).  So,why wouldn’t you use a buyer’s agent?

What is Lurking in the “Shadows” of Shadow Inventory?

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Many experts differ on what impact shadow inventory will have on home values in 2013.   Shadow inventory consists of properties in “pre-foreclosure”.  The owners have stopped making payments and the lender has not yet initiated the foreclosure process.  In some states, the lender is required to go through the court system (know as a judicial foreclosure) and this makes the process take more time.  In other states, like Utah, the process does not need to go through the courts and is much more efficient.  Therefore, in Utah, we do not have a backlog of shadow inventory.

In Summit County, foreclosures represented 34% of sales in 2011 but only 16% of sales in 2012.  This number continues to fall.  As of today, only 4 bank owned homes are on the market in the Park City area, representing only 1.1% of our single family home inventory.

You may read warnings that distressed properties will play a major role in limiting appreciation. According to the National Association of Realtors, foreclosures sell at a 20% discount.  Based on the Summit County and Park City statistics, it appears that distressed properties will account for a very small portion of our market and will have a limited impact on home prices.

Manage the Sundance Film Festival Like a Local

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Sundance is almost here and if you want to manage Sundance like a local, read my friend, Hilary Reiter’s blog, re-posted with permission, from the Historic Park City website.

Having “temporarily” relocated to Park City in 2001 to work in the Press Office of the Sundance Film Festival (and, of course, to ski as much as possible), more than 11 years later I’ve yet to break away from this mountain town paradise. As I approach my 12th Sundance, I figure I’m as qualified as most anyone to offer some insight as to how to get the most from the 10-day Festival extravaganza for those who are not members of the Hollywood jet set. Every year, my friends and I declare, “If you can’t fight ‘em, join ‘em!” This mantra, of course, refers to the crowds of entertainment industry workers, filmmakers, celebrities, media, sponsors (official and guerilla)…and, oh yes, the throngs of gawkers.

So how does one join them, en lieu of fighting them? First, leave the car at home or park at Deer Valley Resort. If the Jennifer Annistons of the world manage to ride the free busses, which run extra frequently during the Festival, so can the little people. In addition to hassle-free transportation, the buses make for great people watching and eavesdropping. And you never know who you’ll meet that will be gracious enough to invite you to that impossible-to-get-into party.

If you want to be immersed in the Main Street bustle, you can’t make your dinner reservations too far in advance. Most restaurants are open to the public, although they may close during certain hours for private functions. Several bars remain open nightly, and celebrity sightings are not uncommon at both watering holes and restaurants if your mission is to stargaze. There are also ticketed shows for national music acts at venues like Park City Live, Downstairs and The Star Bar. Many of the official Sundance sponsors rent storefronts on Main Street and are open to the public, so be sure to explore those as well. If nothing else, you can warm up with a free cup of coffee.

While some residents complain about the Hollywood and New York types who descend on Park City, I have actually found them to be largely considerate of – and even fascinated by – locals. Some festivalgoers are so envious of the well-balanced lifestyle and spectacular natural surroundings we enjoy that they invite us to their shindigs to add some local color. Perhaps it’s because I’m a New Yorker who launched my career in the music industry that I embrace the fast pace and the occasional attitudes of Festival attendees. But, If you live in Park City, work that angle to your advantage – more often than not, you’ll find you are appreciated. Sundance is part of what makes Park City special, so embrace it.

Ultimately, Sundance is and should be about the films and the opportunity to see some rare gems in Park City’s extraordinary, intimate setting. The cast and crew Q&As that follow the screenings are often more satisfying and magical than the films themselves. I must confess that I have never purchased locals tickets to screenings as I never know what my busy schedule will accommodate. I’ve discovered over the years that I manage to see quite a few films, regardless (my record year was 22 screenings, and I never saw the light of day). The crowds dwindle during the second half of the Festival, and it’s easier to get into films after they have screened a couple of times. Waitlist at the larger venues toward the end of the festival, and you’re almost guaranteed a seat if you show up 45 minutes to an hour ahead of the screening time. Oftentimes, people have extra tickets to sell outside the venues. This strategy is advantageous as it allows you to hear word-of-mouth buzz that has generated about the films, so you can make educated choices about what you get tickets for. Extra tickets are also released daily at the Sundance Box Office in the Gateway building at the corner of Swede Alley and Heber Avenue. Don’t waste your time clamoring to get tickets for star-studded films that already have distribution. You can see them shortly after the Festival in theaters. Instead, go for the documentaries or foreign films that you may only have the chance to see during Sundance.

My final tip is perhaps the most prudent – get your flu shot and start your bacteria-fighting regimen now. The influx of big city germs coupled with long days and late nights can be a sickly combination. Pace yourself during the ten days, and you’ll be poised for a Sundance to remember.

5 Real Estate Trends to Look for in 2013 as Reported by THE KCM CREW

Based on my assessment of the Park City real estate market, this blog, posted on kcmblog.com is spot on.  I couldn’t have said it better.  Enjoy!

Predicting trends during volatile economic times in American is no easy task. However, we are going to give it our best shot. We strongly believe these are the five real estate items we should keep an eye on in 2013:

Demand for Housing Will Continue to Surge

The housing market has turned the corner and there is no reason to believe that buyer demand will not maintain momentum throughout 2013. Household formations shot up to boom-time levels in 2012 and are projected to increase at even a faster rate over the next twelve months. A lack of inventory will be more of a challenge to sales increases than will a lack of demand.

Generations X and Y Will Prove They Believe in Homeownership

Contrary to what many have hypothesized over the last few years, young adults (18-35 year olds) are just as committed to homeownership as previous generations. Recent studies have shown:

43% already own a home
72% see homeownership as part of their personal American Dream
93% of those currently renting plan to buy a home
This, along with the increase in household formations mentioned above, makes us believe that 2013 will be the year that many of these young adults will jump into homeownership.

Prices Will Continue to Increase

Pricing of any item is determined by supply and demand. Demand for housing will remain strong throughout 2013. At the same time, the supply of homes ready for is shrinking in many parts of the country. Outside of a few states that still have challenges with large inventories of distressed properties (NY, NJ, CT, IL for example), prices will appreciate nicely.

Even in the areas that are still dealing with high percentages of foreclosures and short sales, prices will not tumble dramatically. The increase in demand will absorb much of this inventory. In these areas, prices will either flatten or perhaps soften to a small degree.

Move-Up Sellers Will Return in Great Numbers

Perhaps what many will find as the biggest surprise of 2013 will be the return of the ‘move-up’ seller. Over the last several years negative equity has prevented many of these sellers from moving up to the house of their dreams. However, with prices recovering, more and more of these sellers will realize that now may be their greatest opportunity to make the move to a lifestyle they always wanted.

With home prices expected to increase and more stringent mortgage qualifications (QR and QRM) scheduled to be announced this year, we believe that the first half of the year will bring many of these sellers/buyers to the market.

The Consumer Will Demand That Their Agent Be an Expert

Real Estate professionals who have invested the money, time and energy to truly understand what is happening and why it is happening will separate themselves from their competition and do very well this year.

Those who take that next step of learning how to simply and effectively communicate the market to their clients will be seen as experts. These industry leaders will dominate their markets.

This blog will help you with the ‘what and the why’. If you are truly committed to being recognized as an expert, go here.