By Karen D. Lorentz
posted
Apr 11, 2012
Photos by Steve & Susan Pearson (Above)
Before photo: This chalet built by Killington sold for a package
price of $20,000 including foundation and furniture, in the
1960s.
With low interest rates and prices still below recent peaks,
most real estate brokers in Killington have been busy and are very
optimistic that 2012 activity will trend upward once again.
"Price is definitely driving sales," noted Judy Storch, owner of
Killington Valley Real Estate. "There are great deals out there,
and long-term seasonal renters are aware of market trends as are
others interested in the area. We are very busy and seeing many
cash deals," she added.
Others agreed, citing a national housing market recovery, faith in
the future of Killington, and the historical fall sales pattern as
further reasons 2012 may top previous years since the housing
bubble burst in 2008.
Year off to a good start
In their first quarter review of the real estate market in
Killington, Heidi Bomengen and Ted Crawford, co-owners of Prestige
Real Estate, noted that in spite of the weather and shortened ski
season, "The numbers of real estate sales and total market revenue
are slightly higher than the first quarter of 2011 which
represented one of the best skiing quarters in a long time.
"There were 13 property sales in the first quarter of 2012, one
more than last year and total market revenue was a little over
$200,000 more than last year for the same period. For everything
nature threw at us this year, this has to be viewed as a very
positive sign for the Killington real estate market," they
note.
Crawford also observed that the 2011 real estate market
experienced "remarkable improvement" in sales volume and revenue
compared to 2010, which in turn was up over 2009. "The number of
2011 sales was up 33 percent over 2010, and total market revenue
was up 58 percent. Transaction volume seems to have hit bottom in
2009 with a steady
rise over the past couple of years while market
revenue bottomed out in 2010. Transaction volume was the highest it
has been in five years and revenue was the highest it's been in
four years," he added.
Bomengen said that 2012 first-quarter property sales saw 13
properties closed from January through March although the mix was
different (8 condos and 5 homes versus 10 condos and 2 homes in
2011).
As of March 31, there were 21 properties under agreement (for
second-quarter closings) as opposed to 20 in 2011, she added.
However, the 2011 second-quarter closings were the highest of the
year. Calling that "an anomaly," she said that in a typical year,
the fourth quarter is the busiest with folks closing in time for
the ski season. Based on that unusual occurrence for 2011 and
various data the firm has analyzed, Bomengen and Crawford observe
that "patterns might be changing."
But they also note that current values are stimulating the desire
to purchase for those who are financially stable and who feel good
about the future of Killington, thus believing 2011's fourth
quarter rebound after Irene could occur again this year.
Ski Country view
Lenore Bianchi, principal broker and a co-owner of Ski Country
Real Estate, is "very optimistic" that the activity level will
continue to pick up this year, noting the unusual 2011 best second
quarter does not worry her because the historical pattern of a busy
fall season didn't happen due to Tropical Storm Irene.
She attributes the current uptick in business to the time of year,
noting people are busy at Christmas and in January tend to ski and
go home because days are darker. But as days grow longer with more
sunlight, property showings trend up and activity levels increase
in February and March through Easter, she said.
"They still ski during the day, but showings definitely get busy
around 3 p.m.," Bianchi said, adding, that pattern has continued
and the "last three weeks were really busy" despite not being a
typical snow year.
Bianchi cited the news of the start of a national housing market
recovery as a positive influence, noting, "It actually began six
months ago, and we usually lag the national trend by six months."
So the "very good and in some cases great values" are stimulating
buyers who are feeling financially secure and wanting to take
advantage of low interest rates, she added.
Bianchi said that property showings slow in the second quarter
with the end of the ski season but start to pick up again in
August. After Labor Day begins another slow time as kids go back to
school. During foliage, activity picks up again, contributing to
the historically best fourth quarter as buyers want to be in for
ski season. With this year's good start, Bianchi expects the recent
pattern of progressively better years will continue.
Tricia Carter, also a broker and co-owner at Ski Country, is "very
optimistic" that the pattern will continue. She believes 2011's
last quarter broke with tradition because "Irene affected
people throughout the East. For people without power for several
weeks, the last thing they were thinking about was looking at real
estate," she said.
Carter cited patterns of family, intergenerational, and retiree
interest in vacation properties as reasons for optimism, noting
"Many people like having something tangible to feel good about
versus investing in the stock market… Parents are living here in
the summer but Florida in winter when their children and
grandchildren use the home to ski."
She also stressed the "potential for the resort and town" as
factors that engender interest in Killington real estate, saying
she sees "the beginning of an expansion. There is a lot going to
happen with the future village and mountain expansion, including
the new peak lodge and eventual interconnect with Pico. The central
Vermont location is convenient and there are plane, bus and train
services. The new Streetscaping of Route 4 and bring a sense of
arrival. There are many other things to do outdoors as well as
cultural and arts opportunities and the revival of the summer
scene," she said, noting "excitement and momentum are building.
Killington has so much to offer now and in the future," and that
bodes well for continued interest in vacation properties.
Bargains
Carter also noted that "interest rates in the 4 percent range are
close to the lowest they've ever been," recalling rates of 10 to
16.5 percent plus points in the 1980s and 6 percent range a few
years ago.
Steve Reilly, senior loan officer at Caliber Funding in Rutland,
said that currently rates range from 3.375 percent for a 15-year
fixed loan to 4 percent for a 30-year fixed (no points) for those
with the best credit.
Judy Storch, who is in her 40th year selling real estate, recalls
interest rates as high as 18 percent in 1982 when the condo boom
started.
"There was a time in the early 1990s recession when prices were
lower than now, so prices are not quite the lowest they have ever
been. But where we are seeing some pricing at historical lows,
there are some real steals. Bargain hunters at the low-end and
high-end have done the best," she added.
A case in point is a one-bedroom Mountain Green condominium that
recently sold for $35,000 on a short sale. "They originally went
for $70,000 to $71,500 at preconstruction pricing. Other
one-bedrooms recently sold in the high 30,000s and were not short
sales," Storch said.
A large, three-bedroom, two-bath, two-level Mountain Green unit
that sold for $155,000 in 1984 (12.5 percent mortgage) recently
sold for $117,500. The buyer got a bargain price, lower interest
rates, and a nice unit, Storch commented.
But she added that the owner of 28 years also had the enjoyment of
using it, noting "Return cannot just be measured in dollars. Most
people purchase vacation homes for personal use and don't look at
them as investments, and today that is even more true."
Additionally, if there were rental income, as is often the case
with Mountain Green units, a lower price can help offset the
capital gains tax incurred on the depreciated cost basis.
Luxury properties also continue to sell. Bomengen said that
trailside Topridge duplex homes constructed in 2002-03 cost
$525,000 to $550,000 while those built in 2005-06 peaked in the
$800-900,000 range. Recent sales have generally been in the
$600-650,000 range, so some have been bargains while others have
actually appreciated in value.
After Photo: The 1964 model chalet built by Killington (seen
in photo at top of article) was moved and improved over time and is
now owned by the Pearson family.]
Value and appreciation
Brokers observed that while lower than the peak years of 2005-06,
many recent prices have not dipped to historical lows. "We have
seen appreciation - it depends on when, where, and what was
purchased. While an owner buying at the peak price has lost ground,
many who purchased earlier have gained," Storch said.
In 1983, a pre-construction Highridge two-bedroom unit went for
$127,500 and the same unit sold for $155,500 in 2011 while a
one-bedroom unit that was $91,750 (1983) sold for $130,000 in 2011,
she noted.
In 1984, the new ski-on/off Sunrise development near the base of
Bear Mountain featured 1-4 bedroom condos ranging from $120,000 to
$260,000. They now sell for $100,000 to $325,000 although they went
as high as $400,000 in 2006, Bomengen noted.
New Telemark Village townhomes, a project just north of Bill's
Country Store on Route 100, sold for $125,000 to $149,000 for
3-level, 2-bedroom, 2-or 3-bath unfurnished units in 1984. A unit
sold for $127,000 to $132,000 when prices dropped in the early
1990s, noted Peter Metzler, a broker and co-owner at Ski
Country. In 1999, they increased from $140,000 to $154,000 in
a matter of months. Then prices peaked at $310,000 in 2005 and one
3-bath unit recently sold for $262,000, he said.
Outlook
"The precipitous drop in prices has stopped and transaction
volume is up, but it will take a few years for prices to trend back
up, Bomengen opined, noting she believes pricing will continue to
experience "a slow recovery."
Storch observed that the era of "flipping is gone, but there have
been very few foreclosures although some short sales are occurring.
The number of cash sales have been up with around half being cash
deals," she said.
Ted Crawford said he continues to see people pay cash for
property, particularly among buyers reluctant to invest in the
stock market.
Bomengen added that, "Most cash sales are not going for a price
higher than the last comparable sale."
While most brokers are optimistic that real estate activity will
continue its upward trend in 2012, they don't see the peak prices
or year-round non-stop activity of 2006 repeating.
"The supply of condominiums still exceeds demand by a wide
margin, but the gap is narrowing. If this trend continues, it
should eventually result in less pressure to reduce prices below
the last comparable sale. However, it is likely to take at least
another year of solid sales, to see this affect," Crawford
said.
He added, "The inventory of homes represents more than a
three-year supply. With the average listing price at $578,000, the
abundance of supply will most likely continue to force lower prices
for Killington homes for at least a couple more years," he
said.
Brokers noted that financing became a major challenge in late 2011
and into 2012 with a tightening of standards causing several deals
to fall through. Additionally, some
lenders no longer granted
conventional loans on condos based on an erroneous belief that they
are condo hotels and therefore do not comply with Freddie Mac or
Fannie Mae standards. However, other lenders are easing that
situation with condo loans.
A second challenge concerns obtaining a property appraisal that is
higher than the sale price of the last comparable property sold.
"All of the appraisers with whom we have spoken expect to continue
to designate the market as 'declining in value' in 2012. This can
keep prices from rising and makes a cash offer particularly
appealing to sellers and a good move for buyers looking for a good
deal on their vacation home," Crawford concluded.
Tagged:
real estate, killington
