Luxury Real Estate

By: Andrew Kirk of The Record Staff

Courtesy of: Peter Linsey of Park City Real Estate

Park City Board of Realtors president Lincoln Calder refused to say that the market has hit bottom, but on Monday he did acknowledge that his Third Quarter Report reveals signs of improvement.

During the first nine months of 2009, more than $575 million changed hands in real estate deals. That's down 33.7 percent from the same time period in 2008, and down 50 percent from the market's all-time high in 2007.

Still, anyone following the board's quarterly reports recognizes those numbers as improvement. At one point, Realtors in Summit and Wasatch counties were reporting numbers down 75 percent from the all-time high.

Since February, pending sales have only increased.

"We've made up some ground," Calder said. "We're not out of the woods yet, but prices are down enough that buyers are seeing value in the market."

In the past, local real estate experts predicted that sellers would need to begin lowering prices to experience a "thaw" in the market. Lower sales prices are disappointing and painful, but would lead to long-term recovery.

Most of the board's third-quarter numbers suggest that is now occurring.

Median sales prices are down 30 percent from highs in 2008, he said. Park City condominiums are selling for about 23 percent less than last year. Kamas homes are selling for an average of 18 percent less. Sale prices for single-family homes in Park City proper, especially in Old Town, had been holding steady. This report shows the average sale price down 13 percent.

As bad as that sounds, it's finally attracting buyers.

"A lot of those buyers are a drawn in by value. That's the No. 1 motivation," he said. "Those are the deals that are happening right now."

The trend is especially true for single-family homes. Calder said many houses, in contrast to condos, have been bought and sold because families are moving in or out of town. Loans for primary residences are easier to get, and necessity makes negotiation easier.

Condominiums have shrunk to only a third of the overall market because they're usually purchased for speculation or as second or third homes. There's less demand for "spec" homes and vacation properties. Loans for them are also harder to get.

Even though sale prices are down, increased sale volume is decreasing supply, which will eventually bring prices back up, Calder said.

He said Realtors are still struggling, but the activity is heartening.

Also Summit and Wasatch counties are mostly free of the troubles making national headlines. Less than 1 percent of all properties are in some state of foreclosure.

"Our market has never been driven by rampant speculation," he said.

The most talked about real estate in town is too new to be affecting the numbers. There have been a few closings at Dakota Mountain Lodge, St. Regis isn't allowing deals to close yet, and The Montage is not far along enough to begin accepting deposits, he said.

Vacant land sales have been, and continue to be, the weakest sector in the market.

According to the third-quarter report, volume is down from 183 transactions during the first nine months of 2008 to only 86 so far this year. Sale prices are down nearly 11 percent.

Better news is that projections for the state appear positive. According to Metrostudy, which tracks the new-home construction industry, new-home inventory is in rapid reduction in the Greater Salt Lake Area, which includes Summit County.

Inventory has decreased 56 percent in the last year, and 25 percent since the end of the second quarter. Metrostudy estimates it would take 2.6 months to clear that inventory, and two months is considered an ideal balance of supply.