Photos by Pam Vanatta
With a healthy national, state and local economy and eight years of steady growth in transactions that averaged a 15 percent increase year-over-year, why, all the sudden, did the 2018 Steamboat Springs real estate market see a drop in transactions of 2 percent? A quick answer would be that demand has levelled off.
In 2017 the Steamboat Springs Multiple Listing Service posted 1,373 transactions, the fourth best recorded and highest since the 2008 crash.
However, the slight drop (call it a levelling off) of transactions may not be due to a reduction in demand, but a reduction in supply to meet demand. The 2008 market crash brought on a rash of listings in 2008, 2009 and 2010. It wasn’t until buyers came back into the market in 2010 that the number of listings finally declined. From 2010 to 2016 the number of listings declined 7 percent annually. However, in 2017 that percentage tripled to a decline of 21 percent, setting a stage coming into 2018 of the fourth lowest number of listings the MLS has seen.
Less inventory led to less buying opportunities, and less buying opportunities led to fewer transactions in 2018. If lower demand was the reason, a reduction of property values would have been the result. However, the average price of all properties sold in the Steamboat Springs MLS increased 13 percent from 2017 to nearly $600,000, the second highest on record.
Although there were not as many 2018 transactions as 2017, there were some very interesting ones. Following are some of the most notable sales and occurrences this past year:
Single Family Homes
Single family homes typically represent about one-third of all MLS transactions. Three hundred seventy-seven single family homes were sold in 2018 at a median price of $585,000 and $259/square foot. Dollar-per-square-foot is an industry benchmark that equates to a price a property is valued, depending on its square footage size. Steamboat had 188 transactions with a $762,500 median price and $404/sf. Although median price in Steamboat went up only 9 percent, median dollar-per-square-foot ($/sf) price went up a substantial 36 percent from its 2017 price of $298.
The highest priced single-family home (non-Farm & Ranch) was a 9,792 sf, 6 bedroom (br), 10 bath (ba) home on 9 acres (ac) adjacent to the Catamount Golf Course that sold for $4 million. It was originally listed for sale in 2007 at $7,895,000. The least expensive home that sold was a quaint, 2br/1ba, 700 sf home in Oak Creek on a .11-acre lot and sold for its $135,000 list price.
Slate Creek Ranch, located just north of town on Highway 129, captured the award for highest ranch sale. The ranch consists of 1,145 acres, stunning scenery, valuable water rights, intact mineral rights, excellent wildlife habitat, public land adjacency, stream-fed ponds, paved road access and usable improvements. Listed at $16.9 million, it sold via auction at $10 million.
The second most popular property purchase is a condominium. 2018 saw 310 condos snatched up, with all but 9 in Steamboat. This was a substantial 14 percent increase over the prior year, most likely due to lack of inventory. Median Price in Steamboat was $365,000 (+4 percent) and $/sf was $371 (+9 percent).
One Steamboat Place was home to the highest priced condo sale, at $2.4 million, or $955/sf, at 2,513sf. The slopeside, 4br/4ba residence comes with yearly HOA dues of $46,101, which includes some of the finest services and amenities one could want. Walton Village had the least expensive condo sale at $152,000 for a 1br/1ba, 565sf ground floor unit.
Town homes fill the niche between condos and single-family homes, with 179 selling in 2018 and 159 of those in Steamboat. Steamboat $/sf values remained steady at $310, and median prices increased 4 percent to $600,000. Stagecoach, about 17 miles south of Steamboat, enjoys a good amount of townhome interest with 14 in 2018 and at a median price and $/sf value of $259,000 (+12 percent) and $179 (+14 percent), respectively.
Winning top town home honors was a ski-in / ski-out 6br/7ba, 5,956sf Ski Trail Lane home at $2,375,000. It also featured a top floor master with fireplace, home theater, fitness room and wine cellar. Glen Eden Resort, in Clark is home to a 2br/2ba, 837 sf townhome alongside the Elk River that holds the lowest priced sale at $105,000. Although Glen Eden zoning prohibits full time residency for its owners, it allows plenty of time for a second home owner to enjoy the fishing, pool, tennis, restaurant and bar onsite, and spectacular wilderness and recreation surrounding the property.
Overall land transactions in 2018 declined 13 percent to 209. This is most likely due to the substantial drop in Stagecoach sales, which went from 72 to 34 (-53 percent). Looking closer at Stagecoach shows the inexpensive (and nearly impossible to build on) parcels priced under $10,000 went from 30 sales in 2017 to a mere 9 in 2018. One would think the lack of housing inventory would help land sales. However, building costs could be prohibiting sales. Generally, it is still less expensive to buy an existing home than to build. Steamboat Springs lot sales increased from 70 to 74 (+6 percent), yet median price substantially increased 33p ercent to $327,000.
Woodchuck Mountain Ranch, consisting of 2,204 acres, and near the Stagecoach recreation area and next to wilderness, BLM and national forest lands, was the most expensive land parcel sold, fetching $5,275,000. Just up from Woodchuck was the least expensive land sale, in South Station I at Stagecoach. The .7-acre parcel, with no utilities and seasonal access, but backing up to greenspace, sold for $4,700.
Upon first blush it appears the market is levelling off. Further investigation suggests demand remains strong, but supply is short. Median days on market supports this idea, dropping over the past five years from 96, 91, 77, 70 and currently 49 days. Absorption rates similarly support this theory, moving from 64, 70, 82, 119 to 123 percent. Some relief is in sight with new developments either coming out of the ground or on the drawing board, but buyers should see nothing happening soon, which adds more pricing pressure for upward movement.
Whether short or long-term, forecasting is always a complex exercise. Many factors come into play, including the economy, interest rates, building costs, politics, taxes and in Steamboat’s case, the weather! Assuming the aforementioned factors stay relatively consistent, in the near term, look for real estate transactions to drop again in 2019 between 5% and 7%. Supply will affect this in two ways: first, lower ‘deliverable’ supply will give buyers less to choose from and cause prices to continue to appreciate, causing a slowdown in purchases. Second, some new projects will be coming on the market in 2019 (undeliverable supply), so although contracted in 2019, they will not close until 2020 (upon construction completion). With baby boomers entering retirement age, rise in location neutral businesses and Steamboat Springs’ excellent schools and healthcare, demand for the Steamboat lifestyle will continue to grow, so look for prices to increase 2 percent to 4 percent, but higher for scarce or irreplaceable properties.
Alterra Mountain Company’s 2017 acquisition of the Steamboat Ski Area will also increase demand, not only short but also long-term and have a lasting impression on the real estate market. In its short period of ownership, Alterra has made a statement with identifying immediate improvements to the ski village and has announced plans for improving the ski experience. Although somewhat handcuffed by the fractured holdings in the village core, the Urban Renewal Authority, in conjunction with Alterra and other property owners, must work in unison to create a unique and memorable Steamboat experience, which has been substandard in comparison to other top tier ski resorts.