The ski season has mercifully ended for Northstar and many other resorts around the basin despite continued snow (and rain). Squaw Valley and Alpine Meadows are the lone resorts continuing with ski operations into the month of May. Reflecting upon the season, it is clear that the acquisition of Northstar by Vail Resorts has had a tangible impact on the resort already with much more to come. Despite the weather creating obstacles for many visitors to reach the resort during peak times, the crowds were strong – a testament to demand for a top-quality resort that consistent delivers strong family programming for the consumer.

While the flow of visitors will diminish significantly over the next six weeks or so, real estate will generally remain active as many of those having toured real estate over the winter season will now take action in anticipation of the summer to come. Similarly, I would expect to see a run up of listing inventory as owners come through the winter and make decisions as to how a second home functions for their life.

There was some activity in the market this past week including a pair of sales at Lahontan:

·         12428 Tom Dolley closed escrow for $1,400,000. Listed for $1,495,000 it took just five days on market to find a buyer for this property. At $352 / sq. foot there is no wonder as this must represent a value well below replacement cost. Kudos to this buyer for taking quick action on a great value.

·         Conversely, Lot #379 closed escrow after 963 days on the market for $180,000. Originally listed for $439,000, this sale would seem to define “chasing the market down.”

·         At Martis Camp, the developer sold two properties this week in addition to the sale of Lot #3, a re-sale, for $474,000.

I was recently asked by a local appraiser my opinion as to whether a short sale should be used as a comparable in the same manner as a standard sale or REO. Instinctively I answered no given all the hurdles and time involved in transacting a short sale.  With timelines as long as six months to complete while a lender evaluates both the property’s value and seller’s distress, a buyer has very little security in knowing whether they do or do not have a deal and often jump ship as other, more compelling deals become available, or they simply sour on the arduous and ambiguous process regardless of how compelling the deal.  

However, the fact of the matter is that short sales have an impact on the marketability of all listings – whether bank-involved or otherwise. Often this impact is a stymieing effect given that short sales, even while pending bank approval, remain on the market alongside active listings with the subtle status change of “Active Contingent.”  Furthermore, because the goal of the seller in a short sale has no equity interest, their primary goal is to find liquidity in the fastest possible manner, often reducing price below market value. When these values are displayed alongside standard listings, it is not hard to imagine a consumer having a hard time accepting the “fair market value” standard sale as an appropriate value thus slowing the entire process.

A prime example of this can be found in the Northstar Village where a rogue 2-bedroom short sale is being offered for $590,000 or $489 / sq. foot well below the least expensive sale recorded within a relevant time period for a 2-bedroom of $615,000 ($506 / foot).  Removing this sale from the equation, the available inventory for 2-bedroom residences in the core of the Northstar Village is just six units with the least expensive being #2305 for $685,000 or $563 / foot and a reasonable jump to $820,000 for a much higher quality product at Northstar Lodge Hyatt just across the Village. Despite offering no indication that the short sale can get done (in fact two failed offers previously to prove that it likely CANNOT get done) the rogue listing is holding up the market by nearly $100,000.

While there can be many mitigating factors that present an argument in favor of the reduced price (i.e. furnishings, appliances, etc.) the consumer, utilizing the many tools now at their disposal including Zillow.com and others and without with benefit of interpretation from an expert, will only see the top line number.

The good news is that the remaining short sale inventory, both at Northstar and throughout the region, is extremely limited.  As values stabilize and even rise, I am confident that we will be able to eliminate this category of transaction and ultimately lose the term “short sale” from our vocabulary altogether.

Written by Associate Broker, Steve Kegal.   Posted by Tim lampe