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« Previous Story | The Industry Report Home Page | Next Story » An IR In-Depth Report: Mountain Real Estate Sales Wed To Supply And Demand Right NowBy Roger Leo 
News may be bleak in some sectors of U.S. real estate, but it seems that the wealthiest among us continue to spend their money on high-end properties in exclusive places such as mountain resorts. "We're definitely seeing the strength in the $1 million and above range, and below $600,000. It's all cash buyers above $1 million, and below $600,000, it's cash or a reasonable loan," Ryan Williams, marketing manager for the Ritz Carlton Club at Northstar-at-Tahoe, Calif., told The Industry Report. That's echoed by Michael Langley, sales and marketing manager for Spruce Peak at Stowe, Vt. "High net worth individuals are not impacted as heavily as middle income individuals in the U.S. right now, and we're seeing the effect of that." Yet housing continues to soften, and hoped-for recovery recedes, causing some to wonder if the exclusive real estate sector is a little like the man who jumped off the Empire State Building. "So far, so good," he was heard to say as he fell past the 25th floor. Experts tell the IR that's way too simplistic. They see markets strong in areas with limited supply and a deep pool of wealthy buyers, but weaker in areas where many competing projects have come on the market in the last year. "Around Lake Tahoe, our volume year-to-date is off of last year, which was off of the year before. The number of sales is off, but our prices aren't dropping like they are nationally. We're tending to hold our value, except in certain pockets and certain types of properties," Ned Stock of Coldwell Banker in Incline Village, Nev., said. "Residences are holding value. Things that have slipped are condo complexes where there's a lot of competition. Resorts are in high demand. It's what baby boomers have been working all their life for, and there's only so much of it," he says. The exclusive developments of Martis Camp and the Ritz Carlton Club at Northstar-at-Tahoe; Spruce Peak at Stowe; and homes in Teton Village at Jackson Hole, Wyo., appear to be holding value, and selling, if at a slower pace. Vail and Aspen, and some less exclusive addresses around Lake Tahoe, are cited as examples of areas that have too much property on the market, with a resulting drop in prices. Some 385 residential properties sold in North Lake Tahoe in the first half of 2007, compared with 315 in the same period this year. Ritz Carlton's Williams said the 18 percent drop in numbers is not as significant as stability in the average selling price, which remained the same at just over $1 million. Ritz Carlton's mid-mountain development at Northstar includes 78 fractional residences, 23 whole ownership units, and 170 hotel rooms. "This fractional product is a great option for people because it's not as much of a financial commitment, $200,000 to $500,000 compared with $3 to $8 million for whole ownership. Our market is not completely recession-proof, but it tends to be," said Deanna Rastetter, Ritz Carlton Club's marketing director. Julie Maurer, marketing and sales V.P. for Booth Creek Resorts, said the Tahoe region has seen a "slowdown in the market and a fair amount of inventory on the market, whether in re-sales or new projects that have come on line in this area." She told the IR "there's a little bit less impact up here than we're seeing in the San Francisco Bay and Sacramento areas, and very high end stuff does seem to be moving. "We're partners with East West Development in the Village at Northstar. We had the land, and they took the risk and built the real estate. We bought back the commercial, 150,000 square feet of space in the Village, and we're 97 percent rented," Maurer said. Northstar also partners with DMB/Highlands Group in Martis Camp, a high end development nestled on 2,177 acres below Lookout Mountain. Northstar is extending the Lookout Mountain lift downhill to link Martis Camp to the trails, gaining another 500 feet of vertical in the process. "Martis Camp is probably the most exclusive development in our area so far," Maurer said. Brian Hull, director of sales for Martis Camp, said DMB/Highlands Group began selling home sites in August 2006 and, in the first two phases, sold more than 185 sites for more than $155 million. The third phase of the project is underway, involving more than 130 families with secured deposits for an Aug. 30 release of more home sites, Hull said. "These sales activities are unprecedented over the last 22 months in this area, regionally, and beyond. They have defied what the market has seen in terms of land sales. Nobody's selling that kind of volume over that period of time," Hull said. "Why? The unique layout clearly identifies with what people are looking for in the Tahoe community. The expansiveness and multigenerational aspect of the membership has been a huge draw, combined with two macro aspects, the Tom Fazio golf course and direct ski connection with Northstar," says Hull. Coldwell Banker's Stock issued his own prognosis for Lake Tahoe. "We will see our prices retreat a little bit from the highs, but we're a unique market and there is a very finite amount of new growth that can occur. Demand outstrips supply and as a result we tend to hold prices." Jerry Blann, the industry veteran who is president of Jackson Hole Mountain Resort, noted a flurry of development and redevelopment spurred by the rebuilding of the resort's famed tram. "We decided our girl was on her last legs. Last summer, we did the foundation work and we're finishing the project this summer. All five towers are standing and we'll start to pull cable in the next month," Blann said. "That's precipitated development and redevelopment here in Teton Village. Teton County is 97 percent government-controlled and managed land; only the remaining three percent is developable. It's simple supply and demand." "There are fewer and fewer places for people to buy and build on, and that's a large part of what's driving demand and some of the costs you're seeing," Blann said. Blann said the old single-family area of Teton Village has 120 lots, 110 of them developed. Granite Ridge, uphill, has another 35 single-family homes. The Village also has 4,000-square-foot townhouses, and hotels. Single-family homes in Teton Village are selling for $2.5 million to $3 million, and older two-bedroom condos are selling for $1 million. "The pace has slowed but the prices haven't dropped," Blann said. "Demand is really strong on the lower end, under $1 million because, believe it or not, that's almost affordable." Elsewhere in Jackson Hole, West Gros Ventre Butte is 95 percent built out, and Wilson is close behind. Jim Horsman of Destination Hotels and Resorts, the man in charge of development of Stowe Mountain Lodge, said, "Certainly it's gotten slower, but at least we're still selling units, and that's a big plus in this economy. "We just broke ground on Phase 2. We feel pretty comfortable there's enough demand. There's only so many units that are going to be built, and that's it. We're not looking at a Vail or a Tahoe or a Tremblant, where you have thousands of properties. We have very few. "From a supply-and-demand perspective, people are realizing that. Being a true luxury project in New England bodes well for us. Would I love to have the sales pace where it was a year and a half ago? Sure. But knowing what's going on in the country, we continue to move forward," Horsman said. Stowe Lodge Phase 1 includes 88 studios and 20 three-bedroom units at $400,000 to $1.7 million. Phase 2, just begun, will add another 136 units. Spruce Peak's Langley sees more interest in the development's higher end products. "We have sold all of our completed mountain cabins – $2.5 million to $3 million apiece – and have two under construction right now." Spruce Peak will have a total of 16 Mountain Cabins. The development includes commercial space, a Bob Cupp golf course, pool, spa and skating rink, and more residential properties. What It Means: As the real estate market rolls into the future, better here and worse there, seasoned realtors take comfort in having weathered similar supply and demand trends across the country in the past. Still, exclusivity is adding a certain cachet that shows up on the bottom line. « Previous Story | The Industry Report Home Page | Next Story » |
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