Gauging the Vail real estate market with real numbers
January 28, 2010 —
Buyers and sellers are always asking "How far is the market down?" and "Have we seen the bottom?" Sorry to say folks, but I have to say no. I do have specific statistics on the decline that I would like to share.
I have always used the Sunridge Phase 1 and 2 complexes to gauge the lower end of the Vail Valley real estate market for these reasons. The complexes are very large with over 200 units, the product is fairly homogenous (I use only the 2 bedrooms which are all 768 square feet), there are always units for sale, and the data is readily accessible. In looking back over the data from the last 5 years, here are the highlights:
- 2006 was the best year in terms of volume with 44 units sold
- 2007 offered the highest average sold price of $316,70
- From 2003 to 2008, the sold price averaged 98% of list price
That was the good news. Now, let's look at the current market environment:
- 2009 offered only 4 sales at an average price of $256,375 (down 19% from the 2007 high)
- 2009 showed the average cumulative days on the market to be 110 (up 47% from 2007's 75 days)
- Presently there are 11 active listings. Based on the 2009 absorption rate, there is a 33 month supply of Sunridge units.
Therefore, in order for the supply/demand equation to move toward equilibrium, either the demand must increase or the supply must decrease. Both of these factors lead to substantial price declines in my opinion. Yes, the homebuyer tax credit extension is helping, and yes the low mortgage rates are helping; however, these factors alone will not spur demand enough to prevent further price declines. This same analysis can be used on higher end properties and I will provide something along those lines soon.
Given that my job is to help my clients buy and sell their homes, I want to convey the truth about the market and present viable options for achieving real estate objectives. With sellers, that truth is to lower your price in almost every case and for buyers, it means to take your time and hunt for a bargain because so many exist. Sometimes no one likes to hear the truth, but generally, people do not hold it against you.
I can be reached at http://www.investinvail.com/
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