It’s clear the market won’t be stabilized until the reductions disappear.
That might be a while simply because of the vast amount of inventory. There are 196 active residential listings in the Basalt and El Jebel area, according to the Aspen Board of Realtors Multiple Listing Service (MLS). There have been 65 sales so far this year. At that pace, the existing inventory would last about three years.
The Carbondale area has 225 active listings. There have been 79 sales thus far this year. That also equates to nearly a three-year supply at the current sales pace.
“Sellers used to be able to put up a sign and attract attention,” said Greg Hunter, a real estate agent for Morris & Fyrwald and a 20-year veteran in the midvalley market. “There’s an infinite amount of supply in this market and a limited demand.”
There used to be three types of buyers in the midvalley: end users, who were buying a home where they could live; investors, who banked on appreciation; and landlords, who relied on rental income or were buying a place to rent to employees. The investors and landlords have disappeared, Hunter said. Many end users are experiencing trouble securing financing because banks have tightened lending rules.
The midvalley market “has definitely been hit hard,” said Hunter. In a “very general sense,” he said, listing prices for residential real estate in the midvalley are 40 percent lower than what was being sought before the crash.
Shadowshot called the midvalley market “a mixed bag” punctuated by “screaming deals and people losing houses.”
Hunter also said there are signs that the market may be “thawing.” He recently closed on the sale of an extensively remodeled home in the Sopris Village subdivision for $545,000. It was properly priced, and the seller took out the right “staging” steps to make sure it looked its best, Hunter said. Many buyers make their decision in 10 minutes while looking at homes — less time then they spend shopping for jeans — so it’s important they make their home look its best, he said.
He sees a trend for more showings among prospective buyers as 2011 approaches. Many sellers have reacted to the marketing by reducing listing prices.
“I think by now, everybody understands what happened,” Hunter said.
While 2009 isn’t much to compare to, at least 2010 is looking better. The number of residential real estate transactions in Basalt and El Jebel has already exceeded the 2009 level. There were 55 residential sales last year compared to 65 this year through Dec. 3, Shadowshot said, citing data from the MLS.
The median and average sales prices in the Basalt area tumbled compared to 2009. The average sales price last year was $852,803. It is down about 33 percent to $561,180 this year, Shadowshot’s research showed.
Missouri Heights and Carbondale, two distinct districts that are tracked in the MLS, show activity on par with 2009, with one month to go. Average and median prices have also dropped in those areas.
The difference between initial listing prices and the actual sales prices is often “staggering,” Shadowshot said.
One big unknown for 2011 is the effects of foreclosure on the midvalley market, said Garret Brandt, a real estate agent with the Fleisher Co. Brandt was a longtime real estate attorney, known for meticulous research on market conditions. He changed professions about six months ago because he felt the market would soon be on the upswing. Now he is convinced he anticipated the recovery too soon.
Eagle and Garfield counties have already exceeded the 2009 amount of filed and completed foreclosures with nearly one month remaining in 2010, Brandt said.
There were 452 foreclosures filed in Eagle County last year, both in the Roaring Fork and Eagle valleys. There are already 566 this year.
Garfield County saw 408 foreclosures last year, and there are already 571 this year.
There is an undetermined amount of “shadow inventory” — homes with owners who are delinquent on their loans but the banks haven’t started foreclosure actions yet, Brandt said. Those foreclosure could be filed in the first half of 2011.
“That’s why I think we’ll see prices continue to lag,” he said. If the shadow inventory is large enough, it could force further price reductions. With luck, the market will be stabilized by June or July at the latest, he said.
Like Hunter, Brandt said the evidence shows values are down 40 percent from pre-recession highs.
Of course, the problems for sellers are creating bargains for buyers. Banks that initiate foreclosures are often willing to sell for less than then the amount they are owed. Savvy shoppers are waiting to pounce.
A 35-acre property with a three-bedroom, three-bath house in the Spring Valley portion of Missouri Heights went under contract for $340,000 in a foreclosure sale, Brandt said. There were also two back-up contracts prepared less than a week after the property was listed.
“There are some incredible bargains out there,” Brandt said.
