Non Region Specific Ski Town Real Estate

[sparty]

It seems like the good ole version of the American dream is officially dead.

I mean, imagine being a young twenty year old that doesn’t have a family with any money and just finished getting a degree and now has a bunch of student loan debt. There isn’t much hope anymore for regular people.

Location matters a lot. I gave up on the idea of home ownership when I was living in Vermont; the places I could have afforded were too far from the skiing and the jobs I was interested in.

Red Lodge, Montana, seemed a lot more reasonable, and if I had stayed, I may have managed to buy a place before things got crazy (the market there, from what I've heard, has gone fairly bonkers and even if it cools, I doubt the bottom will drop out just because of the limited supply).

 

[newfydog]

I see a pullback, but no crash like we had in the last cycle. Bend was neck and neck with Naples Florida for the biggest runup back then. It was full of vacant flipper homes, financed by no money down loans backed by imaginary proforma rental income. When the music stopped playing we were neck and neck with Naples for the biggest crash.

Warren Buffett explains that interest rates are like gravity to house and stock prices. In this zero gravity environment both have risen to astronomical levels. Re-entry may be rough when rates rise, but this time the houses are all occupied and the purchases were backed by cash down.

For the latest horror story to go along with Muleski’s examples, I have a friend who got one of the last sawmill era shacks on the riverfront a few years ago for something like 800k. He replaced some horrible dirtbags renting it. I was so glad to see them go I loaned him some money to get them out of the neighborhood. He cleaned up the trash, painted it and put it up for 1.6 million last week. He sold it for cash sight unseen for 1.7 million in a day.

 

[Uncle-A]

Continues to just be nuts, both purchases/sales and rentals. Logic says that it can't be sustained. But who knows? And hard to time it. I have four data points, in my family, this week.

1. Son has to move. No choice, he's losing the condo he rents in a very expensive town in the CO rockies. He's found a nice 2BR, at what is a pretty reasonable price: $2K. Here's the catch. The owner got over 100 responses to an ad. Our son happened to have a reference who is one of the owners best friends. And our son's contact called. Otherwise? The owner wants to cover her costs, and is not a pig. Our son has just signed the lease. Was told that the landlord was offered up to $3000. He’s not buying there, in this market...no way.


2. Our daughter lives in another expensive CO ski town. Probably the most expensive. She and a roommate have a great rental deal. VERY unusual. A 2BR condo in her building was listed recently. The asking price was about $1500 a square foot. It sold in a day. Only took that long because the price was bid up by 40%. Zero contingencies, cash. Our daughter's friend is the broker.

3. Our niece and her husband just "flipped" a house in Montana. They have only owned it for about six months, and have done really basic work to it. Paint, refinished floors, kitchen appliances. New roof. New furnace. They sold it before they listed with a broker, for more than they were going to ask. The usual...in a day. I can’t recall the numbers, but I know it’s a 45% gain after expenses.

4. In more urban deals, another niece is buying a loft condo in S.F. Direct, no brokers. About 40% less than they tried to sell it for early in COVID. They evidently have owned it for years and “just want it gone.” They are leaving the Bay Area. It looks tiny, and funky. But so is she. She made the deal in about an hour.

i was describing our first house purchase to the “kids” the other day. Interest rates were 18%. My dad thought we were nuts to pay $115K. We negotiated it down to there from a much higher asking price. Had it thoroughly inspected by a number of people. 1982. Refinanced the minute rates fell. The house, which is largely an updated version of the same just sold for $1Mil plus. Was bid up. But describing the deal to buy....you would think I was from the moon.

Not slowing down...not what we are seeing. I hope it DOES slow, though.

I remember those 18% mortgage l purchased my first house in 1979 and also having to refinance. Part of the real estate bubble is that money is so cheap today. You can get 3% today easy enough and there doesn't seem to be an end to low rates.

 

[AmyPJ]

It was kind of a neat conversation because he let his hair down and told us what he really thought because we were strangers and weren't potential customers - don't buy a house right now! He was speaking of all Utah, but probably also for the whole country. He said the rise in prices can't last and that there will be a correction in a year or two. He warns his local friends about this who are thinking about trying to move across town to a bigger house.

He said Many of the buyers in Utah right now are Californians with tons of cash. They are paying 500k-1.5mil in cash with no contingencies. They don;t care if they have to drop another 50k to fix a kitchen, get a new roof or cover a gap in appraisal amount.

I keep thinking this--especially with people buying what in a normal market could take a year to sell with price drop after price drop. The house next to the landfill, the house on the busy street, the house with the really funky floor plan. You know, the ones that might sell for a tad bit of a "discount" now, you will be stuck with that house or stuck with taking a loss if you realize in 2 years, 5 years, that you just can't STAND the location, or the funky floor plan. Or the mortgage.

Absolute lunacy IMO. So many "lipstick on a pig" homes right now. A few cosmetic changes to make a craphole look nicer, but beneath all that it's still a craphole.

 

[Philpug]

I don't see the bottom dropping out like it did 10-12 years ago but I do see either a flattening or maybe a 5-10% at most correction.

 

[Uncle-A]

I don't see the bottom dropping out like it did 10-12 years ago but I do see either a flattening or maybe a 5-10% at most correction.

We probably won't see a crash like 2008 but we could have a small correction. But real estate is not a bad investment, just making a good choice of location. Because location is everything.

 

[BS Slarver]

This pig will need a 50% correction to come back in line IMO but ya never know. Almost bought one of these in ‘17 for 120k. That’s not a typo, it’s 440 sq ft.


People are putting insane prices on properties just to see if they get a bite. Only 4 single family homes for sale in town under 1.8 and two of them are pending. One went on at 1.6 and thought there was no way it would sell, it is in the highway and it went in a week, It is occupied by a group of construction workers.
One of the Yellowstone Clubs subsidiaries is building an entire neighborhood for its staff in Gateway, 45minutes from town, looks to be a 100+ Single family homes at one time.
Bozeman is just as insane. Working on a project there last week and a buyer came to the door with a check book wanting to buy it cash, didn’t ask what the price was, don’t think he cared what it was.
Homeowner came out and said she would have easily double her money in 6 months and it’s not even done yet.

 

[JohnL]

We probably won't see a crash like 2008 but we could have a small correction. But real estate is not a bad investment, just making a good choice of location. Because location is everything.

10% would be a good sized-correction.

I hate to say it, but I don’t see any correction in the smaller ski-accessible cities such as SLC, Denver/Fort Collins/The Springs, Boise, Spokane, Reno, Sante Fe, etc. Along with cities like Nashville, Atlanta, Austin, Phoenix, Tucson, Charlotte, etc. People have been moving to those places for at least a decade, and will continue to do so. Still wonder what will happen to the “super star” areas such as NYC, SF, LA, DC, Boston, Sea, Chicago. They will still be desirable, but there are cheaper options out there now for high skill industries,

 

[JohnL]

In general, Tech companies and large companies in general tend to converge on the same workplaces models. But lots of divergence right now on stated plans. Will be curious 3-5 years from now what the ratio is for fully present on site (Amazon), vs fully remote, vs hybrid of remote 2-3 days a week. That will affect real estate a lot. I know most workers don‘t want to go into the office every day and companies are more comfortable with remote work. But this Op Ed has caused a big stir: https://www.washingtonpost.com/opin...s-understand-risks-not-returning-work-office/

 

[DanoT]

this Op Ed has caused a big stir: https://www.washingtonpost.com/opin...s-understand-risks-not-returning-work-office/

The OP Ed was behind a pay wall for me but I am thinking that the WFH concerns involve a possible tapering off of productivity as well as less collaboration between workers.

OTOH, WFH has a possitive impact on the environment due to less vehicles on the road and less building of office space.

 

[scott43]

I think people will end up back in the office. It may take 3-5 years before companies realize why... But I think they will.

 

[Jack skis]

G. and I bought one of these in 1989 for about $25,000 as I remember. We were at Big Sky for the first of 10 years and were both employed by the resort. It was a winter only residence and we managed to fit the two of us, two cats and a dog into the place. At first it was like living on a boat as to size, but towards the end of our ownership it seemed way too small. Sold it for about double our initial price, which amazed us. By the time it sold, after a year on the market, we were ln CB for the winters and no longer working. Our current condo unit at the base of Mt Crested Butte Ski resort just suffered a 14% property tax increase to just over $91,000 dollars. Don't know how the Hell I ever got in this kind of tax bracket.

This pig will need a 50% correction to come back in line IMO but ya never know. Almost bought one of these in ‘17 for 120k. That’s not a typo, it’s 440 sq ft.

View attachment 133308

 

[MattSmith]

+1 to the house market woes. The 1 BR/1 bath I'm renting in Minturn is being sold. No good sense of where I'll be living come October. Mom? Can I have my old room back? I kid, I kid.

I want to add a perspective to this thread I've not see or heard of in prior housing market fluctuations.

Private equity firms are participating in the non-commercial market and buying up private real-estate. Individual buyers have no chance against the cash offers at well over asking price these entities are able bring to the table.
One might suggest private equity firms are subject to the same market fluctuations as private buyers, BUT their pooled capital allows them to better insulated from the impact AND if they do need to sell, it seems likely to me that a foreign investor has an opportunity to swoop in. I don't mind renting, but do I want Blackstone for my landlord?

Obviously, I'm not financial genius. I only have rudimentary knowledge of how a private equity firm works. I AM a Gen-Xer and child of the 80s. I grew up on Gordon Gekko, Alex P Keaton, and firm belief in a Capitalism. Unfortunately this seems to be Capitalism at work and it's not working very well for a lot of people.

 

[AmyPJ]

+1 to the house market woes. The 1 BR/1 bath I'm renting in Minturn is being sold. No good sense of where I'll be living come October. Mom? Can I have my old room back? I kid, I kid.

I want to add a perspective to this thread I've not see or heard of in prior housing market fluctuations.

Private equity firms are participating in the non-commercial market and buying up private real-estate. Individual buyers have no chance against the cash offers at well over asking price these entities are able bring to the table.
One might suggest private equity firms are subject to the same market fluctuations as private buyers, BUT their pooled capital allows them to better insulated from the impact AND if they do need to sell, it seems likely to me that a foreign investor has an opportunity to swoop in. I don't mind renting, but do I want Blackstone for my landlord?

Obviously, I'm not financial genius. I only have rudimentary knowledge of how a private equity firm works. I AM a Gen-Xer and child of the 80s. I grew up on Gordon Gekko, Alex P Keaton, and firm belief in a Capitalism. Unfortunately this seems to be Capitalism at work and it's not working very well for a lot of people.

This practice is killing a lot of us, including me. It makes me sick to my stomach, truthfully. Talk about sticking it to the little guy...

 

[raisingarizona]

+1 to the house market woes. The 1 BR/1 bath I'm renting in Minturn is being sold. No good sense of where I'll be living come October. Mom? Can I have my old room back? I kid, I kid.

I want to add a perspective to this thread I've not see or heard of in prior housing market fluctuations.

Private equity firms are participating in the non-commercial market and buying up private real-estate. Individual buyers have no chance against the cash offers at well over asking price these entities are able bring to the table.
One might suggest private equity firms are subject to the same market fluctuations as private buyers, BUT their pooled capital allows them to better insulated from the impact AND if they do need to sell, it seems likely to me that a foreign investor has an opportunity to swoop in. I don't mind renting, but do I want Blackstone for my landlord?

Obviously, I'm not financial genius. I only have rudimentary knowledge of how a private equity firm works. I AM a Gen-Xer and child of the 80s. I grew up on Gordon Gekko, Alex P Keaton, and firm belief in a Capitalism. Unfortunately this seems to be Capitalism at work and it's not working very well for a lot of people.

Capitalism tends to exploit the vulnerable.

 

[Sibhusky]

Recent Facebook meme

 

[raisingarizona]

 

[Pat AKA mustski]

There is always a correction in the real estate market, but it never goes as low as the last dip and it will rise in the long run. There is no point trying to time the top or the bottom. This time the correction will be in STR properties. Vacation properties were hot properties because Covid restricted travel. These were too hot, too fast.

 

[Talisman]

In 2009 those five or six 440 SQFT units were going for $18-25K depending on there state of dilapidation. I think the Big Sky real estate market is frothy, but there seems to be a huge appetite for housing at $900 to $1000 a SQFT right now. The past corrections were drastic in the intermountain west, but "past performance is no indication of future gains" or losses.

This pig will need a 50% correction to come back in line IMO but ya never know. Almost bought one of these in ‘17 for 120k. That’s not a typo, it’s 440 sq ft.

View attachment 133308
People are putting insane prices on properties just to see if they get a bite. Only 4 single family homes for sale in town under 1.8 and two of them are pending. One went on at 1.6 and thought there was no way it would sell, it is in the highway and it went in a week, It is occupied by a group of construction workers.
One of the Yellowstone Clubs subsidiaries is building an entire neighborhood for its staff in Gateway, 45minutes from town, looks to be a 100+ Single family homes at one time.
Bozeman is just as insane. Working on a project there last week and a buyer came to the door with a check book wanting to buy it cash, didn’t ask what the price was, don’t think he cared what it was.
Homeowner came out and said she would have easily double her money in 6 months and it’s not even done yet.

 

[sparty]

There is always a correction in the real estate market, but it never goes as low as the last dip and it will rise in the long run. There is no point trying to time the top or the bottom. This time the correction will be in STR properties. Vacation properties were hot properties because Covid restricted travel. These were too hot, too fast.

I'd disagree on the timing bit, at least when it comes to vacation property. Big name places may see some less fluctuation, but property around indy ski areas often varies with the expected fortunes of the area. At the extreme end, the condos at Bolton Valley were dirt cheap the year the resort was bankrupt and not operational; my parents considered buying one, and I really wish I'd been able to understand the local population trends at the time, because in hindsight those were a pretty good bet at that price.

If upgrading your primary residence will improve your life, that's a different story; with interest rates as they are, I'd be willing to take the hit on purchase price right now if we find the right place in the right spot, because of the value return.