Owning property in ski country became a reality for many bargain hunters who had capital to spare during the U.S. housing market’s downward spiral, but analysts say things are starting to turn around in America’s ski resort towns like Aspen, Colorado, and Park City, Utah. Zillow reports that homes in both locations saw modest gains in the year ending at the end of January, but there are still bargains to be had. Prices may be on the rise, but compared to what experts anticipate the market is still ripe with deals and for those who want a slice of ski country they may have better luck buying early. For more on this continue reading the following article from TheStreet.
Good real estate deals are available in many U.S. ski areas these days because of the housing bust — but things are beginning to go downhill for bargain hunters.
"Buyers had more of the upper hand for a long time in many markets, but that dynamic is starting to change," says Andrew Ernemann, president of the Aspen Board of Realtors in ski-friendly Aspen, Colo.
Ernemann, a broker/associate at realty firm B.J. Adams & Co. says Aspen home prices stabilized in 2012 after tumbling during the Great Recession.
"There are still values to be found, but the market is much more in balance," he says.
In the ski mecca of Park City, Utah, Jeff Spencer of Resorts West Real Estate reports that Realtors saw an uptick in sales beginning Jan. 1.
"[Buyers] have decided that we’ve hit bottom, so they might as well buy now," says Spencer, who’s also president of the Park City Board of Realtors.
Market tracker Zillow.com estimates median Park City home prices rose 9.2% over the 12 months ended Jan. 31 to reach $433,700. Similarly, the typical Aspen home value gained 7.1% over the past year to hit $1.14 million, according to Zillow.
Still, price in both towns have managed only to hike partway back up the mountain toward their previous peaks.
Zillow (Z) estimates Aspen’s average home prices are still off 34.5% from an early 2008 high of $1.74 million, while Park City values are 21.7% below their pre-recession peak of $554,200.
"People might have missed the bottom, but still we’re close enough to it that this is a good time to jump in," Spencer says.
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Know when to buy
Rich buyers historically propped up Aspen’s housing prices even when the U.S. economy tanked, but even they couldn’t protect the local market from the Great Recession and the recent housing bust.
"We learned in 2008 and 2009 that we’re not immune to broad economic cycles," Ernemann says.
So buyers looking for the best prices in ski country should obviously hunt for deals when the housing market and broad economy are weak — as they still somewhat are today.
The time of year when you look for ski properties can also make a big difference.
For instance, Ernemann says Aspen’s bargain hunters often wait until just past the community’s key February/March and July/August home-buying seasons and focus on properties that didn’t sell.
Only pay for what you want
Prices on ski homes and condos tend to vary based on a wide range of location-related factors, from the quality of a property’s mountain view to how close it is to ski trails, shops and restaurants.
Experts recommend deciding ahead of time what you want nearby and what you’re not willing to pay extra for.
"A family with kids might want a great family space, while a jet-set couple with no children might just want to be near the local bars and restaurants," Ernemann says. "That’s important to think about, because the further you get from heart of [a ski town] or the slopes, the more bang you’ll typically get for your buck."
Consider nearby alternatives
Sometimes you can find ski-house bargains by getting off the beaten path — literally.
Spencer says many homes in his town are right on ski trails, but people looking for deals can buy properties that aren’t and hop on Park City’s complimentary buses to reach the slopes.
"If you’re on a ski trail, that obviously increases a home’s price," he says.
Ernemann says Aspen-area househunters on a budget should consider Snowmass Village, Colo., some eight miles away.
"It’s still part of the same resort community, but real estate there has been slower to recover and there are some great opportunities for buyers," he says.
Check a property’s rental value
If you plan to rent out your ski property when you’re not using it, make sure you know before you buy how it will fare in the rental market.
Ernemann says agents who show you properties will often prepare a free rental analysis for you.
If you’re worried about a broker’s objectivity, most ski communities have lots of property-management firms that will give you a free market analysis in hopes of getting your future business.
Understand second-home mortgages and taxes
Some lenders have different underwriting standards for second-home mortgages, so don’t assume you’ll qualify for a loan or get today’s lowest rates if you’re buying a vacation property.
Ernemann says some second-home buyers end up paying around 0.5 to 1 percentage point higher interest these days than they would for a loan on a primary residence.
"Some banks charge [a] premium on interest for second homes, although the spread isn’t nearly as much as it used to be," he says.
Buyers should also understand how federal tax rules apply to vacation homes.
For instance, you can generally deduct the mortgage interest you’ll pay on your vacation property — but only on the first $1.1 million that you borrow for both your primary and secondary homes.
Internal Revenue Service rules get even more complicated if you rent your ski property out for more than 14 days per year, so consider consulting with a good tax adviser before buying.
This article was republished with permission from TheStreet.