Park City Real Estate Report

After a prolonged dormant period, the Park City real estate market is booming once again, according to an informal survey of some of the area’s leading realtors.

“The Park City market moves in concert with other Rocky Mountain ski towns, like Vail, Aspen, Jackson Hole and Sun Valley,” explains Carol Agle, who has been a local realtor for more than 20 years.

“All of these towns had a flat market from 1997 through 2003,” continues the former president of the local real estate board. “But in January of 2004, the local market rose up, stretched, and hit the road running.” At that time there was an 18-month inventory of housing, meaning it would’ve taken that long to sell all the properties on the market then. That timeframe has subsequently shrunk down to just a month or two.

“The last up-market of this kind was from 1990 through 1995, when there was a growth rate of one to two percent monthly for 60 consecutive months,” continues Agle. “Indications are that this looks to be a similar cycle of appreciation.”

The upsurge in the market can be attributed to several factors: The desire by many to move assets from the stock market to real estate; increased disposable income and generational transfers of wealth that allow the purchase of a second or third home by the affluent; and the constant allure of life in a vibrant mountain town.

Prudential’s Steve Chin is another veteran of the local real estate scene. He’s been in Park City for 30 years, and a Prudential mainstay for 25. “In my opinion, the real slowdown began in the spring of 2000, when the dot.com bubble burst, and many of the high-tech stocks lost much of their value,” explains Chin, who’s also a CPA. “We had a very lean period for about three years, and things only picked up again in the fall of 2003.” The 9/11 tragedies intensified the doldrums that were initiated by the devaluation of the tech stock sector. “Things were pretty stagnant for quite awhile,” says Chin. “It turned out that many folks had an artificially inflated net worth, lost huge percentages of their stock portfolios, and ended up struggling to make ends meet.”

Now things have turned, and anything priced at $2.5 million or less is very strong, according to the longtime realtor. “It’s a combination of several factors. There was very little new construction during that fallow period, so our inventories are low. The stock market has stabilized, the gross domestic product is growing, interest rates are attractive, and the lasting lesson of 9/11 is to cherish your family. Folks who might’ve saved to pass everything onto their kids are buying condos, townhomes or houses, at all price ranges. They want to spend quality time with the people they care about.”

Very high-end properties, above the $2.5 million mark, haven’t recovered to the same level as the “bargain” properties priced lower. “There’s still a caution prevailing, where someone who might truly be able to afford a $5 million home only wants to spend $2 million, or the folks who can spend $2 million are only comfortable spending $1 million.” Chin echoes Carol Agle’s sentiment about the subtly shifting attitudes concerning the stock market. “Though real estate isn’t as liquid, many people prefer the safety of land or property, the hard asset, particularly when the stock market could turn volatile again at any time.”

There’s one notable exception to the slower selling pace of the ultra-expensive properties. Ski-in/ski-out opportunities are a rare and coveted commodity in a town like Park City. “At the beginning of this year we released 14 lots in the Red Cloud development at Deer Valley,” concludes Chin. They were priced from just over $2 million to $3.25 million. Twelve of them were purchased within a month’s time.”

The Colony sets the standard for ski-in/ski-out properties. Connected to The Canyons via ski runs, this wooded, stream-laden, 4,600-acre “ski ranch” offers the largest slope-accessible homesites in North America, ranging from four to 26 acres, with an average size of eight acres each. There are 269 lots in total, and of the 170 that have been released to this point, 145 have been sold. Prices range from $1.1 million to a recent sale of $4.3 million for an 11-acre parcel. “Not only is that the highest price ever paid at The Colony, but we’re pretty sure it’s the highest price ever paid for a single family homesite in the state of Utah,” explains Director of Marketing Tom Gauld.

And the single family who made the purchase is not under obligation to construct a single dwelling. Another of the unique aspects of this attractive development is the latitude to construct out-buildings; a guesthouse, a barn for horses, etc. on the homesite. There is no other ski-in/ski-out property in the nation that offers the same option.
“When the dot.com market fizzled, we went from about 30 sales annually down to 10 or 15,” states Gauld, who’s been involved with the project since its inception in 1996. “Starting back in 2004, things have picked up very nicely. In the six-month period comprising the end of 2004 and the first several months of 2005, we’ve had $43 million in transactions.”

Gauld thinks the reverberation of the Olympics has been a boon to the area in general, as folks who visited the area for the first time after viewing the Games on television were attracted by the accessibility of Salt Lake City, and by association, Park City. Also there’s the relative value of property, at least in comparison to other upscale mountain towns like Vail, Aspen and Jackson Hole. It’s hard to put the words “bargain” and “multi-million dollar lot” in the same sentence, but in a mountain, ski and second-home community, it’s just a relative term.

Talisker is another developer that has seen a dramatic increase in business in recent months. Empire Pass is their 1,600-acre Deer Valley project, and the three distinct neighborhoods comprising the development continue to flourish. “The Northside neighborhood has had 10 home sales in the last two years, and all but two of the 24 Ironwood townhomes have been sold since 2003, at $1.5 to $3 million,” says Richard Albrecht, Talisker’s chief operating officer. Also in demand is The Grand Lodge. Fifteen of the available 27 condominiums sold the first day they were offered in February of this year, at prices of $1.8 million and up. A total of $33 million in sales were tallied there in February alone, though the luxury condos won’t be ready for occupancy until the winter of 2006/2007.

The Village at Empire Pass is the second neighborhood. Shooting Star is a condo complex with prices beginning at $1.8 million, and all 21 units have been sold. Paintbrush is a neighborhood with six homes in total. Four have already been sold, at prices between $4 and $5 million each. Finally, Larkspur has 11 townhomes, and eight have been put under contract for prices between $2 and $3 million. The third neighborhood is the aforementioned Red Cloud, which has also done a tremendous amount of business in recent months. The whole town is booming, but no more so than at the always-in-demand Deer Valley.

The boom isn’t limited to residential properties. Commercial real estate is thriving in Park City also, according to Mike Sloan, the branch broker at Commerce CRG. “We’ve seen a tremendous upswing in prices on Main Street,” offers Sloan, who’s been in town almost 30 years. “Prices have gone from about $300 a square foot up to $500 per square foot since the beginning of 2004.” He reports that leasing prices have crept up incrementally, from $35-$45 per square foot, but the dramatic gains have been in purchased property.

“We’ve seen an increase of longtime Main Street tenants purchasing buildings, as opposed to outside investors,” reports Sloan. “They make a commitment to Main Street, reap the tax benefits of ownership, and aren’t subject to the vagaries of rent increases.” Recent purchasers include the owners of Crosby’s Jewelry and Hilda’s clothing store.

The boom goes beyond Main Street, as the Redstone retail development near Kimball Junction has been very successful since it opened in 2004. Anchor tenants like Petco, Bed, Bath and Beyond and Wild Oats have made the retail center a success since day one. “There are longer leases and larger space commitments being made than ever before,” concludes Sloan. “The old Kmart is being renovated, and will ultimately be occupied by five tenants; three national and two local. It illustrates how the area continues to grow, and attracts a diverse clientele.”

Writer Joel Zuckerman leaves the low country of coastal Georgia for the snow country of Utah whenever possible.

Real Estate Inventory

Currently there is less than a four-month supply of single-family homes priced under $400,000 in Park City and the surrounding area, according to realtor Mike Sloan. “Generally speaking, if you have under a six-month supply of inventory, that’s like being out of inventory,” said Sloan. “A third of the homes still listed may be under contract already, because they are listed until they are closed, not until they go under contract.”

The total Park City area market, looking at single-family homes, condominiums, vacant land and commercial properties, also hovers around a four-month supply, less than half of the nine-month inventory reported in the spring of 2004.

Interest in the Silver Star Condominium project prompted the developers to hold a drawing for the 99 units that will soon be built. Paladin Development Partners asked for an application accompanied by a check for $10,000 (completely refundable for unsuccessful candidates) to enter the drawing. They expected to keep the offer open for two months, according to Rory Murphy, principal of the company.

After only six days, they had 325 applications, turned away 200 more, and closed the drawing.

“I was honestly stunned,” said Murphy.

The two-, three- and four-bedroom condominiums are expected to have an end price of $1 million or less, which appeals to buyers of permanent, vacation and investment homes, according to Murphy.

“It is a function, truly, of what has happened in this marketplace,” said Murphy. “For whatever reason, Park City has suddenly become
the hot mountain town.”

Sell-Outs

Currently there is less than a four-month supply of single-family homes priced under $400,000 in Park City and the surrounding area, according to realtor Mike Sloan. “Generally speaking, if you have under a six-month supply of inventory, that’s like being out of inventory,” said Sloan. “A third of the homes still listed may be under contract already, because they are listed until they are closed, not until they go under contract.”

The total Park City area market, looking at single-family homes, condominiums, vacant land and commercial properties, also hovers around a four-month supply, less than half of the nine-month inventory reported in the spring of 2004.

Interest in the Silver Star Condominium project prompted the developers to hold a drawing for the 99 units that will soon be built. Paladin Development Partners asked for an application accompanied by a check for $10,000 (completely refundable for unsuccessful candidates) to enter the drawing. They expected to keep the offer open for two months, according to Rory Murphy, principal of the company.

After only six days, they had 325 applications, turned away 200 more, and closed the drawing.

“I was honestly stunned,” said Murphy.

The two-, three- and four-bedroom condominiums are expected to have an end price of $1 million or less, which appeals to buyers of permanent, vacation and investment homes, according to Murphy.

“It is a function, truly, of what has happened in this marketplace,” said Murphy. “For whatever reason, Park City has suddenly become the hot mountain town.”