First Quarter Realtor Stats are Good News

Unit and dollar volume doubled since last year
by Andrew Kirk, OF THE RECORD STAFF, Park Record of Park City, Utah
Posted: 04/27/2010 04:03:33 PM MDT

Things are looking up for Realtors.
During the first quarter of 2010, Realtors sold nearly twice as many properties worth more than double the dollar volume from the first quarter of 2009.

It wasn't hard to surpass the dismal figures from early 2009, but selling 325 units worth $303 million would have been a respectable quarter not too many years ago. These increases were true for all property types, according to the First Quarter Report from the Park City Board of Realtors. This isn't necessarily good news for home owners hoping to sell for a quick profit. In the Park City area, sales prices for the year preceding March 31, 2010 were down about 20 to 30 percent from the year preceding the same day in 2009 which were sale prices close to the peak from the real estate boom. The lower prices and more frequent sales were directly correlated explained board president Mark Seltenrich on Monday. People were reluctant to let go of the perceived property values generated by the boom in 2009. Over the past few months, people needing to sell have priced "correctly," and sales have followed, he said. The auctions in January held by Accelerated Marketing Partners made a significant impact in setting values, he said. The successful auction and following sales of several units at Silver Strike combined with sales at Flagstaff did exactly what Accelerated Marketing Partners said it would do: create transparency in the market and allow buyers to agree on true market value.

Several condominium sales in upper Deer Valley followed, actually raising the median sales price for condominiums by 20 percent not because area condos increased in value, but because so many high-end units sold following the auctions, he explained. In fact, transactions at the St. Regis and other Deer Valley properties actually skewed statistics measuring ratios. Condominium sales are typically a third to 40 percent of the total volume, but during the first quarter more than half of all real estate sales were condos. Seltenrich expects that to reverse by the end of the year.

Although outdone by condos, sales of single-family homes in the first quarter increased 73 percent from the previous year. But like condos, the increase is attributable to sellers coming to terms with lower prices. The good news, Seltenrich emphasized, is that he hasn't seen prices continue to decline. "Correct pricing" was established several months ago and has remained stable. "We're now at the bottom of that pricing curve," he added. "Prices have been bumping along at the same level for few months now prices can't rise until they stop falling, so we're at the point in our market."

More good news is the market has appeared to hit bottom for foreclosures and notices of default. "It appears we've passed the peak for that. There's still a fair amount going on, but it's not increasing and appears to be decreasing," he said. The bad news is that inventory levels are still too high. That's making it a "buyer's market," which certainly isn't bad for people shopping, but the healthiest situation is for the advantages to be balanced. There are about 3,000 units still on the market, down from 3,500 a year ago, but still on the high side, he said.

Even more troubling is the "shadow inventory" out there. That's all the owners wanting to sell who have been waiting to list, the impending foreclosures, the bank-owned properties not listed yet. Add to that list units at the Montage, and there's a lot of inventory yet to enter the market, Seltenrich explained. "It means there are a lot of choices," he added. "But sellers won't be able to hold out for high prices." Seltenrich said he still sides with the optimists and expects the year to end on a strong note.

Broker Thomas Wright with Summit Sotheby's International said he agrees with Seltenrich's optimism. For his own curiosity, Wright subtracted the Silver Strike and St. Regis sales from this quarter's statistics and still found the numbers to be up significantly. In retail, merchants have been suggesting current spending habits are the "new normal." Wright said he thinks current real estate pricing may be the new reality. The proof is in the numbers. Homes that went under contract within three months of being on the market did so at 96 percent of the list price. Those sold after six months did so for 90 percent of the list price. Those for sale longer went under contract for 85 percent of the list price.
"To solicit offers, you have to have it priced within three to five percent of fair market value," he said. People think they need wiggle room in their price, Wright said, but they aren't getting offers and it's aging the property on the lists. "You become a bit stigmatized for being on market so long," he said. Conversely, Wright said he hasn't seen a lot of buyers "low balling." There's some consensus on values right now. Also, lower prices might be bad news for Heber and the East Side. People who were priced out of Park City bought on the periphery, but Park City is now more affordable, he said.

Broker Jess Reid of Jess Reid Real Estate said he occasionally disagrees with the board's summary of quarterly numbers, but feels Seltenrich is right on. However, "shadow inventory" worries him as well. Developers with permission to build northeast of Jordanelle Reservoir could also heavily impact inventory, he said. Reid also agreed on the positive impact of the Accelerated Marketing Partners' auction. In 32 years, Reid said he's only seen two or three successful auctions. Reid expects a slow recovery. That's coming from surviving three previous recessions, he said. But consumer confidence is growing, he added. "I think it will feel like a recovery the second half of the year," he said.