It’s Summer time! Let’s talk about “Bubbles”

Dean Laird — Thu, 06 Jul 2017 19:06:04 +0000

“Are we back to the bubble of 2007?” is a common question that we are asked as real estate professionals. It’s a tough question to answer because we don’t have a crystal ball, however we can look at the contributing factors of the prior bubble and subsequent burst, and attempt to make some professional conclusions. In general, my answer is “yes perhaps, but I’m hoping we are more insulated or protected than we were during the previous bubble so the burst doesn’t hit us so hard. “

But to dig a bit deeper, we need to consider if the question relates to the Steamboat market or the macro US market. If the macro market experiences a burst, Steamboat WILL experience the effects, albeit a tad delayed, which is historically typical. So, what contributed to the ‘07 bubble nationally? Experts contribute it to 4 factors;

Low mortgage interest rates, fueled further by foreign investor confidence.
Low short-term interest rates which contributed to more ARM loans and extreme leveraging
Relaxed standards for mortgage loans, encouraging subprime loans and other problems…. Prior standards expected that most mortgages were 30-year fixed rate loans requiring a down payment of at least 20 percent or mortgage insurance if the 20 percent down payment requirement were not met. The borrowers also had to prove that their income was sufficient to ensure that the monthly mortgage payments would be manageable.
“Irrational Exuberance” – A term defined by Robert Shiller as “a heightened state of speculative fervor.” “In practice, all the participants who contributed to the housing bubble (government regulators, mortgage lenders, investment bankers, credit rating agencies, foreign investors, insurance companies, and home buyers) acted on the assumption that home prices would continue to rise.

The combination of all four causes created a type of “perfect storm” causing the housing bubble to be extreme and the resulting credit crisis to be severe.” But, according to an article written by Jeff Holt*, the primary contributor was factor 4. Irrational Exuberance. “The housing bubble would not have occurred without the widespread belief that home prices would continue to rise. Irrational exuberance contributed to the other three causes. Mortgage interest rates would not have been so low if foreign investors and credit rating agencies had not believed that U.S. home prices would keep rising. Low short-term interest rates would not have led to such extensive use of ARMs and such a high degree of leveraging without irrational exuberance. And relaxed standards for mortgage loans would not have led to such a large increase in subprime mortgages without irrational exuberance.”

I, for one, got caught up in the “Irrational Exuberance” and I know that I am far more conservative in my thinking, spending and investing than when I wore my invincible armor of 2007. I’d like to think we all are more conservative and thus, more protected from the effects of a burst.
Source: https://www.uvu.edu/woodbury/docs/summaryoftheprimarycauseofthehousingbubble.pdf

To contact Dean, call at 970-846-8284.

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2014 First Quarter Luxury Real Estate Sales

Thu, 03 Apr 2014 19:09:56 +0000

The luxury market in Steamboat continues to improve following the national trends that “luxury is back”. In the first quarter of 2014, there were 18 sales of property over $1 million ranging from a Storm Meadows townhouse at $1,025,000 to the Red Bell Ranch which sold for $5,700,000. The average selling price was 92% of asking price.

Here are the properties:

Development	Address	BR	Days On Market	Sold Price	Asking Price	% of Asking
Trails @ Storm Meadows	2335 Storm Meadows Drive, Innsbruck #6	Four	28	$1,025,000	$1,100,000	93.18%
Mountain View	540 Cheyenne CT	Five	60	$1,070,000	$1,100,000	97.27%
Tree Haus	36861 Tree Haus Drive	Four	228	$1,100,000	$1,249,900	88.01%
CrawfrdAddtoSS	197 Hill Street	Three Plus	260	$1,125,000	$1,139,000	98.77%
Olympian Subdivision	35 5th Street, Unit 403	Three	1100	$1,191,697	$1,349,000	88.34%
Olympian Subdivision	35 5th St. Unit 401	Three	1091	$1,235,000	$1,298,000	95.15%
1St Add To Ss	844 Aspen Street	Three	145	$1,300,000	$1,595,000	81.50%
Ski Ranches Subdivision	2330 Val D’Isere	Four	329	$1,368,500	$1,398,500	97.85%
North Meadows Subdivision	1910 Christie Drive	Three	88	$1,500,000	$1,685,000	89.02%
Graystone on The Green	1295 Clubhouse Ct	Four	63	$1,520,425	$1,575,000	96.53%
Running Bear	2185 Bear Drive	Five Plus	93	$1,595,000	$1,595,000	100.00%
Graystone on The Green	1211 Clubhouse Circle	Four Plus	247	$1,750,000	$1,799,000	97.28%
Edgemont Condominium	2410 Ski Trail Lane, #2704	Three Plus	452	$1,850,000	$1,995,000	92.73%
OSP Condominium at Apres Ski Way	2250 Apres Ski Way	Four	259	$1,850,000	$2,195,000	84.28%
Anglers Ridge	820 Anglers Court	Four	293	$2,000,000	$2,195,000	91.12%
OSP Condominium at Apres Ski Way	2250 Apres Ski Way	Four	30	$2,025,000	$2,295,000	88.24%
Dakota Ridge Subdivision	35925 Agate Creek Rd	Five Plus	330	$2,862,500	$3,295,000	86.87%
Other	42155 Fern Hill RD	Four Plus	280	$5,700,000	$6,600,000	86.36%

If you are considering buying or selling a home in Steamboat, give Eliese a call at 970-846-8284.

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It’s Summer time! Let’s talk about “Bubbles”

2014 First Quarter Luxury Real Estate Sales