Tuesday, August 04, 2009
The Steamboat TODAY newspaper recently printed the first of a 5-part series regarding the real estate market in Steamboat. This first segment is titled “House of Cards” and depicts a struggling housing market in our town.
Sufficed to say that property values have declined since their record highs in 2007, but I think we can count ourselves lucky that relative values are still holding strong. Let’s be honest, we witnessed record leaps in sales price over the last decade. Properties were appreciating at stupendous rates. Total dollar volume of Routt County home sales more than doubled in just four years from 2003-07. The typical home owner saw their equity in real estate increase by six figures in the span of just 5 years. Practicing a little conservatism in borrowing, these people find themselves in a good position right now. It’s those that got swept up in the storm of the buying frenzy and borrowed irresponsibly against their home’s value that are now experiencing difficult times (thank you sub-prime mortgage lenders for that one).
The TODAY is quick to predict that the arrival of the next increase in property values might not be for a few more years. Author Tom Ross then goes on to say that the future of real estate development might “never be the same.” Same as what, I ask. Buying over-valued property in the hopes of building high density projects to turn for a quick profit? Perhaps that’s not such a bad thing. Perhaps serious developers should take this as a lesson to truly evaluate the needs of the community and the economy we’re building here and crawl before they run without careful planning.
And in the grand scheme of things, is a few years practicing a “buy-and-hold” strategy of investing really a big deal when it comes to realizing gains on real estate? What has happened to the idea of buying property for both the enjoyment of ownership as well as the potential for profit? For those with the means, this flattening of market prices in Routt County should be taken as a sign that now is as good a time as any to buy. Think about what folks like Warren Buffett would do. This market correction needed to happen eventually and now its here. This is the time to seek opportunity, not be overwhelmed by naysayers spouting doom and gloom.
If history has taught us anything, it’s that real estate in coveted communities such as ours, with good planning and solid infrastructure, will rebound. Don’t wait 5 years and wonder “What if I had bought when prices had flattened?”