Vail Homes

A wonderful new home displaying the latest science in “Green” construction is now nearing completion at 2338 Chamonix Lane in West Vail.  Bob Stephanoff, builder/owner of the new spec home, admits it costs more and takes a good deal more effort to build a truly “Green” home, but it’s worth it.  Read the full article by clicking this link:  

http://www.realvail.com/RealEstate/259/New-home-breaks-environmental-ground-in-Vail.html
 

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     Human nature will not let anything of consequence happen until there seems to be no other choice.   Residents of the mountain communities as well as front range commuters to the ski resorts have been witnessing a rapid collapse of the the I-70 corridor from Denver to Vail for some time now.  Traffic during holidays and weekends has started to try the patience of just about everyone.  Unfortunately, up until now, there has only been bickering between the groups who think they have a solution to this vexing problem.  With numerous lengthy closures to I-70 this winter, traffic to and from Vail is now becoming the 800# gorilla that requires consensus…..NOW.

      Last week, longtime adversaries in this multifacited argument evidently came to terms on a compromise solution that will start attacking the problem of how we get there and get back.  For years now, the Colorado Department of Transportation (CDOT) has been advocating more of the same - adding additional lanes to the I-70 corrider.  The opposition, which includes many of the moutain communities along the I-70 corridor, have resisted widening the highway and have been lobbying for some new solutions, including investigation of either a rail system or even a monorail system that could link Denver International Airport to Vail -Eagle Regional Airport.  The agreement includes widening of several sections of I-70 in current bottleneck areas but not through the opposing communities of Idaho Springs and Georgetown.  This would require another tunnel bore at the Idaho Springs Twin Tunnel and most likely a third bore for the Eisenhower Tunnel.  In addition, widening of I-70 from Silver Plume through Summit County, improvements to Vail Pass and several interchange upgrades would be accomplished.   In return, CDOT has finally committed  to consider a mass transit system - something they have been doggedly fighting for years.

       Everyone party to the agreement admits that the proposed changes are limited in scope and effectiveness.  Naturally, this progress will require tons of impact studies - all of which will be the basis for many colorful fights to come.  By CDOT’s estimates, it will take until 2020 to fund and build these limited improvements.  No estimate has been offered as to when a mass transit system can be agreed to.

       As always, public works projects take a lot of time and it will take until at least 2020 to fund and complete even the limited proposed improvements.   It is unfortunate that the plan everyone seems to have agreed on (though not yet documented) is at best a band-aid that will obviously be inadequate even before it has been completed.  Indeed, one CDOT study reveals that by 2020, traffic congestion that is now common to weekend and holiday travelers will by then be a daily event.    I personally believe that the only real fix to the problem is providing modern, high speed public transit to and from the lifts.  While many are saying  that Americans won’t use mass transit, it’s becoming more and more apparent that we just can’t continue to do things the old way.  The choice between a relaxed, weather-worry-free, one hour ride to the slopes versus a nerve-racking 4 hour drive (each way) at $10 per gallon seems to me to be a no brainer.   Opponents argue that the technology a monorail system that would fulfill our needs doesn’t exist.  Then again, we put a man on the moon.  We need an Out of the Box solution here.  Perhaps this agreement between factions who have been warring for 10 years is the first step.

John Nilsson 

In a totally unexpected and unprecedented move, Vail Resorts (the parent company of the Vail skiing experience), has come up with something unbelievably novel: They have made a lift ticket at their 5 world class resorts LESS expensive…..and they have done it in a very big way.

Just last week, the Boulder, CO based owner of Vail Mountain announced the Epic Ski Pass. And EPIC it is. Instead of raising lift rates for next year as they have since Vail’s inception in 1962, they have slashed the price of a lift ticket by offering a full season, unlimited and unrestricted pass for only $579.00. This price goes to anyone who wants to step up and put down a $49.00 deposit. I don’t think I need to elaborate how exciting this is when you consider a single day lift ticket here in Vail costs $92.00 right now and a comparable full season ski pass for this season set you back over $2,000.00. The Epic Pass is good for all 5 Vail Resorts owned ski areas: Vail, Beaver Creek, Breckenridge, Keystone and Heavenly Valley (you can ski any of them on the same pass) and there are absolutely no “blackout days”. You now have a complete season of unlimited skiing available to you at the same price as this year’s limited 10 day Colorado Card!

What’s the Catch? There ain’t any.

What a refreshing idea: Provide the absolute best skiing experience at a dramatically lowered price. This move will undoubtedly greatly enhance Vail’s brand loyalty and will have unparalleled positive ramifications on our Valley’s economy. Every other ski area owner/operator must be choking! Get your Epic Pass now (don’t wait as prices will most likely go up) by logging on to www.snow.com and clicking on the Epic Pass link. You can reserve your pass for $49.00. I’m sure I’ll see a lot more of you next year! Way to be, Vail Resorts!!

       So says Treavor Theelke at Land Title Guarantee in his monthly sales activity report. I’d say he’s right. Eagle County sales, which were showing a downward trend in the last quarter of 2007, turned in the lowest number of transactions since 1996 with 104 sales - just 72% of sales recorded in January of 2007. The high end of the market remained strong in January with 6 transactions of over $4,000,000. Conditions in the national market are obviously coming to roost here in the Eagle Valley.

       What does this mean to you and I? First, we can no longer cruise along with our heads in the sand fantasizing that we are insulated from national economic upheavals. Even though our area is financially much stronger by a long shot than most of the US, we must eventually fall victim to at least the increasingly dour media that pervades our modern life. Even people who now have cash to spend on a vacation home in Vail must be injecting into their buying decision some consideration of the general financial markets and how the drying up of liquidity will effect them in the near future. Once we accept that 1)real estate is cyclical (I’ve seen 3 such market adjustments in my 32 years in the local real estate business) like just about everything else, and 2) that down-cycles beget up-cycles and are, in fact, healthy for the market, things don’t look so bad.

       To date, neither Sonnenalp Real Estate nor I have felt the negative effects of the national real estate/financial malaise but it is my feeling that we are in the midst of a major readjustment in our local supply/demand equation. Demand is dropping, supply is expanding, and it’s a fact of life that Buyers always realize this before Sellers realize it (or want to accept it). Deals are not getting done now and won’t get done until Sellers accept the fact that more and more Sellers are starting to chase fewer and fewer buyers.

       A positive approach is the only way to solve any problem. No matter what the condition of the Market, Real estate changes hands due to a successful blending of Price, Terms, Condition and Marketing. As a Seller in a tightening market you must be even more adept in your understanding of these factors to be competitive. You’ve got to stand out in every way you can.

       First, the Condition of your property must be as good as it possibly can be. Know that there are most likely 3 or 4 properties that are similar to yours that bear that rarer buyer’s attention. Maybe now is the time to sit down and analyse what should and must be done to improve your property’s condition. Anything “Dog Eared” will kill you. Also, make sure everything from windows to carpet to furniture is spotlessly clean. Attention to detail is all-important now.

      Second, make sure your marketing team is aggressive and visible and has a positive, problem solving attitude. It’s really easy for a broker or a brokerage company to get depressed in a slower market and stop doing the right things - like spending money on marketing your property! The wrong attitude here can be devastating in a slower market.

       The Third Factor - Terms - is not currently an issue with interest rates low and a lot of cash in the pockets of Buyers. Know, however, that a liquidity crunch will effect even the strongest of Buyers. While they may have cash for your property, if a business loan dries up that cash is going somewhere else other than into a vacation home! It may soon be the case that “creative financing” and owner carry financing will again be an important factor in getting a sale finalized.

       Finally the Painful Factor….Price. If you’ve paid attention to the three previous parts of the equation and your property is still sitting, you must accept the fact that it is up to you (and only you) to bridge the gap between your property and the market by adjusting your price downward to meet the buyer’s requirements. That Buyer is certainly not going to come up to you in this market! When all else is said and done, only the realization that bringing your property’s price in line with the new supply/demand reality is going to get the job done for you.

       One last bit of advice to Sellers if they want to be successful in today’s real estate market: 1) Most real buyers in today’s market are not trying to steal from you. They just have a vastly larger load of reasons why they should not buy your property, and 2) If you find a real Buyer for your property, treat that Buyer like he is the last Buyer you are going to see for the next 12 months (he quite possibly may be)…. and then act accordingly!

John Nilsson

Eagle County property owners knew their valuations had gone up several months ago. Every two years the State of Colorado requires Counties to re-assess local property values to reflect current actual valuations. Counties carry out this task and notify property owners of their actual valuations at the end of the appraisal period. These property owners then have a period of time to contest their valuations. No one was surprised to find that valuations have risen dramatically over the last two years in Eagle County - in some cases as much as 40% to 50%.

The problem came home to roost last month when tax bills were sent out. While most owners knew their valuations had gone up dramatically, the common understanding was that actual property tax increases were limited by state statute to a small percent per year due to a bill past several years ago by representative Doug Bruce. The “Bruce Bill” limited increases in tax collections to a small percentage per year no matter how much the actual valuation increased. Unfortunately, individual counties were given the the right to “De-Bruce” their tax billings by public vote and many counties, including Eagle County had off-year referendums authorizing this “de-bruseing”. Many voters did not understand the ramifications of approving these referendums - in fact, there are now no limits to how much the individual taxing districts can raise their individual mill levy requests. Thus, many local property owners are facing property tax increases of over 40% this year. Painful as it is to most local property owners, Eagle County Property Taxes are still very reasonable when compared to many other parts of the country.

For more information, please see the following link: http://www.vaildaily.com/article/20080218/NEWS/618114539

The legality of performing an IRS Section 1031 Exchange for your vacation home has always been a big gray area. The general rule for a successful 1031 exchange is that both the acquired property and the relinquished property must either be held for investment or productive use in a trade or business. While many second home owners rent their properties and technically have been holding them with the expectation of investment return, the personal use by the owner has thrown doubt as to Section 1031 qualification.

Now, according to a new release prepared by Marvin A. Kirsner, Greenberg Traurig LLP, Boca Raton, FL (561-955-7630) and forwarded to me by Jame Mikes, under this new Safe Harbor ruling, second homes would be i for 1031 exchange treatment if:

1. The property has been held for at least 2 years

2. The property as been rented at fair market rental value for at least 14 days per year during this ownership period.

3. The taxpayer’s personal use does not exceed the lesser of 14 days per year or 10% of the number of days the property is rented to others.

These safe harbor requirements apply to both the the relinquished property and the acquired property so beware: if the acquired property is not used per these regulations during the future period of ownership, the taxpayer is required to file an amended return disallowing the 1031 status!

As with all IRS rulings, there are many intricate interpretations of this new Safe Harbor so be sure to contact your personal tax consultant for advice to be certain your transaction crosses all “T’s” and dots all “I’s”. While the Safe Harbor delineates only limited personal use, it does, for the first time, provide some clarity to a question that was often interpreted many different ways.

Please feel free to contact me for a copy of Revenue Procedure 2008-16 which documents the new Safe Harbor.

John Nilsson

According to Treavor Thelke, Land Title Guarantee, 2007 Eagle County real estate sales reached nearly $3 Billion, setting an all time record and surpassing the previous record set in 2005 by more than $160 Million. In addition, 2007 sales totals exceed the highest overall sales price ever in Eagle county with the average price for all transactions at $1,101,375, nearly 25% over last years average sales price!

In depth analysis of the the statistics, however, shows some developing trends that mirror the wider national market.

1. While the dollar volume reached an all time high, the overall number of transactions were 2,688 - the lowest since 2003. This tells us that the upper end of the market is where the strength is - helped along by 96 transactions over $4 Million. The lower end of the scale has slowed.

2. Most of the year 2007 gain occured in the first 6 months of 2007 where the numbers showed marked dollar volume increases over 2006 corresponding months of between 117% to 169%. The last three months of the year showed a dramatic monthly decreases in dollar volume over 2006 at 92%, 72%, and 81% respectively - a definite indication that the real estate market cooled in the last three months of the year.

IN SUMMARY: 2007 was a record setting year in the Valley for real estate sales - a result of a very, very hot 1st quarter and high demand for the upper end properties. The lower end of the market (under $3,000,000) slowed significantly throughout the year. It appears that the first quarter of 2008 will show a continuation of this trend.

Please feel free to contact me for more discussion on this subject and specific backup for my conclusions at 970-390-7600.

VAIL, COLORADO – Sonnenalp Real Estate is offering the first Arrabelle at Vail Square residence ready for occupancy, providing an inside look at the highly anticipated project. The five-star hotel and residence complex, which opened in late December, represents the highest level of luxury and convenience, and combines the elegance of Europe’s grand resorts with Vail’s alpine heritage and world-class style.

The residence features an expansive four-bedroom, four and one-half bath floor plan, with over 3,800 square feet of living space and European-style finishes. Seven outdoor patios overlook the activity of the village—the ice-skating rink, water features and fireplaces. Residents can enjoy an intimate dinner in the private owner’s lounge, which features ski slope views and food from Centre V, the hotel’s in-house French brasserie. “Everything is so convenient,” says current owner Steve Slaughter. “I can go for a quick walk and pick up wine for dinner, or just grab a cup of coffee from the new Starbucks.”

Located in the heart of the newly developed Vail Square, The Arrabelle sets the standard in luxury alpine resorts. The hotel reflects the romantic heritage and ambiance of the European Alps, architecturally inspired by cities such as Innsbruck, Prague and Salzburg. It features 36 guest rooms averaging 550 square feet each, approximately 50 additional condominium lock-off units, a location steps from Vail’s Eagle Bahn gondola, a RockResort Spa and fitness center, and a variety of first-class amenities, ranging from rooftop pools and fine-dining restaurants to ski and boot valets.

The hotel’s dedicated, professional staff is available to make sure that every guest’s stay is as comfortable and enjoyable as possible. A personal concierge, located on each floor, ensures that every need and desire is met—no matter how large or how small. From ordering morning coffee and arranging daily activities to securing last-minute dining reservations, a personal concierge is available 24 hours a day.

Listing broker Donna Caynoski asked concierge Justin what he offers guests and owners. “I simply ask them to describe their perfect vacation to me with every detail,” he said. “Once they offer this, I am off to make sure all of those details are fulfilled.”

Sonnenalp Real Estate is a recognized leader in the luxury real estate market, representing buyers and sellers of the Vail Valley’s most distinctive properties. Its exclusive affiliation with Christie’s Great Estates—a subsidiary of Christie’s International—provides worldwide reach to affluent clients on six continents.

As a member of the Christies Great Estates network, Sonnenalp Real Estate is privy to a great deal of high end real estate market news. According to a press release on January 23, 2008 entitled “The State of the High End Market”, things are going very well indeed - despite the evident slow down in the rest of the market. According to reports from Chisties Members:

Brown Harris Stevens in Manhattan has seen a 51% spike in the average price of condominiums.

According to Avram Goldman of Pacific Union, San Francisco is faring well in the north and south. The high end in San Francisco is strong and vibrant.

Charles Manger of Brown Harris Stevens, Hamptons and North Fork says that according to their database, 50 homes priced over $5 Million have either sold, gone to contract or had an offer accepted in the past 2 months.

Brown Harris Stevens in Palm Beach: Sales have remained steady with the number of single family homes sold increasing by 12% in 2007 (compared to 2006) and the average price of a single-family house has rizen nearly 16% in 2007 to $5.3 million.

The San Antonio market is phenomental according to Phyllis Browning, Phyllis Browning and Company. “We are experiencing multi-offers on residential properties, and there are buyers for $2 Million plus homes. In the last week of December and in the first week of January, our office closed two properties, each over $4 Million.”

Jeff Hyland, Hilton & Hyland, Beverly Hills: All our high ent properties ($10 million and above) are selling for more than they would have a year ago. We continue to have little inventory and any seller who does not sell today can easily wait another year. In the rarefied air of expensive properties, no one needs to sell until they get a price they are happy with. If any house were to drop twenty percent there would be a mad rush to purchase with people jumping over each other to get an acceptance. A property just came on the market at $85,000,000 on Friday and there have been 11 showings so far-two were mine. We just closed two week ago on the most expensive sale ever in Pacific Palisades at $16,000,000.

So……It seems that reports of the death of the real estate industry are a little blown out of proportion. We here in Vail’s upper end market are experiencing a truly excellent market with sales of 5 properties over $5,000 since January 1. Admittedly, the “sub prime” disaster is just exactly that: a disaster. So far the Vail Valley has been insulated from what is happening in other parts of the country and in lower income markets. Our real estate market continues to perform in a Blue Chip manner!

If you’ve tried to drive to Vail (or home again) on any busy winter weekend, you know that traffic is a real issue. You’ve got to know this concern is becoming big time when the politicians start jumping onto the issue.

Under a proposed plan by Colorado State Senator Chris Romer (D-Denver), weekend skiers could be charged as much as $12 per one-way trip for using I-70 between the hours of 6:30 am and 8:30 am on Saturdays and Sundays. Nothing was published about timing of the return trip. Obviously all the details of the proposal have not seen the light of day. Romer says his plan could reduce “rush hours” traffic by 10%.

Romer’s plan also specifies that those who sign up to miss the rush hours would get a rebate check in the mail for $24 just for waiting out the traffic. It will be interesting to see how Romer plans to administer this angle.

Reaction, far from mixed, has been centered around the fear that skiers would “just say no” and stay home to watch football. Buzz Schleper, owner of Buzz’s Ski Shop in Vail Village: “It would kill the ski industry. You can’t tax skiers extra - they will just stop coming. We’d be the laughing stock of the entire ski industry”. Furthermore, there was no mention of how the revenues collected from this endeavor would be spent (assuming they didn’t all go to paying for the “rebates for those who signed up to miss the rush”). Note: I’ll be happy to sign up for that rebate every Saturday and Sunday from now on!

It’s my feeling that essentially turning I-70 into a toll road could be justified as long as 1) Everyone who used the highway paid a fee - truckers and folks just driving to Grandma’s house included - and 2) The collected funds were used to fund a new high speed rail system from DIA to Eagle County Airport. Only through biting the bullet and embracing the need for a new solution to the traffic problem are we ever going to get a handle on it.