Grand County real estate recovery slow, steady
March 5, 2015
Tax revenues seem to suggest the recovery of Grand County's tourism economy is in full swing, but the real estate market has been a bit slower to rebound.
Total real estate transactions in 2014 were down slightly from the year before, according to data from the Land Title Guarantee Company.
However, gross volume was at its highest since 2008 at $425.5 million, up around 30 percent from 2013, according to the data.
The data paints a complicated picture, though it seems to suggest a recovery is under way.
The market in Grand County tends to be heavily influenced by the state of markets elsewhere, said Scott Berger, the county's finance director.
"Over 60 percent of all the properties in the county are owned by people who don't live here," Berger said. "Until people who don't live here start buying again, we're just not going to see that construction element in the county recover."
Leslie Larkins, vice president of Land Title Guarantee Company, echoed Berger's sentiment, saying the Denver Metro area economy tends to influence the market in Grand County.
"I think we're seeing the Grand County market just starting the recovery," Larkins said. "We tend to follow the Denver Metro area by about three or four years."
Land Title Guarantee Company gathers data on real estate markets across Colorado using public records.
Larkins pointed to the increase of average prices and the drop in short sales and bank sales as indicators of a nascent recovery.
"Our metro offices were so busy four years ago, and I think the Denver market has made a full recovery," Larkins said.
Likewise, what had been a trickle of contracts coming into the company's Winter Park offices since 2007 showed a marked increase in the second half of 2013, Larkins said.
That's good news for Grand County.
Though lodging tax in the county set a record in 2014, sales tax revenues were still below pre-recession levels.
A robust real estate market would boost sales tax revenues and the county economy in general.
"Until real estate recovers, the contractors and all of the construction employees aren't going to come back and have work and spend money," Berger said. "So then sales tax will probably take a big jump, but right now I think it's all about tourism from a county-wide basis."
But the most important benefit to the county from a strong market would be increased property values.
Property taxes are the county's biggest source of income, Berger said. Property values are assessed based on real estate sales in the previous 18 months.
The county is reassessing property values this year, though Berger said he doesn't anticipate values to increase.
"Until we have a history of increased sales, we're not going to see assessed values go up, so our property tax revenues aren't going to go up," Berger said.
Based on data from 2014 and the beginning of 2015, Berger said he did anticipate values, and county revenue, to increase after the county's next reassessment in 2017.
Shrinking inventory could spur building
Low inventory could partially explain the substantial increase in volume from 2013 to 2014, Larkins said.
Stuart Huster, broker/owner of Coldwell Banker Mountain Properties in Winter Park, said inventories have been shrinking across the board since last summer.
Some specific categories, like condominiums priced between $100,000 and $200,000, have shrunk especially fast, going from overabundant to depleted, Huster said. Prices have yet to catch up.
"Prices have remained flat for six years, and I think we're about to see our first shift and prices will begin to increase this summer based on the drop in inventory," Huster said.
Larkins said she expected building to increase to meet what has recently been a steady demand.
For Huster, the uptick has already begun.
He's currently overseeing a new development at Lakota.
"We just built our first spec, and it's under contract and scheduled to close in April," Huster said. "And I'm going to be building duplexes this summer."
Market lags behind neighboring counties
While total real estate transactions fell in Grand County last year, they increased in neighboring Summit, Eagle, Routt and Pitkin counties, Larkins said.
Transactions in Grand fell by 2.9 percent last year, according to Land Title Guarantee Company. New construction as a percentage of gross sales also fell in Grand County while increasing in neighboring counties, according to the data.
That's partially because those counties had more robust markets before 2008, Larkins said.
Grand County's year-to-year volume increase, driven by Front Range investors, did exceed those of the counties mentioned, Larkins said.
"I think we're a little bit behind other resort towns, but I think 2014 was a good year," she said.
Larkins, Huster and Berger all agreed that 2015 should be even better.
"I think that, barring anything unforeseen, we should have our best summer of real estate sales that we've seen in the last six years," Huster said.