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Old 10-03-2011, 03:36 PM
 
8,317 posts, read 25,181,256 times
Reputation: 9066

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Here's a horror story that I know about that proves wanneroo's point. I know of a particular mountain condo complex where units were selling for $220K+ just 3-4 years ago at the peak of the "bubble." Because they were somewhat cheaper even at that ridiculously high price than some nearby properties, people completely ignored their inferior construction quality and substandard maintenance. Today, probably half or more of the units of the complex are in default, if not already in foreclosure. They are selling for as low as $35K, partly because the HOA is looking at having to assess somewhere between $50K and $100K+ per unit to remedy all of the substandard construction issues, deferred maintenance items, and other problems with the complex. Not to mention that HOA dues are probably not being collected on at least half of the units. A fellow I know who knows some of the people still owning units in that mess told me that some owners confided that they wished the whole complex would burn to the ground--they would come out money ahead. This complex is certainly somewhat of a worst case horror story, but it certainly is not alone in having serious problems--there's a ton of 'em like that out there.
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Old 10-03-2011, 04:40 PM
 
9,817 posts, read 19,078,228 times
Reputation: 7546
Quote:
Originally Posted by jazzlover View Post
Here's a horror story that I know about that proves wanneroo's point. I know of a particular mountain condo complex where units were selling for $220K+ just 3-4 years ago at the peak of the "bubble." Because they were somewhat cheaper even at that ridiculously high price than some nearby properties, people completely ignored their inferior construction quality and substandard maintenance. Today, probably half or more of the units of the complex are in default, if not already in foreclosure. They are selling for as low as $35K, partly because the HOA is looking at having to assess somewhere between $50K and $100K+ per unit to remedy all of the substandard construction issues, deferred maintenance items, and other problems with the complex. Not to mention that HOA dues are probably not being collected on at least half of the units. A fellow I know who knows some of the people still owning units in that mess told me that some owners confided that they wished the whole complex would burn to the ground--they would come out money ahead. This complex is certainly somewhat of a worst case horror story, but it certainly is not alone in having serious problems--there's a ton of 'em like that out there.
I also know of a number of places I suspect or know for sure those types of things occurred as in 2006 it became obvious the market was showing signs of imploding and suddenly there was a grand rush to finish up projects already started.

There is one condo complex in Avon that was completely empty until this year for almost 2 years with a whole array of issues and now apparently some of the condos have been sold in a fire sale. However, it's my understanding there is much work to be done and in addition what work that has been done would be suspect in my eyes.

I think there are some that think this is just a little dip and then we will ride a big boom up again, flipping all along the way. I don't think so. The perfect storm of a good economy, low interest rates and very liberal lending standards are gone for a long time, decades maybe. Especially considering that mountain real estate is a luxury item one can do without, that is even more susceptible to these issues.

I just don't see the demographics, finances or that perfect storm listed above coming together anytime soon to inflate mountain real estate prices again for decades.

On a long term investment, the people that I have seen that have made real money in Colorado real estate were people that:

1. bought raw land in key areas and sold it some distance into the future.
2. got paid to develop and build properties, including successful marketing to convince people they HAD to buy there, such as Bachelor Gulch(a vast collection of multi million dollar properties that are rarely occupied).
3. bought finished homes and condos during market downturns and then aggressively, locally managed their own collection of properties, putting their own time into fixing them, maintaining them and marketing them.

As an example of how over valued I think things are, the original luxury homes on Mill Creek Circle in Vail, were built for around $30000 in 1962-63. In 2011 dollars that is $225,000. Now some of those original homes are gone and new homes built in their place, but now you are looking at millions of dollars for a place on that street. One might argue Vail is more developed resort now and more well known, but it the value really so exponentially higher?

I think the RE market has a way to go to get back to realistic historical values. Maybe the baby boomers can afford that, but my generation isn't going to have the money for it.
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Old 10-03-2011, 07:11 PM
 
Location: Durango, CO
169 posts, read 319,228 times
Reputation: 257
I couldn't agree more with what wanneroo and Jazz wrote. I'm new to the area but I don't think one has to be a brain surgeon to decipher that a crash in Colorado resort real estate is coming. The Average Joe can't afford the prices and those who can are sitting idly, waiting for the inevitable bottom to fall out before doing so.
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Old 10-10-2011, 12:08 PM
 
Location: Ferndale, MI
85 posts, read 297,987 times
Reputation: 55
Default Validation from the Financial Times

Quote:
Originally Posted by wanneroo View Post
I also know of a number of places I suspect or know for sure those types of things occurred as in 2006 it became obvious the market was showing signs of imploding and suddenly there was a grand rush to finish up projects already started.

There is one condo complex in Avon that was completely empty until this year for almost 2 years with a whole array of issues and now apparently some of the condos have been sold in a fire sale. However, it's my understanding there is much work to be done and in addition what work that has been done would be suspect in my eyes.

I think there are some that think this is just a little dip and then we will ride a big boom up again, flipping all along the way. I don't think so. The perfect storm of a good economy, low interest rates and very liberal lending standards are gone for a long time, decades maybe. Especially considering that mountain real estate is a luxury item one can do without, that is even more susceptible to these issues.

I just don't see the demographics, finances or that perfect storm listed above coming together anytime soon to inflate mountain real estate prices again for decades.

On a long term investment, the people that I have seen that have made real money in Colorado real estate were people that:

1. bought raw land in key areas and sold it some distance into the future.
2. got paid to develop and build properties, including successful marketing to convince people they HAD to buy there, such as Bachelor Gulch(a vast collection of multi million dollar properties that are rarely occupied).
3. bought finished homes and condos during market downturns and then aggressively, locally managed their own collection of properties, putting their own time into fixing them, maintaining them and marketing them.

As an example of how over valued I think things are, the original luxury homes on Mill Creek Circle in Vail, were built for around $30000 in 1962-63. In 2011 dollars that is $225,000. Now some of those original homes are gone and new homes built in their place, but now you are looking at millions of dollars for a place on that street. One might argue Vail is more developed resort now and more well known, but it the value really so exponentially higher?

I think the RE market has a way to go to get back to realistic historical values. Maybe the baby boomers can afford that, but my generation isn't going to have the money for it.
Just got some validation of your comments from this article in the financial times (Oct. 7th) Conditions on the slopes - FT.com
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Old 10-10-2011, 03:55 PM
 
1,742 posts, read 2,628,280 times
Reputation: 1923
I don't think this new law will help resale values either.
'toy ranches' lose tax break with new law | koaa.com | Colorado Springs | Pueblo |
RP
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Old 10-10-2011, 03:57 PM
 
20,378 posts, read 37,934,905 times
Reputation: 18194
Quote:
Originally Posted by proveick View Post
I don't think this new law will help resale values either.
'toy ranches' lose tax break with new law | koaa.com | Colorado Springs | Pueblo |
RP
I like that. I'm tired of such gimmicks. Maybe they'll find more to close.
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