I was speaking with a fellow REALTOR® here in Park City last week and she stated that she was surprised that prices here in Park City and Deer Valley hadn’t fallen as much as she had expected. While news articles from around the country show home values dropping as much as 30%, Park City hasn’t seen very dramatic price changes. Many people ask “why?” Here are some of the contributing factors.
The reasons vary somewhat according to the property involved; primary residences and second or vacation properties. In this article we’ll focus on the latter. Second homes and vacation properties are a luxury item and they are bought by people that can afford them. As much as 70% of Park City and Deer Valley area property can be attributed to second homes and vacation property. The majority of these property owners have relatively small or no mortgages on these properties and most have an “if it doesn’t sell at this price, I’ll just hold onto it” attitude. Few of the second home owners have a true need to sell. In the sellers mind, the property is worth ‘x’ and in time it probably will be. Sellers here in Park City have “staying power” and while overall sales volumes are currently down 45%, prices are holding somewhat steady. Sellers are willing to wait, and Buyers are not necessarily willing to jump at prices that have held steady which leads to more property on the market. This Seller’s resistance to drop their prices and ability to wait is a major reason that prices in resort towns don’t fall as much as national averages in a down market.
A driving force behind the national market downturn was the sub-prime and “risky” mortgages. Park City saw relatively few of these mortgages. It may seem odd from the outside, but few of the second homes with values over $1M have any mortgage debt at all. Historically, fifty percent of real estate purchases in Park City and Deer Valley are cash. In general even with as easy as credit was recently, it was still tougher to mortgage secondary homes as creditors know that if there is trouble, these are the first thing debtors walk away from. That is not to say that sub-prime mortgages in our market don’t exist or that there are no property owners that are in financial trouble, only that this number is smaller in relation to the Nation’s trouble spots.
Another reason that Park City second home and vacation property values have stayed strong is that things the have not changed much here. People still want to be here, whether it is to vacation or to live. Park City is a beautiful, easily accessible. The city offers endless recreational opportunities and a great climate. Park City’s economy has not been greatly impacted by the national “crisis”. In addition, the Utah economy has been touted as one of the best in the country. Finally, there is scarcity built into Park City. There are only so many places in the world that are like our city, and much of the town is truly “built out”.
These are some of the reasons that Park City has not seen a dramatic change in its prices as compared with other spots in the Country. That is not to say that prices in Deer Valley and Park City have not fallen; they have. As noted earlier, pricing remains fairly steady, but many of the properties that have sold were priced aggressively and represent pricing similar to 2005. There are good values and realty opportunities in Park City, and the situation for each seller is unique. Just don’t expect to see rows of homes for sale with foreclosure signs in every other window as you search for a place to live or vacation in Park City.
For more detailed information about recent price trends in Park City, Utah and Deer Valley, UT go to: http://www.youinparkcity.com/. Price trends, highs and lows, averages and days on market information is available for each Park City neighborhood.