Trying to get this train back on the tracks...

Here's a great article on the marketplace in the DC area;
http://www.mcenearney.com/tips/nova-marketwatch.php

Like others have stated, regardless of location, most realtors have a more than optomistic outlook on things.
Some are even so green that us common observers and homeowners know more about the local marketplace than the so called professionals.

On to vacation properties.. a good article on second homes from Money magazine;
http://money.cnn.com/2006/08/17/real_estate/vacation_home.moneymag/index.htm?postversion=2006082115

As far as Snowshoe, more homes are sitting on the market longer. Few are conceding on price, others throwing in incentives such as 6 months+ on HOA fees. Talking with some real estate and sales and marketing heads this weekend confirms this. However, they also state that they are ahead of 2005 sales YTD. Some developments are still smoking hot and others pretty dull. A great buffer for S'shoe is that they serve a huge regional area and are somewhat immune from the downturn in the overvalued markets such as DC. Also, Mountain property still looks like a bargain compared to 'water' properties. OBX properties are definitely seeing some price declines from the clouds.

The latest development (private) on the mtn is www.sawmillvillage.com, single family homes adjacent to Widomaker from $700K to $2.3M. These are pretty fat properties and very unique- it will interesting to see how they do. Loggers Run townhomes started in 2004 for $450K and sat for several months, then BAMM, they all sold in about 45 days. Current values run 650-700+.

The biggest question is the uncertainty of what the new owners will do with the mountain... hopefully we will learn more when the deal closes next month.

Ski areas around the Mid-A aren't built up like the Atlantic beach areas - including the Outer Banks now. Inventory in the mountains now is right around demand - maybe a still a bit lower. I think this should keep the market decent as long as the economy holds out.

The beach is a different story. Down on Hatteras there are a ton of houses - many are new since Isabelle 2 years ago. When I was there in August, seemed like half of them were for sale. "For Sale" signs lined the highway all the way back to Kill Devil Hills. Inventory there now exceeds demand - by a bit. Affordability is also a huge problem especially with the interest rate increases over the last couple years. It's next to impossible to find anything at the beach under $500K. The mid-sized oceanside house I rented was on the market for $850K.

I spent a weekend in Ocean City MD this summer also. I read some local newspaper articles about the real estate market there. One article (written by a realtor) acknowledged that the real estate market had cooled off significantly in OC. Prices were starting to recede a bit. But the author cautioned about investors/buyers waiting for prices to come down further. Given the prospect on rising interest rates for the next several years (today's rates are still pretty low from a historical perspective) any drop is housing prices would offset or overshadowed by the higher cost of money. Translation - It's still a great time to buy! (of course)....

The next 2 years will be interesting. Data shows that there are a large number of agressive mortgages scheduled to adjust increasing monthly payments by quite a bit for lots of home owners and investors. Some people will have to unload their properties to stay solvent. This will put downward pressure on home prices across the board - primary and second residences, regardless of location.

Another cloud on the horizon is tax reform. Many proposals on the table, including flat taxes, call for elimination of the mortgage interest deduction. What do you suppose that would do to the housing market?

I agree, the next two years will be a literal killer for many in the housing market, both primary and second homes. There have been several good articles on this recently; a single adjustment in many ARM's has bumped up mortgage payments by 50%, and the interest only loans are coming home to roost. A friend in the banking biz says their forclosure rate is already up 40% YTD.

I've been meaning to post this article for sometime. Its from August '03 but still very 'fresh' to todays marketplace. Hope the board moderators dont shoot me- i cant link it since it is a paid access archive. I just pulled my old hardcopy and will give all the proper credits.

This article is on beach houses but is also applicable to mountain property, etc. I leaned heavily on this article when researching my purchase at S'Shoe. It is one of my all time favorites and I hope you enjoy it;



Buying Castles In The Sand- Six things you need to know before you invest in a beach house.
By Elizabeth Razzi
Kiplinger's Personal Finance, August 2003

The surf is calm; the breeze is cool. Interest rates are absurdly low. If you could just buy a little beach house right now, you could ride the price up for a few years. Summer renters would help pay for it, and your family could enjoy the place all through the off-season.
If that logic sounds familiar, you may be a victim of the dreaded VRED symdrome: vacation real estate delirium. Beg someone to drag you into the shade, so you can cool down and think clearly.
If youre doing mental math beachside, youre not alone. New construction and resales in second home communities have been going gangbusters for years. On the Outer Banks of North Carolina, for example, construction added nearly 15% to the supply of homes in 2002 alone. And many of those new owners expect to rent the house for at least part of the year.
Unfortunately for buyers, rents on vacation homes havent risen nearly as fast as prices. Steven Sharman, a property manager for Prudential Resort Realty in Nags Head, NC, says buyers used to expect to pull in about 10% of the home purchase price in rent through the season. Now, thanks to rising prices, rents add up to only about 5-6% per season. He cites a ten bedroom house that recently sold for $2.65 million. It pulls in about $200,000 per year in gross rent. Only 13 months previously, the owner had bought it for $1.5 million. "When it was a $1.5M house, the $200K rental income offered very good cash flow," says Sharman. But its not so stellar now that the house is a $2.65M investment.
Before you give in to a sudden urge to buy, consider these points:

1. Beware the gin and tonic. Youre much better off with hot buttered rum. That is, if the deal still looks good in the off-season (especially if thats when youre likely to spend most of your time at the home), its more likely to be a winner. Buying a second home is a major decision. Take your time. Most buyers in Hilton Head, SC, buy during their third visit, says Dudley Woodard, president of Century 21 Advantage Properties.

2. Keep tabs on what renters want. That changes over the years- and it could be different from what you enjoy. You may be content to walk a few blocks to the surf, but renters pay to be as close to the ocean as possible. They also want big houses. On the Outer Banks, for example, houses with at least five bedrooms (and nearly as many baths) are popular with extended families. And that big house had better have a swimming pool, gas grill, hot tub, even an outdoor fireplace, says Sharman. An elevator wouldnt hurt. "Ten years ago, if you told me you'd need a pool at your house at the beach in order to rent if, I would have laughed," he says. No more.

3. Figure in management costs. You dont get to keep all the rent, and management fees eat up a larger share of rent on a less-expensive property. Prudential Resort Realty charges 10% to 25% of rental income for advertising, handling contracts, cleaning and the other hassles of overseeing week to week rentals. The smaller cut applies to the big, ocean front houses that rent for as much as $11,000 per week at the height of summer.

4. Plan to refurbish every few years. "Renters want homes that are clean, fresh, and modern- to the point of newness," says Joan Talmadge, who owns All Seasons Vacation Rentals, in Cape Cod, Mass. Replacing many of the furnishings every three to five years is an expensive proposition. And in those luxe beachside houses, renters expect lots of up-to-date toys, such as TV's, stereos and DVD players.

5. Brace yourself for discounting. "The more anxiety it draws, the sooner it goes on the 'specials' page," says Ross Twiddy, and agent who handles rentals for Twiddy & Co., on the Outer Banks. "With some owners, if it doesnt rent for a week, they'll come and use it themselves. Others lose sleep if every week is not booked up well in advance." Thanks partly to lousy weather along the East Coast this spring, there were plenty of "specials" to choose from as late as mid June. The more other owners get the jitters, the less your chance of holding out for full price.

6. Expect heated competition. You'll need to advertise aggressively. Photos on the Internet are a must, agents say. Renters want to see pictures of the inside and outside- and of the view. They are especially cost-conscious this summer and are using the Web to hunt down the best house for the money. "In years past, I dont think you had to be that good, frankly," says Jeff Talmadge, co-owner of All Seasons Vacation Rentals. "Demand was so strong that most of us with homes to rent were getting a little comfortable with what we could charge- or with the lack of effort we had to put into renting it."

Insert from article; Homes- Look who's buying- The typical owner of a second home is 61 years old with a household income of $76,900, according to the National Association of Realtors. Most never rent their home. One in six owners older than 55 plans to make it his or her primary residence after retirement.
-Reporter: Katy Marquardt

Great article. When we were looking at buying an investment property a couple years ago in the valley, the realtor noted the same thing about rental prices not keeping pace with property values and mortgage expenses. He said that his firm - Canaan Realty - was looking to adjust the rental prices upward to align them more closely with the rising monthly mortgage costs. The problem I had with this model is that what I am willing to pay for an investment is based on an entirely different value framework than what I am willing to pay for a weekend rental.

As the economy has slowed, inflation risen, and wage growth stagnated people start to cut back - vacations are one of the first discretionary expenses to go. This puts downward pressure on rental fees, while mortgage lenders don't feel the same pain. Also, at least in the Valley - there are only 2-3 weekends all year where it might be a little hard to find a decent rental. Most other weekends, people looking to rent have a large number of houses to select from. The exception would be slopeside rentals - where the rental inventory at Timberline is extremely low. But that advantage only holds during the 13 or so weekends of winter. During the off-season, there is no advantage, in my opinion, to staying slopeside at a resort like Timberline that has a pretty limited summer and fall calendar of events.

For higher rents to take hold, all major property owners and management companies - including the hotels, B&Bs, and state parks would have to raise prices. I don't rent myself, but it does not seem to me that rental prices in Canaan Valley have increased much at all in the past 4-5 years. Anyone have a different experience?

I think it is mostly true that rental prices have not significantly increased over the last several years but, for whatever reason, this year has been a particularly active rental year for me. I suspect it has something to do to people looking for vacations closer to home due to gas prices but it could be any number of factors.

I own a house in Black Bear. In deciding to buy the rental income was one, but not the major, factor in the decision. To their credit the realtor did not oversell my ability to recoup the cost of the house through rentals but did accurately point out that I should be able to pay the HOA fee, utilities, and maintenance cost from rental income and, in a good year, have additional money left over. Of course there are tax advantages in owning a rental property that need to be considered.

My primary motivation was to have a house in an area we love. Secondarily we wanted a place to run should another catastrophe hit DC, whether terrorism or pandemic flu. Only coincidentally did I consider rental income. I did assume, and so far this has been proven true, that appreciation would outpace inflation and when and if I sell the property I will realize a modest or not so modest profit. I am not sure the say would hold true if I were buying today in a market that may be at its peak and poised for a correction.

I agree that real estate in the mountains has probably peaked as prices level off, however, I don't see the market "correcting" to any great extent in the near future due to the steady demand for second homes. Very few second home owners buy with the intent to flip a property. They are looking at the long run or personal use. Some rent, but for most who do, it's out of necessity. When I purchased I had to determine if I could afford the expenses associated with the property if I didn't rent it. If I couldn't I didn't buy. I see the CV market and surrounding areas as fairly stable because the availability of existing houses in the market is relatively limited. A lot of the listings are for building lots which are listed for exorborent prices. As I said in an earlier post, some of the listings out there are purposely priced higher in attempts to either fish for a big profit or to increase assesed values of like properties for the future.

not sure what the other places are seeing, but the 'body count' is definitely down at the shoe this season. retail, restauranteurs, marketing, and real estate personnel all have the same story. probably a combination of the overall slowdown and gas prices.

I think gas prices are an excuse. The rest of the travel industry is doing quite well. Personally, I think it is lack of marketing. There are not many big events this summer at the Shoe. The events that they have are not marketed often or well. My theory is that the Shoe loses money in the summer. In an effort to make thier cash flow and income statement look better to prospective buyers of the company (Fortress) - they cut expenses including marketing. With the problems they have had converting their reservation system and with Seneca - I think maybe they just scaled things back this summer - giving themselves a chance to get out from behind the curve. Which by the way also helps thier financials look better in the short run.

The problems at Snowshoe are varied and numerous, but I'll just cover one, marketing. The marketing at Snowshoe is about the most incompetent I've ever seen in a resort - better yet, any company. It almost seems that their marketing is run by the old Xerox executives that discarded the computer mouse, the laser printer, and the WYSIWYG computer interface as lacking potential.

This year they have lost several major events. I am a layman at this but talking to several people of at least one of the events they lost, the arrogance and lack of customer service at the mountain was a factor. Take it or leave it approach. To my pleasant surprise, the last event I attended at Snowshoe had a booth with the corporate planning folks giving out information. About time.

Then there's the absolutely substandard retail operation on the mountain. If I seem upset it is because I can't, for the life of me, understand how a company can REALLY work to do things wrong. There is a basic disconnect between the real estate and the strategic focus of Snowshoe on one side, and the retail operation on the other. If you are selling to the upper middle class, then your retail operation needs to match the customer base. Being a bit trite, If you're selling real estate to the Armani customers, you need to have an Armani store nearby. But they don't. Their retail operation is certainly not geared to their new customer base, but still relegated to their old customer base.

For example: Ski gear. Go to the Red Barn outside of the village, which apparently has got the bubble. Yes, they will have Columbia gear, but you will see the new editions of upscale technical gear, Spyder Vail, Andermatt and Zermatt jackets and their accessories, the new Karbon clothing, Obermeier, etc. I'm not talking Prada, gents, although it would be nice. Just good, fashionable gear. Then visit Snowshoe's 4848 and it seems like a discount store with full prices. Their buyers don't seem to have a clue who their customers are. I know that this is not endemic to Intrawest, as all Stratton, Tremblant and Whistler are full of fast-selling top-of-the-line gear.

Then there's the restaurants. Up until recently, my comment about the Junction was that it was the place to take your friends to relive the experience how your immigrant ancestors were treated at Ellis Island. There is not one upscale restaurant on the mountain following the demise of the Red Fox. Not one restaurant takes reservations. They are losing a large base of people who simply won't make an hour line to eat. What's more, these are the people who won't mind spending $100 a person for a good meal. On a promising note, Brian Ball's new restaurant at Soaring Eagle will feature reservations but again, that's 3/4 of a mile from the village.

Does that affect sales? Certainly. If prospective buyers see a Village with boarded up stores, that observation is certainly a part of their overall experience.

lbotta ; I missed something here ... what's this about the 'demise' of the Red Fox? When/why did this happen? I was under the impression that the Foxfire and Red Fox were under the same management ... yes/no?

The owners of the Red Fox got divorced. I'll tell you over a beer... Meanwhile, there were also issues with the ADA access and fire code updates in the old building. The venerable restaurant closed in the beginning of the summer. It is being replaced by two restaurants in Soaring Eagle, one really nice, and one for the masses.

As you know, whatever Brian Ball touches it turns to gold (unlike Snowshoe's food and beverage department). So there's ample room for optimism in these new eateries. Snowshoe needs some positive reinforcement in the gastronomical area and these two promise to be winners. Unfortunately they are not in the village.

the red fox is dead, an unfortunate victim of divorce. rumored for the past two years and now a reality. the r'fox had slowly gone downhill the last two years anyway- Brians wife, Margaret Ann, was running things. While she is a good chef, the biz side and service fell off. I took my company there for a corporate gig (12 at dinner on the corporate account and ready to spend a wad) and we had to ask for the wine list (at a '4 star' restaurant). Any manager, sommelier(sp?) or even a decent waitress/waiter should know how to 'read' their potential customers without a word being spoken.

Brian is a good guy and runs a nice operation (f'fire), his two new gigs at Soaring Eagle should do well. He's my new neighbor due to his unfortunate circumstances. I hate it for him- starting two new restaurants is very capital intensive, throw in a divorce and it makes it that much more difficult. They are supposed to be ready to roll in December. Not sure if anything is going to replace the r'fox, also dont know the status on Yoedlers pub (the upstairs portion that uses the r'fox kitchen, etc). Ill try to find out next weekend.

fyi, there were several on here including me who were stuck with gift certificates to the r'fox. I had $400 worth- I talked with Brian last weekend and he told me there is one R'fox account still open. His biz mgr is sending me a check this week. Better hit it while its still open or it will soon be a worthless souvenier.

I have total respect for Brian, both personally and professionally. Two years ago one of his former employees perished in a fire in Charleston. He was from near Snowshoe, and the family lived in very humble conditions. He took time off from operating two restaurants to take care of everything, funeral, family, etc. He's got a heart of gold.

And if it wasn't for him, the restaurant scene at Snowshoe would be as upscale as the snack bar at the local Walmart. He runs a tight ship and has mutual loyalty from his employees, who in turn respond very well. The success of the Foxfire is evidence. Wish he was able to take over the Junction.

Lou:

Another business/marriage rocky road is Purple Fiddle in Thomas, WV. John Bright announced that he and Kate have separated in the last Purple Fiddle newsletter, but they will still run the business as a team. I hope things work out for both of them. They have done a lot for the community over the years. I wish them continued success in the future.