Courtesy of Doug Labor, Steamboat Sotheby’s International Realty
The Steamboat Springs condominium market has always been a staple to the real estate market. Condos have been dotting the landscape since Mt Werner Lodge was constructed in 1966, growing in number and size since that time, expanding from the ski village to downtown.
Today condominiums represent over a quarter of the market, second only to single family homes. However, in the boom years of 2005, 2006 and 2007, they were actually the most popular property to purchase. An important distinction in those times compared to the present, is that in the mid-2000’s there were new condominium projects coming out of the ground or recently completed…adding anywhere from 30 to 75 new units to the market at once. No new condo projects have come on the market since that time, and no new product will be available in the foreseeable future.
CLICK HERE for a graph of the annual transactions from January 1 to August 15 for the years 2006 through 2016, along with the median price of those sales. 2015 transactions totaled 165 with a median price of $290,000. 2016 has posted 162 transactions (-2%) at a median price of $302,000 (+4%). 2016 started out slower than 2015, but pending activity implies it will surpass 2015, indicating a healthy demand for this type of property.
If you are in the market for a Steamboat Springs condominium, the following are important items to consider:
The HOA
Condo ownership is not only the sticks and bricks of the property, but also consists of the grounds, common elements (amenities, elevators, etc.). This ownership is typically split, as a percentage, by the size of the individual square footage of a condominium relative to the total square footage of the entire building. It costs money to operate and maintain these common elements, as well as manage the property, and this cost is apportioned by a percentage allocated to each individual unit. Buyers need to know the financial health and nuances of the HOA. Considerations include how utilities are programmed, how services are provided and even capital reserves for future replacement or amenity renovation, as well as the contemplation of any future special assessments. This can be obtained from receiving the Annual Meeting Minutes of the HOA.
CONDO REPORT CARD
Imagine the diversity of the renovations each of the Mt Werner Lodge condominiums have gone through since 1966 with the various owners they have had, as well as the timing when they were done. For property managers to offer those condominiums to the renting public in a fair and concise way would be difficult. However, a system has been developed by all of the rental management companies that seems to work. Each year the management companies give their individual condominiums a ‘grade’, which is based upon the quality of the condo in their reservation system. When a reservation request is made for a specific property type, the condo with the highest grade is rented first. The next reservation taken for that same timeframe gets to stay in the condo receiving the next highest grade, and so on. With this system the owner who has invested the most into the quality of their condo will receive the most income. Buyers should request the current grade for the condo they are interested in purchasing, and if it does not have the highest rating, find out what would be needed to get it.
RENTAL INCOME
If you are buying for rental income, find out what the historic income has been for the condo or condos you are considering. I have developed a Condominium Cash Flow Comparison that provides a side-by-side analysis of how each property performs financially. In some instances it has revealed a more expensive condo ends up being less expensive to own. This analysis also determines how well the property is priced relative to its income, how the HOA amenities may help or hurt your investment, a cash-on-cash return, and other helpful data to make sure the property will meet your financial expectations.
PERCENTAGE OF UNITS FOR SALE
Over the past three years it has taken an average of 202 days for a condo to sell. A condo owner typically owns their property six years, then either finds a replacement property or leaves the market altogether. This means at any given time 3% of the total number of condominiums in the project should be for sale at any one time. More than that and you should dig deeper to assess why there are more on the market; less than that could indicate there are a lot of happy homeowners.
Many options are available in the Steamboat Springs condominium market. Take time to think about places you’ve enjoyed staying in the past and have enjoyed the most. Ask questions, do your research and even do a test drive by renting in the project you are considering. Then enjoy it for years to come!