TIF Passes

[KingsFourMan]

You'd have to be out of your mind to plunk down $2-3M on the second home real estate market in VT right now. The Silicon Valley Bank failure that just happened last week is the second largest bank failure in US history. The feds said it would be an isolated incident, kind of like how they said this inflation was going to be transitory. A second major bank failure was just announced today in Signature Bank, a bank with $110B in assets and total deposits of roughly $88B. The Fed is scrambling now to prevent widespread panic.

Interest rates, which are only going to continue going up because inflation is still not under control, are now getting to the point where people who barrowed at low adjustable rates can't afford to make the payments any more leading to more and more foreclosures. Non-fixed mortgages by the way have skyrocketed recently as interest rates have climbed.

The music has stopped, the police are here, and the party is over. The only question now is how ugly is the hangover is going to be. I've said all along, if this isn't a real estate bubble then what the hell is? But, no, no, no, this time it's different, because blah, blah, blah. Yeah OK, we'll see.

[SPORE]

You'd have to be out of your mind to plunk down $2-3M on the second home real estate market in VT right now. The Silicon Valley Bank failure that just happened last week is the second largest bank failure in US history. The feds said it would be an isolated incident, kind of like how they said this inflation was going to be transitory. A second major bank failure was just announced today in Signature Bank, a bank with $110B in assets and total deposits of roughly $88B. The Fed is scrambling now to prevent widespread panic.

Interest rates, which are only going to continue going up because inflation is still not under control, are now getting to the point where people who barrowed at low adjustable rates can't afford to make the payments any more leading to more and more foreclosures. Non-fixed mortgages by the way have skyrocketed recently as interest rates have climbed.

The music has stopped, the police are here, and the party is over. The only question now is how ugly is the hangover is going to be. I've said all along, if this isn't a real estate bubble then what the hell is? But, no, no, no, this time it's different, because blah, blah, blah. Yeah OK, we'll see.

Raising interest rates don't impact cash purchases, which the majority of them have been over the past year plus due to the local banks not lending on the inflated prices.

Now, if they purchased in Cash with the HELOC on their primary residences, that will be a different story.

[Skivt2]

In isolation. But it depends. If the purchases are made and then the cash is needed for some other purpose the property will have to be sold. If some folks become economically stressed due to the recession then selling the property may make sense since parking the cash in Resort real estate is both an opportunity cost and a risk due to downward prices. If the purchases are investments to be used as STR’s and demand drops for Overnight stays due to a poor economy people will start selling. Investment properties don’t make sense when they lose money. When that happens some folks will sell. If there are more for sale then there are buyers at a particular price then the price will fall. It’s a known fact that Resort real estate is highly elastic. It’s extremely dependent on the economy in ways that primary real estate is not. The fact that remote work is possible could mute that but won’t entirely. We are in a bubble. It’s anyone’s guess when it pops and how much things will drop. In the short run prices may stay stable. But there are 680 billion in unrealized loss on the bank’s books due to the interest rate issues. And banks are also quietly setting aside reserves for the giant commercial real estate losses to come over the next 4 years. Should get interesting.

[snoloco]

There has been next to no new construction of real estate and lodging near Killington for like 20 years. It's a question of supply and demand, and there is way to little supply at the moment. I can't imagine they'll have any problem selling the base camp and village units, though it might be at a slightly lower price point than they had initially hoped.

[Skivt2]

There has been next to no new construction of real estate and lodging near Killington for like 20 years. It's a question of supply and demand, and there is way to little supply at the moment. I can't imagine they'll have any problem selling the base camp and village units, though it might be at a slightly lower price point than they had initially hoped.

I struggle with the idea that supply far exceeded demand right up until 2019 with condo languishing on the market until they were auctioned and owners renting long term to avoid foreclosure. Then suddenly demand skyrocketed. I have no opinion on why that happened or if it’s transitory. But it’s not as thorough demand slowly grew and gradually outstripped supply. Given the sudden exuberance of the past three years it’s plausible that demand continues and its also possible it does not.

[PinnacleJim]

There has been next to no new construction of real estate and lodging near Killington for like 20 years. It's a question of supply and demand, and there is way to little supply at the moment. I can't imagine they'll have any problem selling the base camp and village units, though it might be at a slightly lower price point than they had initially hoped.

The last big lodging development was the Grand Hotel about 1999. In the last few years the demand for vacation properties at Killington has eaten up the inventory and now any condo that comes on the market that is not overpriced immediately goes into contract. Not clear how long this will last, but there is clearly a shortage of supply at the moment.

[GMCrra]

The demand jumped from summer investments, market started turning in late 2017 after World Cup and summer growth. These are generally 5 - 6 year up cycles followed by flattening or drop in value in a 10 year cycle.

Also, prices out West got ridiculous, pricing out or giving pause to some east coasters. Western prices have peaked especially with STR restrictions. Okemo and Stowe were already expensive here in VT, K got the spillover along with STR boost making it easier to rationalize.

Lot of risk baked in here from this point. Really comes down to job market and people's ability to manage 2nd home cashflow moving forward. The funny crypto and stock market liquidity is drying up. But inflation and summer will ensure we don't see 2011 - 2017 prices again, unless we have a depression.

[KingsFourMan]

The high-end outlying homes already appear to be tumbling significantly. Exactly the properties that you would expect to fall first. Compare these sale prices to the current zillow estimates. The dominoes have started to fall.

https://www.zillow.com/homedetails/167- ... 9657_zpid/

https://www.zillow.com/homedetails/48-T ... 1287_zpid/

https://www.zillow.com/homedetails/274- ... 5455_zpid/

https://www.zillow.com/homedetails/274- ... 9592_zpid/

[SPORE]

The high-end outlying homes already appear to be tumbling significantly. Exactly the properties that you would expect to fall first. Compare these sale prices to the current zillow estimates. The dominoes have started to fall.

https://www.zillow.com/homedetails/167- ... 9657_zpid/

https://www.zillow.com/homedetails/48-T ... 1287_zpid/

https://www.zillow.com/homedetails/274- ... 5455_zpid/

https://www.zillow.com/homedetails/274- ... 9592_zpid/

Except for the fact that the zillow estimates on those 4 hours have been consistent for the past year.....

[GMCrra]

Zillow zestimate has never been that accurate, especially in VT that doesn't have enough data and too dispersed. Only the condos with a lot of sales nearby are remotely accurate.

Prices have not dropped on luxury VT properties, slowed but not dropping yet. But luxury sales are falling all over so its a matter of time, Hamptons are falling.

Stowe actually just had multiple 2.5M+ sales recently. But ski in/out has stayed in demand even if other properties are slower to sell. Work from home, crime in cities....there is still interest in the market.

[KingsFourMan]

"Stocks tumble as Credit Suisse woes add to banking sector jitters"
"Shares of the Swiss banking giant fell nearly 20 percent in early trading, creating new uncertainty in the wake of Silicon Valley Bank’s collapse."

GENEVA (AP) — Shares in the globally connected Swiss bank Credit Suisse plunged Wednesday and dragged down other major European lenders as fears about deeper problems in the world banking system spread in the wake of bank failures in the United States.

"Dow falls 600 plus points as Credit Suisse adds pressure to already troubled banking sector"

“You’re going to see a credit crunch happening in the United States and that’s starting to get priced into the market in a dramatic way,” said Mike Novogratz, CEO of Galaxy Digital, a financial technology and investment management firm.

Everything is fine, nothing to see here. So what if there's a credit crunch, real estate values will not be affected, who barrows money to buy real estate anymore anyway???

[Seacoaster]

And yet a $3.3 Million property came on the market and was under contract in less than a week.... Million dollar second or third home buyers are not impacted by economic waves.

[KingsFourMan]

And yet a $3.3 Million property came on the market and was under contract in less than a week.... Million dollar second or third home buyers are not impacted by economic waves.

Forbes says otherwise:

Luxury Home Sales Plummet 38%, The Biggest Decline On Record Driven By Inflation, Recession Fears

https://www.forbes.com/sites/brendarich ... 6e23871abc

[Bubba]

https://mountaintimes.info/thanks-for-p ... ks-bright/

Letter from Solimano and Sneyd.

[Bubba]

And yet a $3.3 Million property came on the market and was under contract in less than a week.... Million dollar second or third home buyers are not impacted by economic waves.

Forbes says otherwise:

Luxury Home Sales Plummet 38%, The Biggest Decline On Record Driven By Inflation, Recession Fears

https://www.forbes.com/sites/brendarich ... 6e23871abc

Are you really saying that a long term project will be seriously derailed by a short term dip when the developer hasn’t even broken ground and won’t be building homes anytime soon?

Anyway, the price of these properties is nothing compared to the price of urban and suburban luxury real estate.