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Show ' Park City's Meal Estate Boom: low IngpiU B ? i. byNanChalat .Getting into -Real hstate is a sign of growing up in Park City. Former wild and crazy guys (and gals too) the ones who once took pride in living hand to mouth from ski season to ski season now sport button-down shirts and groomed coiffures and a portfolio. It is hard to avoid discussions involving contractors, con-tractors, remodels, the new units up at.. ..and comments like "I hear he jturned it over for a sizeable piece of change. " So far, brokers and agents have had their hands full keeping up with the demand. Park City has doubled in size since 1975, but how long can it continue? According to some sources, the end of the housing boom is in sight. "I think that 'we are headed for a recession," states City Planner David Preece, "and traditionally, resorts are hit the hardest." Steve Peterson, Mortgage Officer at First Security Bank in Park City, says that loan applications for new construction con-struction are down as are applications for the purchase of completed buildings. "However, commercial development is as strong or stronge- than ever." Building Build-ing Inspector Bo5 Skanter predicts that fewer building permits will be issued this year than last year. It appears that the rapid level of growth, which took off in 1976, has begun to decline-44 decline-44 We .'are beginning to see some buyer resistance to the purchase price," says Peterson, Peter-son, who feels that the escalation of residential prices must level out. The prices in Park City have risen approximately 300 in the 'ast four yaIs:Jn- 1975 the average home cost $40,000 to $50,000. In 1977 the cost rose to $70,000, and today the average runs from $100,000 to $150,000. The average house in old town costs between $50,000 and $100,000 while the prices in 1 . 1 ity limit " Xs 'y limit yGC J city limit f ( Thaynes Canyon may run as high as $250,000. Rusty Davidson, President of Pioneer Bank and member of the Planning Commission says, "The economy in general is not as strong... Prices have inflated so much that someone who might have bought a house last year cannot afford it this year." Steve Tachiki, with Valley Mortgage at the Silver King Bank Building, concurs. con-curs. "There has been a slowdown in residential building. There are lots for sale that are not moving right -now." David Preece adds, "We are seeing more 'For Sale' signs and .they are staying up longer because buyers can't get the mortgage mort-gage money." Mortgage rates have risen from 8l2 in 1975 to between 10 and 12 today. Banks are currently offering only 80 financing which . means that a buyer must produce a $25,000 down-payment down-payment on a $125,000 home. "The mortgage picture pic-ture does not look optimistic," optimis-tic," according to "Preece, who is concerned about buyers involved in speculative specula-tive investments. "Approximately 30 of the houses built and sold are for speculative purposes. Current speculators buy a house, live in it for six months (in an attempt to curb speculation, banks require re-quire that a residence, to receive financing, must be owner occupied for six months), and then sell it hoping for windfall profits between $30,000 and " $50,000." Tightening of mortgage money will reduce the demand for those houses and the original owner will be stuck with the payments. Preece forsees a higher vacancy rate in single family residences and condominiums. condomin-iums. A similar situation occured in 1975. Developers hadn't anticipated a national recession and found that they had overbuilt for the market. "As a result, there was a firesale on condominiums," condomin-iums," Preece said. Not everyone agrees that the housing industry in Park City has peaked. Real Estate agents, of whom there have been as rapid an increase as the number of job sites, see only continued growth. For instance, Sheila Purdom at Century 21 says, "There, has been no problem selling. In fact, we are experiencing a lack of lots." Dusty Orrell at Skyline Realty comments, "A recession will certainly affect us but I feel tharwe are insulated here." While noting the current slowdown, Tachiki hastens to add that he also feels "Park City is different. It is a boom town. Our company (Valley Mortgage) is very optimistic which is why we moved up here." Tachiki doesn't think that a recession will hit Park City as hard as it will hit the rest of the country, partly oecause ne inimcs mat Utah in general " will not be as severely affected. Dick Whitney at Gump and Ayers says, "We are just being discovered." One of the larger building contractors con-tractors in town doesn'st foresee any change in the growth rate for at least five years. He feels that fluctuations fluctua-tions in the national economy wilt have little bearing on Park City because of the type of money involved. Park City, he explains, once billed itself as an alternate resort, less expensive than Aspen, but now it is coming into its own and the type of person who is investing here has enough money such that a recession will not affect him. Davidson, too, is not entirely pessimistic. He sees the arrival of Skaggs and Holiday Inn as a sign that the system is bound to be self-correcting.; self-correcting.; "The financiers who back those projects have examined the situation very closely." The two major problems that Davidson sees facing Park City today are the economy and the fuel shortage. A friend of his who has studied, the elasticity of gas prices suggests that the price of gas may go as high as $2.58 per gallon. "That, would certainly affect someone some-one who was considering buying a home in Park City and commuting to Salt Lake for work." In the meantime, nailguns bang incessantly against a backdrop of heavy equipment. equip-ment. There seem, to be construction crews on every other block, and framing contractors are busy as far into the future as they can see. But the excavation and cement contractors, who are several lots ahead of . the builders, already feel that the end is in sight. Bill Eppley of Eppley Construction says, "It is still as wild as ever but the market is saturated. Next year I expect an extreme slowdown. In fact, I would be a fool if I didn't prepare for it." The questions is how to go about preparing for a recession reces-sion which might or might not occur. How does a town that has spent the last four years gearing up, stop in mid-stride to wind down? Who is going to be holding the hot potatoe when the national economy blows the ,whistje?. . . There has Seen a decrease in the building of 'spec' houses, and there are signs that investors who are on the one hand anxious to unload some money for tax purposes, purpos-es, are on the other hand becoming leary of real estate inflation. (There are some examples of local real estate slumps in Southern California.) Califor-nia.) But many who are already holding are playing die market as boldly as ever, and as long as there are some who want to play, the market will hold. Till when? No one can tell for sure. t . viv jearf odt fjo I 1979 ,,neS ShW Park Chy $ maJr rcsidcnial communities in 1975 (above) and (below) in I |
