News
It was only a couple years ago that “build-out” was the latest buzz in Summit County. Build-out referred to the point in time when all the usable lots in Summit County would have been developed. Other resorts that have reached build-out saw large price increases, the implication of course being that Summit County was closing in on build-out and would soon see a consequent jump in prices.
Obviously, that didn't happen. Lot sales in Breckenridge and Summit County have been abysmal in 2009, although in Breckenridge the third quarter showed a second consecutive quarterly increase in sales, a whopping 12, whoopee! That still is just about half the number of sales from the same quarter in 2008, and about a quarter of the number of sales we were having at the peak of the market. Not surprisingly, inventory levels also continued to climb to a record 276. At $266,000 the median price has pulled back to 2006 levels.
In September of this year Kate Berg of the Summit County Planning Department posted an update to her previous analysis of “Build Out” in Summit County. According to her detailed analysis of residential properties, as of January 1, 2009 69 percent of the 40,783 zoned residential units in Summit County have actually been built, leaving 28,131 yet to be developed. In this report, Kate makes an important distinction between “absolute build-out”, i.e. what is theoretically possible, and “realistic build-out” which accounts for those properties that have physical constraints as well as other limitations. Accounting for those additional constraints, the current build-out figure for Summit County rises to 74 percent. Looking at specific areas in the county, Frisco is the most built-out at 89 percent, followed by Blue River at 79 percent, and Breckenridge at 76 percent.
So when can we expect to see complete build-out? When Kate extrapolated construction rates from 2003-2008 she came up with an average rate of 380 new units per year, and build-out of 87 percent by 2020 and 97 percent by 2030. Interestingly enough, in the first half of 2009, 300 new certificates of occupancy (COs) were issued, a 21 percent drop from the 2003-2008 average. At the same time, the number of applications for building permits in Summit County dropped from 597 in 2008 to 401 through October of 2009 according to postings on the county website. At the current rate for 2008 we will end up with 481 permit applications issued, a 20 percent drop in activity. Similar to lot sales, there is a ray of hope. According to the Summit County Building Department, the activity for 2009 is still running 20 percent higher than the average over the last six out of eight years, even though it is off the 2008 peak.
CO's and new construction are down, meaning less building, which slows the rate of build-out. At current activity levels it will be sometime in the mid 2020s before build-out becomes a significant factor. That, of course, is based on a straight line projection of past trends, and if we have learned anything from the past few years it is the classic prospectus warning, “past history does not guarantee future performance.” Instead of looking at build-out, which may or may not occur in 2025, it makes more sense to keep an eye on inventory and sales numbers. That will have a much more immediate impact on what land in Summit County is worth.
Joan Miller is a broker at RE/MAX Properties of the Summit in Breckenridge. For the numbers behind this analysis, her newsletters or recent articles, visit her on-line at JoanInBreck.com, call her at 970-333-4203, or e-mail her at JoanInBreck@comcast.net.
Obviously, that didn't happen. Lot sales in Breckenridge and Summit County have been abysmal in 2009, although in Breckenridge the third quarter showed a second consecutive quarterly increase in sales, a whopping 12, whoopee! That still is just about half the number of sales from the same quarter in 2008, and about a quarter of the number of sales we were having at the peak of the market. Not surprisingly, inventory levels also continued to climb to a record 276. At $266,000 the median price has pulled back to 2006 levels.
In September of this year Kate Berg of the Summit County Planning Department posted an update to her previous analysis of “Build Out” in Summit County. According to her detailed analysis of residential properties, as of January 1, 2009 69 percent of the 40,783 zoned residential units in Summit County have actually been built, leaving 28,131 yet to be developed. In this report, Kate makes an important distinction between “absolute build-out”, i.e. what is theoretically possible, and “realistic build-out” which accounts for those properties that have physical constraints as well as other limitations. Accounting for those additional constraints, the current build-out figure for Summit County rises to 74 percent. Looking at specific areas in the county, Frisco is the most built-out at 89 percent, followed by Blue River at 79 percent, and Breckenridge at 76 percent.
So when can we expect to see complete build-out? When Kate extrapolated construction rates from 2003-2008 she came up with an average rate of 380 new units per year, and build-out of 87 percent by 2020 and 97 percent by 2030. Interestingly enough, in the first half of 2009, 300 new certificates of occupancy (COs) were issued, a 21 percent drop from the 2003-2008 average. At the same time, the number of applications for building permits in Summit County dropped from 597 in 2008 to 401 through October of 2009 according to postings on the county website. At the current rate for 2008 we will end up with 481 permit applications issued, a 20 percent drop in activity. Similar to lot sales, there is a ray of hope. According to the Summit County Building Department, the activity for 2009 is still running 20 percent higher than the average over the last six out of eight years, even though it is off the 2008 peak.
CO's and new construction are down, meaning less building, which slows the rate of build-out. At current activity levels it will be sometime in the mid 2020s before build-out becomes a significant factor. That, of course, is based on a straight line projection of past trends, and if we have learned anything from the past few years it is the classic prospectus warning, “past history does not guarantee future performance.” Instead of looking at build-out, which may or may not occur in 2025, it makes more sense to keep an eye on inventory and sales numbers. That will have a much more immediate impact on what land in Summit County is worth.
Joan Miller is a broker at RE/MAX Properties of the Summit in Breckenridge. For the numbers behind this analysis, her newsletters or recent articles, visit her on-line at JoanInBreck.com, call her at 970-333-4203, or e-mail her at JoanInBreck@comcast.net.
