To sell or not to sell, that is the question |

To sell or not to sell, that is the question

After seeing existing condo sales numbers increase throughout 2009, the first quarter of 2010 showed the first drop in a year to 24. For long suffering owners who have delayed selling while waiting for an improved market this seems to be one more piece of bad news they did not need. Once again they face the question, to sell or not to sell.

Traveling back in time to the third quarter of 2007 it was easy to believe that both Breckenridge and Summit County had dodged the bursting of the national real-estate bubble. At the time, although I wanted to be a true believer, the steady climb in inventory combined with the relentless drop in sales numbers had me worried, in spite of the continued increase in sales prices. Throughout the winter of 2007-2008 most of the Realtors I spoke with were hoping the decline in sales was merely a severe version of the typical seasonal decline in sales we see in the first quarter of each year. For Realtors however, 2008 turned out to be the summer that never was. Sales not only did not increase in the second half of the year, but actually declined.

Tracking a market like Summit County can be difficult. The relatively small numbers create large statistical volatility which can result in deceptive results. One of those often quoted numbers is month’s inventory, which is typically found by dividing existing inventory by some measure of sales, typically the previous month’s sales. In our small market, monthly sales can fluctuate much more than in larger markets, leading to absurdly large variations in “month’s inventory.” To help “smooth” the curve, and create a meaningful chart, I have created a one year “look back” that picks a point in time and compares the average quarterly sales and inventory for the previous year to produce a “month’s inventory” figure, similar to the “moving average” used in financial analysis.

The results are striking. We went from three months inventory in Q4-07, a clearly defined “Seller’s Market,” to seven months inventory, a “Buyer’s Market” in six months. Obviously Summit County was not immune to national events like some had hoped. As buyers disappeared, inventory ballooned and sales dropped until the month’s inventory for Breckenridge condominiums reached 34 in Q3-09. Although things have improved since then, the backside of the inventory curve has been much shallower than the runup.

Returning to our original question and our long suffering owners, when should they sell? The first step in that decision must be to look at the facts as they are, not as we wish them to be. We are still in an abysmal real-estate market for sellers. Although I track Breckenridge in detail, the trends in Summit County are nearly identical. The worst of our declines appear to be over, with Breckenridge condo sales numbers up 50 percent in Q1-10 compared to a year ago. Inventories however remain high, which keeps downward pressure on prices. In my most recent newsletter I looked at the three quarter moving average for condo prices per square foot. Extrapolating that number through the end of the year we could easily see another 5-10 percent drop in prices.

However, we do not live in a static world. Just a few years ago I remember predictions being made on 2005-2007 sales using straight line extrapolation concluding that in a very few years we would see Aspen like prices. Although I do believe we will continue to see lower prices this summer, as long as we continue to have a flat or growing economic recovery, I know that ultimately as prices drop it will create more demand for our existing supply, eventually stabilizing prices.

Right now our inventories have stopped growing, which means that the combination of sold and withdrawn properties is matching new listings. The fact that many sellers are sitting on the sidelines because of low prices does not change that equation. The question for the market is when will those sellers reenter, and what will be the effect.

Although seller motivations are nearly infinite, we can divide them into two camps; the have to sell, and the want to sell. For the have to sell, even though our sales are improving, prices are still in decline. You need to sit down with your Realtor and make a detailed review of current sales and price your property to sell for no more than the most recent sales and below the active competition. Remember, those active properties you look at represent properties that have not sold, and your goal is to not be one of them.

For the want to sell group, the decision is harder. There is cost to not selling you must take into account, including mortgage, maintenance expenses, and taxes. Before deciding not to sell you will need to calculate how much money you will end up spending if you decide not to sell, and how long it will take you to recover that additional investment.

What can we conclude? Wanna-be sellers (like myself) need to either bite the bullet now and sell for less, or dig in for the long haul. For those who choose to sell now there is an upside. If you sell now at a lower price, virtually anywhere you choose to buy will be in a similar or worse market than ours. You will sell low, and be able to purchase low or even lower. If you wait to sell until your property appreciates, it is likely your new purchase will also have appreciated.

To sell or not to sell? It all depends on your personal situation. But even in this buyers’ market, you can sell and benefit. It will require hard cold calculations, but it can be done.

Joan Miller is a broker at RE/MAX Properties of the Summit in Breckenridge. For the numbers behind this analysis, newsletters and recent articles, visit her online at, call (970) 333-4203, or e-mail

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