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Resort real estate at exclusive destinations such as Vail, Aspen, or Telluride has often been immune to economic ups and downs.

Property values have not always appreciated, but these markets have typically remained stable. The markets are small and desirable, which would offset many economic impacts. That’s not the case in 2009. Currently these markets are suffering in the economic downturn just like markets elsewhere. Prices have fallen 30% from their peaks in 2006 and foreclosures are on the rise; but perhaps most telling is the slowdown in sales activity.

Real estate sales in Eagle County, Colorado, which is home to Vail and Beaver Creek ski resorts, have plummeted over 72% compared to 2005, and 47% from last year. In fact, 2009 sales are on track to reach just 41% of the average sales volume from the past 17 years, equaling only 69.5% of 1992’s total sales, which was long before many of the existing properties were even built.

Urban areas see continued activity because people need a primary residence to live in. But it would seem that vacation homes are not a priority for most people. Lending restrictions have become tougher for second homes and investment properties, contributing to the slowdown in real estate sales in the ski resorts. However, a more positive reason is that many sellers are unwilling to part with their properties if they have lost value. This is the flip side of communities with deeper financial resources. In the exclusive Bachelor Gulch and Beaver Creek neighborhoods, 15% of the property listings from last summer have been taken off the market, a sign that some owners prefer to ride this one out.

Of course, not all the wealthy are immune to money problems. In the past month, several multi-million dollar foreclosures have been filed. A home listed for $7.5 million in Beaver Creek is set for a foreclosure sale in February with a debt of $6 million. A beautiful horse property in nearby Edwards, Colorado was once for sale for $9 million, but is going to foreclosure with a debt somewhere around $5.5 million. A beautiful stone, attached single-family on the Eagle River needs to sell around $2.2 million to clear the loan, while the neighboring property sold for $3 million just last year. There is opportunity for savvy buyers and Realtors, who can often arrange short sales prior to the foreclosure sale date, especially for loans this large.

Source: The Vail Academy