Less can be more. The end is not nigh. The real estate market — including second-home and resort markets — will recover … eventually.
Predictions and advice about opportunity, realism, smart growth, environmentalism — and a slow-paced recovery — were the hallmarks of NewWest.net’s fourth annual Real Estate Development in the Northern Rockies conference in Missoula. The two-day event, which ended yesterday at the Hilton Garden Inn, included more than 30 speakers who discussed wide-ranging topics about development, planning, land use and the future of the West.
The boom-and-bling era of speculation and eye-popping returns on real estate have obviously vanished, said the planners, architects, developers, policy makers, real estate agents, green builders and others who took the stage. But the current economic downturn could fuel a shift that benefits people and the planet, speakers said. When smart growth replaces sprawl, when developers are good neighbors, when downtowns are revitalized and landscapes are preserved, the region will be protected from ugly booms and busts.
“It’s really about going back to simplicity,” said Rebecca Zimmermann, an owner of the Denver-based Design Workshop. At the worst moments of the economic crisis, clients told her “every dream I ever had is on hold,” Zimmermann said. “Now, with the stock market back up, there is desire again to have a dream home,” she said — but the dream has changed.
“People want to live in places that connect people to nature and connect people to their families,” she said. “The days of the inter-west buyers who were refinancing their primary home and taking that money out to buy a condo at Copper Mountain — that almost doesn’t exist any more.”
Most speakers said it will be three-to-five years or more before there’s recovery and stability in the real estate market.
But property is still selling, even in the very high-end market. Samuel Byrne,
the new owner of the Yellowstone Club, said in an on-stage interview that the exclusive ski-and-golf resort has seen $50 million in sales since he closed on the property in July. Some of the sales were distressed properties and buyers cut deals directly with the banks.
“People swooped in very quickly on those and snapped them up,” said Byrne, the managing partner of CrossHarbor Capital Partners, a Boston-based investment firm. With Byrne’s leadership in place — and the Tim and Edra Blixseth saga over — the demand returned. “It’s truly a unique asset — one of the most unique properties in the world,” Byrne said.
But how is the rest of the West faring? What’s changed? Here are some answers and conference highlights:
– “The second home market is not gone — people will make extraordinary buys coming out of this cycle,” said Byrne. “At certain price points there will be tremendous opportunities and recovery in the marketplace.”
– Consumers have shifted away from seeing real estate as an investment. Many of today’s home-buyers want property that’s greener, smaller and more long-term. “It’s more about what people want for their family,” said Christopher Kelsey, of Steeplechase Development Advisors.
– Eco-friendliness is a deal-clincher for increasing numbers of buyers. From the builder’s perspective, sustainable buildings can also qualify for money-saving tax credit programs and subsidies.
– People come to Montana to enjoy small towns and wild landscapes, so protecting those assets with smart growth plans is critical, said Luther Propst, founder of the Sonoran Institute.
– Well-heeled home buyers are looking for quality-of-life landscapes: places where they can see wildlife, go fishing and skiing, and play outdoors, said Roger Lang Jr., who transformed his 26,000-acre Sun Ranch in southwest Montana into an eco-lodge — and a home to everything from boreal toads and bald eagles to grizzly bears. “Wealthy, high-end home-buyers subsidize wildlife conservation,” said Lang.
– Healthy downtowns and residential areas are walk-able, compact, sustainable environments with neighborhood centers, open spaces, mixed housing (including single-family and multi-family buildings), and increased connectivity, to reduce reliance on vehicles. Turning these visions into reality isn’t easy, but it’s possible. “Many small towns may have not had significant planning or investment since the Works Progress Administration, when they got their first paved roads in the 1940s,” said Stefan Pellegrini of Opticos Design in Berkeley, Calif. “Planning continues to be contentious in these places, but they’re small enough so you can achieve consensus.”
– Businesses seeking to build can take advantage of a new tax credit program from the U.S. Treasury for new construction in distressed census tracts. The program (which has admittedly tight restrictions) helped the Garlington, Lohn & Robinson law firm construct a $14 million, six-story green office building in downtown Missoula, without having to put up the standard $4-plus million in cash that banks would typically want for such a project.
– Green building today has evolved into an art form. Builders can insulate down to the slab to keep air and moisture out of buildings. They can use 95-percent-efficient gas-fired condensing boilers; Energy Star appliances; high-efficiency toilets that only use 1.28 gallons of water per flush; high-efficiency fans instead of air conditioners; and smart irrigation with built-in mini-weather stations, so the sprinklers don’t go on after it rains, said green-building expert Jeff Medanich, of the Colorado Chautauqua Association.
– Green buildings can put green in your wallet. The Garlington building, which aims to be LEED gold certified, will have solar collectors on the roof to heat hot water, solar photovoltaic collectors to generate about 2 percent of the building’s energy use, natural lighting, recycling collection rooms, a high-efficiency radiant heating and cooling system, a reduced floor-to-floor height (to reduce building volume), and high performance solar-control glazing and sun shades, said the architect for the project, Marty Noyd of OZ Architects. The height reduction alone saved $465,000 in the building cost, he said.
In the end, even the wealthiest home and landowners want to take a breath, reassess and avoid any more tumult, as Sam Byrne of the Yellowstone Club put it. It’s time to achieve peace in the valley, he said. “The club’s goal now is to stabilize itself, stabilize its reputation, and not sell a lot in the next three years,” he said. He intends to offer more townhouses and condos in the future, put more land into conservation, and put eco-friendly measures in place.
“Less sprawl, more open space, with clustered developed that’s designed to be sustainable and environmentally friendly — that’s the goal that everyone’s been talking about today, and it’s not different at the high end of the marketplace,” said Byrne. With a few exceptions, he joked. Buyers might arrive in a private jet before they drive off in their Prius.