STOWE MOUNTAIN RESORT has created many of the attractions that ski areas seem to aim for these days. At the base of the highest peak in Vermont, 4,395-foot Mt. Mansfield, is the new Stowe Mountain Lodge. The huge ski-in, ski-out complex's two main wings cost $285 million to construct, and they feature 278 full-ownership units that double as hotel rooms when available. The lodge also has 34 multilevel fractional-ownership penthouses, a first-rate spa with expansive views of the mountain, a golf course, a private club for those who prefer not to lunch with the crowd, two excellent restaurants featuring Vermont foods, a big, year-round swimming pool and a performing-arts center with coming headliners like Southside Johnny & the Asbury Jukes and Suzanne Vega.
A new item at Stowe this year: a reusable lift ticket based on radio-frequency identification technology, which means you no longer have to try to make two sides of a ticket adhere to a steel wicket in a snowstorm. The gate to the lift opens automatically on your approach; you keep the card in your pocket and reload it online.
There's serious money behind these efforts. Owned for years by a founder of the Starr group of insurance companies, which became American International Group, Stowe's new condo-hotel and spa are managed by Destination Hotels & Resorts, which oversees more than 35 upscale properties in places like Telluride and Vail. Lowe Destination Development, a sister company, is a joint-venture partner in Stowe's adjoining Spruce Peak project. Both are a part of a big real-estate investment firm, Lowe Enterprises, in Los Angeles. An AIG unit, Chartis, bought Stowe Mountain Resort from its ailing parent in 2010.
Just down the road is the Topnotch Resort, with its own beautiful spa and restaurant and condominiums. Its well-heeled backers are upgrading, too. The resort was bought by Terra Resort Group, a hospitality management firm with operations in Jackson Hole, Wyo., that recently joined with MetWest Ventures to form MetWest Terra Hospitality. MetWest is an $80 billion-in-assets investment-management outfit started by a Drexel Burnham Lambert bond specialist.
Development at Stowe and elsewhere is happening in cold, icy economic conditions.
Using data from the Vermont Real Estate Information Network, Teresa Merelman, a broker at Stowe Realty, tracked local condo sales for Barron's. The number fell sharply from 46 in 2005 to 27 in 2010, before dipping to 22 through the first 11 months of 2011. The median sale price fell less precipitously, from $352,040, or $239 a square foot, in 2005, to $338,275, or $196, in 2010.
"Prices have come down quite a bit, but I think they've stabilized recently," she says.
A potentially better barometer of sales, says Merelman, could be the transaction history of a 26-year-old condo at Topnotch. It sold this past summer for $422,500, about 26% below its asking price. The same 1,900-square-foot, three-bedroom unit, with a nice view of Mt. Mansfield, fetched $525,000 in 2004. Admittedly, many variables affect price, but that's about a 20% drop in seven years.
King says that Stratton's market, too, has undergone an upheaval. Right now, there are about 150 condos for sale. He categorizes them in three ways: The first 50 are priced "unreasonably" -- way too high -- the next 50 are priced to sell, while the final 50 linger in between. This year, about 48 condos will be sold, the same total as in 2010. What's selling, he says, is the best deal, not the most gorgeous view. "It can be facing the parking lot" and sell if it's got an attractive price, says King. The same applies to local home sales.
The broker tells of a financial-services executive who recently listed his four-bedroom, ski-in, ski-out condo at $890,000, well below the $1.2 million to $1.3 million some neighboring units got a few years ago. It quickly sold for $850,000, or more than 30% below the perceived value at the market's peak.
Because he bought it about 12 years ago for $795,000, the exec, now with grown children, escaped with a profit. Although serious sellers are abandoning dreams of bubble-year prices, brokers insist that it is far from a distress situation, in part because building has stopped.
Bill Hunt, who handles villa sales at the Trapp Family Lodge near Stowe, says that management demands upfront payment before starting construction. Last week, the lodge broke ground on its first new three-bedroom villa in about two years. The Trapp villa units are mostly fractionally owned, but run $1.5 million for whole ownership.
Intrawest, which owns Stratton and is itself owned by private-equity giant Fortress Investment Group, wants a 70% financial commitment before building, notes King.
Tightfisted bankers also have limited the pool of buyers. Financing that relies on rental income or is backed by weak credit scores is usually dead on arrival. Merelman notes that no closing occurs without a new appraisal, so lenders aren't stuck with overpriced property.
These constraints can make it tough on a 99%-er looking to buy a $100,000 condo or small house. She suggests they search away from the base lodges. Most deals on high-end properties are being done for cash. "A lot of times," says a broker, "these are Wall Street guys dealing with Wall Street guys."
If you have a young family that loves to ski and some cash in your pocket, get ready to make a deal. It's a great time to sharpen your edges -- and your pencil.
