This has been a stellar ski season, and President's weekend should be no different. We have a tremendous base, pretty much all of the rocks are covered up. With another 6" last night and another foot or so expected today, we should be set up nicely for the next week or so. So if you are able to make it out here for a long weekend or week, make it out and make sure you get up on the mountain. 

It has been a crazy, and very white 2017 in Crested Butte! We have over 200" of snow so far this ski season with more on the way. The mountain is skiing really well and most of the terrain is open. Patrollers have been working incredibly hard at keeping the runs open, given the fact that it has snowed at least 8" a night for the last week and a half. You kind of lose track of the days when you are endlessly shoveling, roof raking, snow blowing or generally figuring out a way to get from your house to the lifts or work. It is a great upper body and back workout though. We are finally seeing the rate of snow fall slow and might even get a glimpse or 2 of the sun. 

If you are coming out here soon, make sure you check the road closures before driving from Denver or wherever, the passes have been closed periodically for avalanches or avalanche danger. Also, be very careful when venturing into the backcountry as the avalanche danger is very high and there is a lot of instability out there. I like to stick to controlled terrain and as long as the lifts keep running, I'll be on the mountain.

I've had a number of people asking my opinion about the new year and what it means for the economy and real estate. Since I'm always happy to give my opinion, here it is: It feels like more people are positive about the economy with the new President elect and Republican Congress. I hear more optimism than I have heard in a long time, and it seems like people are looking to put money to work, possibly in different ways than usual. Purse strings are being loosened and since the Crested Butte real estate market is all about disposable income, it seems like people are more willing to consider spending that money on second homes or investment properties. 

The economic reality is that the policies we know the new administration is considering are all about domestic economic growth, less mandated spending, a stronger dollar and inflation coming back, along with higher interest rates. Higher interest rates are not good for real estate generally, but in this case, since we have had abnormally low interest rates for such an extended period of time, seeing them rise, along with inflation, isn't a bad thing. Inflation will make house values rise, and with the lack of spec building for the past many years (though people are building for themselves, many fewer homes have been built without an already identified buyer) we are still in a seller's market. 

The Affordable Care Act likely being overturned is good for small business owners, and for independent contractors, like me, especially in our remote area. I think people see that there will be less expensive, and unmandated, health care options in the near future and that is a cause for relief. More competition in this realm will also help, and being able to pick a policy that you want will be great too. In Crested Butte we currently have 1 insurance company serving the valley under Obamacare. More options and hopefully, interstate competition create more competition here, and likely, lower rates. 

So, all in all, I'm pretty bullish for 2017. We certainly will have some issues to figure out, but I think economic growth will happen nationally, and I'm all for that. Repatriation of corporate profits from overseas will also spur growth here and kick-start the currently sluggish economy. People are feeling better about the future, and that leads to more investment, which works for me!
​Happy 2017!
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We have received a few feet of snow in the last few days, which makes for some pretty epic skiing, especially at this time of year. See the pic on the left for the pow cam while I am writing this. More in the forecast, and still pretty light lift lines here, if you can get here. Enjoy!

Crested Butte is a great place to be for the holidays, especially if you are looking for a white Christmas, that's pretty much guaranteed. Right now, the ski conditions are excellent! The feeling I am getting about next year is excitement. People are hopeful about new conditions in Washington, and the economic growth that should bring. People are anxious to be finished with 2016, for many a bad year, and on to 2017. I wish everyone prosperity and happiness in the New Year and hope we can all come together. 

The Federal Reserve finally raised interest rates yesterday, after a year long break. The rate rise was a shoe-in at this point, given that people had fully expected it since September. Rates had already risen in anticipation, in fact, the 10-year note has been trading around 100 basis points above where it was just a month or two ago with anticipation of both this rate rise, and a stronger economy with a business person taking the White House in January. What does that mean for real estate? Well, higher lending rates certainly, and probably more and freer lending by financial institutions  that have been handcuffed by almost zero rates for about a decade. In other words, people will have higher rate mortgages, albeit at relatively low levels in the long term scheme of things. The offset is that the economy should be stronger, and inflation will likely come back to more normal levels. That means more and better jobs, higher wages and greater potential for some people to get loans. Coupled with the higher rates are a stronger dollar. Not good for people coming to the US, but for us, a great chance to travel overseas at lower prices. The US will remain a safe haven place for international investment, and additional households will be eligible for loans if the anticipation of a stronger economy comes to fruition. So in general, pretty good for real estate, but you won't be seeing loans under 4% again for a long time. 

We have had decent snow so far this winter season, with quite a bit more snow expected later this week. It's always exciting when you hear forecasts in the feet rather than inches, and it's just whether or not it comes to fruition that will be the difference between gleeful powder days or disappointment. Either way, for most of the visitors heading this way for Christmas/New Year's, the conditions are good on the mountain. Cross country skiing has also been nice, with soft conditions and good coverage. More downhill terrain is opening every week, and the groomers and patrollers are doing a fine job. Restaurants that have been closed for the shoulder season are starting to reopen, and in a couple of weeks, crunch time will be here! I relish seeing our town filled with happy visitors, enjoying the snow and shopping, just make sure you have good rubber soles on your shoes so you don't go home with an injury.
​Happy hollidays, everyone!

Existing home sales in October rose 2% to 5.6 million units, a level not seen in 9 1/2 years. Does that mean that we can finally say the recession is behind us? The difference this time is the lack of spec house building and that new construction in general has lagged demand considerably. Our market is certainly lagging in building. Areas like CB South and Skyland have a shortage of available properties for sale, but vacant land is still a lagging sector. In cities like NY the situation is different, as there has been a great influx of new development, especially at the high end of the market, and prices are starting to fall there.We should be in good shape now that the election is behind us and hopefully the economy will start picking up. I'm optimistic.  ​

The Crested Butte ski resort, along with 13 other ski resorts, has sold to a hedge fund. See Denver Post article here. 
I am a little troubled by the comparison of the sale to a mortgage being sold to another mortgage servicer. In the case of a mortgage, the debt holder gets verification of insurance: in case of trouble, the insurance will cover major issues thus rendering the deal hedged. In this case, there has to be some insurance, likely in the form of a lease cancellation clause. If the resort managers, (i.e. the Mueller family) fails to manage properly, the owners, (i.e.the Och-Ziff hedge fund) can terminate that relationship. Given what we have seen from the Muellers since they started managing CBMR, I would say that their ability to manage well is certainly hindered by a lack of attention, be it their presence or money being put towards improvements. They have had some substantial real estate misses here and with the latest lawsuit they lost related to the Prospect subdivision, I think their perceived ability to improve the ski area is certainly compromised. Hopefully the new owners will be able to exercise a termination clause and get better managers here. In the meantime, with local real estate all is well. I always consider us a great summer resort with skiing adding nothing to real estate valuations. If something were to happen on the mountain and it were to improve the skiing experience, it would only create upside to our market. Hopefully that will happen one day, but this deal potentially puts us a step closer. 

The current economic situation in the US is a bit sluggish, which is a bit confounding given the stimulus the Federal Reserve has exerted in the past number of years. Those years of easing are coming to a close, with the Fed slated to raise interest rates in December of this year. But the question lingers, why hasn't the economy picked up very much and why is the consumer still acting hesitantly? I believe the answer comes in a few different aspects of the economy.

#1, uncertainty due to the terrifyingly vicious political climate. We are all aware, and sick of, the election cycle this year, but it has created a lot of uncertainty in the economic realm. Will the Democrats gain a majority in the executive and legislative bodies? This could create a very different outlook from what we have become accustomed to in the last 8 years. And not necessarily for the economic better.

#2 Health care costs. In most places health care costs with Obamacare have continued to increase with 2017 premiums looking to spike in many states. As an example, my health care costs were $308 in 2014, Obamacare quotes are $768 last year and are slated to be $1078 in 2017. That is a 350% increase (for a worse plan) in just 2 years! This is completely unsustainable and something needs to be done. In terms of consumer economic uncertainty, this one factor is the most important. Why would I, or anyone, spend freely when my after tax health care costs are so unpredictable? Both parties seem to agree that the health care system in the US is broken, but hopefully someone has a plan for fixing it. The other aspect of Obamacare that is misleading is the number of people on its plans. I have never been on Obamacare, but since I applied they count me as one of their insured. How many other people are in this situation or had insurance for a month or 2 then cancelled? I would wager that those numbers are enormous and of the 10 or so million people they are counting, many fewer have had continuous coverage and re-enrolled. So, in actuality the problem it was trying to solve (getting insurance for those with pre-existing conditions who were otherwise uninsurable) is still a problem, and many other people are dealing with rapidly rising costs for no good reason. 

#3 World Wide recession. Our economy is sluggish, but is still doing well in comparison to most other countries. Many European and Asian countries have negative interest rates. This creates a situation where that money is looking to go elsewhere, in many cases into higher yielding US bonds. That has made the dollar strengthen a great deal against other currencies. That is great for Americans looking to travel overseas, but not so good for our economy. When our products, services and real estate are more expensive due to the dollar's strength, fewer people invest here, which in turn hurts our economy. Luckily for us in Crested Butte, we continue to have an influx of people looking to invest here, and have never been effected much by global concerns. This should help us avoid the boom/bust of international investment and keep our market fairly steady.