I was having lunch with a mortgage banker friend this week and we were discussing the real estate and prospects of a sustainable and saleable market. Brad and I were sharing experiences of what we were seeing in various markets around Virginia and he used a wonderful analogy. He said we are in a “bathtub recovery”. Perfect. If you are totally confused about the housing market, join the crowd. One day you’ll read that owning a home has never been more affordable. The next day you’ll see news that housing starts have plunged to nearly their lowest level in half a century. After four years of falling prices and foreclosures, it is difficult for anyone to gauge the markets, especially listening to the talking heads on TV. Historic price appreciation in the mid 2000’s had many believing that property values would never go down, and many of us repeatedly warned that things were moving too fast. We were affected by the bubble at Wintergreen and in Central Virginia, like other parts of the nation, but not as badly. Many new people in our markets did not understand the cyclical nature of the real estate and many did not have experience or perspective. Today, it is critical to keep one’s eye on the fundamentals in order to see where real estate values will be going. It seems we are starting to head in the opposite direction. There is a new reality in all real estate markets and while no one has a crystal ball, we are cautiously optimistic.

Customers might feel a cautious and apprehensive to buy right now because they feel prices will not go up fast enough, yet just a few years ago the same people thought that prices would never go down. The majority of gains in the shortest amount of time are made when conditions change, and especially, as they change. Yet, the information that is posted about the home market is usually months old and is “calculated using a three-month moving average and published with a two month lag”. It does not show what is happening now. The recession appears to be over and within a year or two home prices should start to rise. We believe right now, is the best time to recommend anyone purchase at Wintergreen or elsewhere, in the past decade. Why? First, mortgage rates hit their lowest levels in American history in late 2010 and we are up just a little from the lowest rates ever, still about 5% on a fixed 30 year rate. Second, homes are more affordable than ever and it should continue. Nationally, foreclosures and fair valued priced properties sales are leading the way. There is a historic drop in new construction and a steep decline in prices, on the order of “30% nationwide since 2006, and as much as 55% in the hardest-hit markets”. Inflation is just around the corner and when that starts, rates will increase and home prices. However, taking into consideration home prices, income stability, and mortgage rates, we are starting to see increased interest in buying. For this national market to return to what the experts anticipate, America will need a decent economy, job creation, and consumer confidence continuing to improve.

No cities went untouched by the collapse in prices, but markets such as Northern Virginia and other parts of Virginia and North Carolina within our market area held up reasonably well and are showing job growth. Due to their stability and growth, we seem to be headed toward increased interest in a second and primary home community like Wintergreen. Our few distressed sales will be absorbed, followed by the standing inventory, and finally new construction will start again. I encourage you to talk to friends or family who would enjoy owning a 2nd home or having a retirement place in this part of Virginia or at Wintergreen. Send me the names and contact information and I will be happy to send them a package of information. Thank you for thinking of me in referring your friends. It is greatly appreciated and it is a great time to buy here.

As mentioned on previous occasions, our markets at Wintergreen and this part of Central Virginia have always appealed to the upper affluent demographic within a three hour drive time radius and thus, we have been somewhat protected from what has happened on the more distressed parts of the nation. Yesterday, we got the results of the first quarter numbers from CAAR and Nelson County Tight credit standards have not stopped sales and we are we are returning to the standards that prevailed before the craze. We have 90% funding for both homes and condos. “The credit standards are now at about historical levels, excluding the bubble period,” says Mark Zandi, chief economist for Moody’s Analytics. “We saw prices rising with fundamentals in those periods, and it will happen again.”

It is interesting to note that while the overall residential real estate market is still down, sales of vacation homes fared better than sales of primary residences and investment properties in 2010, which is great news for us. “Consumers found low real estate prices, attractive mortgage rates and the potential for price appreciation compelling enough reasons to buy more than half a million vacation homes last year”, according to proprietary research commissioned by Homeaway, Inc.; part of the National Association of Realtors (NAR) 2011 investment and vacation home buyers survey. “We are seeing nearly all vacation home buyers say they plan to rent out their property and decided to purchase a vacation property last year primarily because of low real estate prices”. 2010 proved a good year to buy, according to the NAR survey. “There were 543,000 vacation homes sold nationally last year, 36% paid cash, 54% plan to own their property more than six years, and 34% said they would buy another property within the next two years. 27% wanted a personal family retreat, 12% bought for price appreciation, 11% because of low mortgage rates and the others were 13%”. Our owners at Wintergreen are given the benefit of being able to rent their 2nd home when they are not using them to supplement the mortgage and carrying costs. There is also something developing which might be interesting to the owners of the nicer homes at Wintergreen. It is called “Third Home” and worth a quick search www.3rdhome.com

Now to the resort according to the Chairman of W.P.I.:


“With our ski season coming to an official close on Saturday, March 26, WPI concluded its second consecutive successful winter. Total ski department revenue was approximately $9.5 million against a budget of $8.7 million; of this $800,000 positive variance, about $600,000 in additional cash flowed to the bottom line. Overall, WPI has exceeded its total sales budget by $1.5 million in fiscal 2011, and expects to realize an incremental cash surplus of approximately $800,000 to $1 million by the end of June.”

These positive operational results have allowed the resort to pursue several important initiatives:

“The renovation of the Edge Restaurant. Last updated in 1998, the edge will be closed through mid-may while an extensive remodeling project is undertaken to restore a more rustic, lodge-style environment to the beautiful scenic views from the dining room’s picture windows. Gone will be the industrial, stainless-steel-and- particle-board look, to be replaced by warm natural wood paneling, planks salvaged from old barns, beamed ceilings, and vibrant accent colors. The change will be dramatic and, we believe, appreciated by all.

The renovation and re-opening of The Market at Wintergreen. Recent emails announced the closing of the Black Rock Market on March 27. After undergoing an extensive remodeling and redecorating effort, including new flooring, display shelves, ceiling paneling, and lights, the market at wintergreen will celebrate its grand opening on Saturday, May 7. The market will feature Boar’s Head deli products, fresh local produce, freshly baked bread from Albemarle Baking Co., and locally-roasted coffee from Trager Brothers in Lovingston”. (Personal note: this is the best coffee I have ever found.)

“Irrigation of the Shamokin course in Stoney Creek. Since January, your golf maintenance team and local contractors have been installing a new irrigation system on the Shamokin Nine. This project has included the installation of 350 new sprinkler heads which will provide much improved hydration to a course which is typically the first to suffer when heat and humidity descend upon the valley during the summer. Management expects the course to re-open for play in May”.

“But perhaps the most important initiative coming out of the past two winters is the impending $500,000 installment on repayment of the private placement debt. As you will remember, WPI raised $7.5 million through a private debt issue to the membership in 2009, which was used to refinance debt then held by Bank of America. The principal is not due until June 30, 2014, but your board of directors, acting on the recommendation of resort management, voted unanimously on March 19 to initiate an early, voluntary repayment of $500,000. This action is consistent with the board’s goal of reducing the amount of outstanding debt by several million dollars prior to the stated repayment date (providing, of course, that operational performance supports this). The board has authorized the $500,000 to be paid to note holders on or before June 30. If you were an investor in the offering, you will be contacted in the coming weeks regarding the method by which us bank, as trustee for the investors, will allocate the repayment. Please keep an eye out for correspondence regarding this initiative”.

That is the news from the mountains and valleys of the Rockfish. Hope it is helpful. Things are getting better and I feel we are going to have a productive summer in regard to real estate sales and resort usage. Come spend some time in the mountains this spring and summer. It will renew your spirit.

Contributed by Tim Merrick

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