Greetings from one of the most beautiful places in the world.
Summer activities are in full swing from evening concerts in the Evans Center to summer sports to children’s programs to great dining in the Devils Grill and Copper Mine (new menu) to guided hiking with Doug Coleman and great fishing, just to mention a few. The opportunities within Wintergreen while enjoying the cool summer breezes in the mountains seem endless. If you want to escape the heat and have some fun, COME! And, if you need a good deal on a place to stay, call us at (434) 325-7933. We are still 15 to 20 degrees cooler than where you are.
Now to business:
There is little doubt the upheaval in the real estate market over the past couple of years has been a jolt to the nation’s collective psyche. Economists believe we are at the trough or close to the bottom of the market and the market is starting to turn. Due to historically low interest rates, we are starting to see more activity and sales. It should be remembered that in any housing recession, housing prices are slow to recover, but sales recover faster. WREC sold in the six months from January 1st to July 1st 2009: 7 lots, 6 condos, 16 homes. In the same period of this year, we sold 14 lots, 8 condos, and 28 homes and that does not include all the sales within Wintergreen, but it is the lion’s share. It seems to be getting better. People have become more conservative in their personal finances and those interested in buying here are looking for houses and condos and home-sites that exhibit affordable value. These buyers are prudent and informed by making use of the Internet. It gives them information which makes it harder for properties which are overpriced to be noticed. Wintergreen Real Estate Company has an advantage in our market in that we have one of the most sophisticated and robust web sites in the industry. Our website www.wintergreenrealestate.com remains the primary driver of prospects to the community and eventual sales. Most Americans within a three hour radius of our community are familiar with Wintergreen through vacationing, advertising, or referral. And, although the Internet services satisfy many of a potential Buyer’s initial curiosity, there is still a tremendous need to utilize the skills of a real estate professional. The best result requires a partnership. At Wintergreen Real Estate Company, we like to utilize the strengths of the internet coupled with experienced, knowledgeable agents to make sure our buyers are making the right decision and they look to our group of seasoned experts at WREC for good advice. Understanding this real estate market will be the key to our recovery. There are still opportunities for savvy real estate investors even in a slow real estate market recovery. As mentioned, properly priced real estate sells and the other properties sit on the market. It is a great time to recommend a friend or relative. Simply put, there are some good deals out there.
A friend sent me the following note on pricing and I thought it might be interesting for our owners who have property listed for sale.
“Most of us think of numbers as describing quantities, and nothing more. Four is more than three; case closed. However, numbers have aesthetic qualities, too. There’s a reason an estimated two-thirds of items on retail shelves have prices ending in nine. It’s good for sales. Researchers have known about this nine-ending effect for nearly 80 years. Perhaps because precise prices look low — even lower than those ending in nine. A Cornell University study published recently in the academic journal Marketing Science looks at buyer attitudes toward precise numbers, both in the laboratory and the marketplace. Subjects sorted into groups and asked to make flash decisions on where a string of large numbers ranked on a magnitude scale of 1 to 9 consistently assigned higher magnitudes to round numbers than to precise, slightly higher ones.
For example, they judged $510,000 to be slightly higher on the scale than $511,534, and they saw $400,000 as considerably higher than $401,298. The researchers theorize that people aren’t used to discussing large numbers with precision, so they tend to associate precision with smallness. They call this tendency the precision heuristic (a heuristic is a type of mental shortcut that humans use to make decisions quickly, but not always wisely). The habit seems to be learned, not hard-wired; the researchers found that they could retrain subjects through additional demonstrations in which the obviously large numbers were precise and the obviously small ones were rounded.
That’s all well and good in the lab, but would the precision heuristic work in real life? It already has, apparently. The researchers studied thousands of real-estate transactions in South Florida and Long Island, N.Y., where houses sold for less than the asking price. All else held equal, houses that were originally listed at precise amounts sold for about 0.75% more than those that started with rounded prices. On a $500,000 house, that’s $3,750.” We should be willing to explore anything to get an edge for our sellers in this weak and recovering market. Maybe a price adjustment based on heuristics valuing will get a buyer’s attention.
Headlines may proclaim that real estate sales are up, but according to a recent AP Economic Survey, home values in some areas have fallen an average of 30% since 2006. We are seeing few new single-family housing starts but are seeing more additions. Our buyers are looking at existing inventory which will help absorb the standing inventory.
It is very important to remember given the slow rate of sales and the weaken economy that Wintergreen is in far better financial shape than many of other resort communities. Thankfully we have a mature community, little debt, and great leadership. I asked John Coy, the chairman of W.P.I. if I could enclose a copy of his recent letter to members, because it is pertinent and affects all owners at Wintergreen. If you are a member, forgive the redundancy, if not, it is worth noting.
“As you recall, two years ago we were in default on our loan agreement with Bank of America, and owed them about $12 million. Today, WPI’s debt consists of $7.5 million owed to the Members who participated in the private placement. We have no balance owing on the line of credit. These results were not achieved without sacrifice by many and a ceaseless dedication to the cause, but I believe that today we stand apart from many other organizations and communities that have not been able to endure the economic difficulties of the past two years.
I am especially pleased to report that on Wednesday, June 30, WPI executed an agreement with Bank of America whereby the large majority of our real estate holdings and personal property were released back to the Resort. An extremely difficult business and financial challenge which began in July, 2008 has been successfully met and resolved, in no small part as the result of the Membership’s continuing support of the Resort and the success of last year’s $7.5 million private placement initiative.
Bank of America has released all of WPI’s real estate holdings, with the exception of the Wintergarden Spa and the Associate Housing facility. The Devils Knob complex, the developable parcel known as Grassy Ridge, the Mountain Inn and Village area, and all our ski terrain has been returned to our control. We continue to maintain a $3 million line of credit with Bank of America (thus their retention of the two parcels), and our account has been moved from the “workout” group in Charlotte and returned to the commercial office in Richmond.
To be sure, the past winter helped provide WPI with its best financial performance in many years, and we look forward to reporting these results in greater detail at the Annual Meeting in October. But just as important as an improved financial picture is what I believe is the elevation of morale among the Membership and its different constituencies over the past months. There exists a sense that things are moving in the right direction and, while there is undeniably much ground to be made up and work left to do, we have the right leadership team in place to achieve those goals.
I am exceptionally pleased to be able to make this announcement, and offer my gratitude and thanks to our Membership, the management team, the entire staff who helped engineer and make this turnaround possible, and the support of the many guests and day visitors who have joined us over the years. The future of WPI is certainly much brighter today than in 2008. “
I also wanted to pass this on to you because we just recently received it from the W.P.I. Members Office and I did not want you to be confused with their new policies.
“Please note that effective May 28, 2010, the Wintergarden Aquatics & Fitness Center will become exclusive to WPI Members and Resort Guests every day, all day, 365 days a year. Patrons with spa services or enrolled in a fitness class will continue to have access to the pools and fitness center on the day of service or class. WPI Membership is available for the new set price of $5,000 for a Non-Equity membership and $12,000 for a Premier Equity Membership. The new set price for a WPI Right of Membership is $9,000. Financing is available for all products.”
In closing allow me to mention something that is guaranteed to bring great pleasure to any member of your family in addition to all the things there are to do at Wintergreen; FISHING. Wintergreen is blessed being in the middle of some of the best fishing in America. The James River and the Shenandoah River are world renowned rivers for Smallmouth Bass and only about ½ to an hour away. The Rockfish River branches merge a couple miles down Route 6 and below Skyler to the confluence at the James in the late spring and early summer is a stunning little river with spectacular fishing when the large Bass from the James are spawning. It can provide one of life’s best days on the water. The fishing is great and the scenery truly beautiful. The ponds in Stoney Creek were stocked in the mid 1970’s and those fish are big and strong enough to pull your canoe. Whether you have a cane pole and some worms or a fancy fly-rod and poppers, you will catch big fish. As a favor, just don’t kill them. The same fish should be caught by Grandparents and later Grandchildren. The trout fishing is also first class. Spend part of a day enjoying quiet solitude and a beautiful upstream hike on Stoney Creek in Shamokin Gorge. Russell Otis and WPOA under a permit from the good folks at Virginia Department of Fisheries stocks twice a year in addition to a decent resident population. Finally, for the true fly fishermen, there are opportunities to catch large trout on dry flies on the Limestone streams in the Shenandoah Valley and Western Virginia, which will rival the famous trout streams of Montana and Great Britain. Instruction is available through local shops and there are guides and information available. Call me if you need advice or have questions. Have a great summer and stop by the Black Bear Café office or the Stoney Creek Office next time you are here, It would be great to see you again.
From Tim Merrick