While the real estate market in the upper Roaring Fork Valley showed signs of recovery in 2010, conditions remain a little tougher downvalley, mainly because of a beefy inventory of homes on the market.

The Aspen Times met recently with representatives from the three biggest realty firms in the valley to take the pulse of the Basalt, El Jebel and Carbondale areas. The roundtable featured Greg Hunter of Morris and Fyrwald, Ted Borchelt of Chaffin Light Real Estate, and Patty Brendlinger of Mason Morse Real Estate. Following is the question-and-answer session with those real estate agents.

Aspen Times: Help assess the market conditions in the part of the midvalley where you specialize. Specifically, where are prices now compared to their high in 2007, have we seen prices bottom out, and what’s going on with inventory?

Greg Hunter: I work primarily with Basalt and Missouri Heights. I think prices have fallen between a third and 40 percent, sometimes maybe a little further. I think the better floor-plan homes are finding buyers in that price range. Some of that product that needs further help — whether it’s cosmetic surgery or further price reduction — is still sitting on the market.

AT: What are we seeing with inventory?

Hunter: What I’ve seen is an inverted pyramid of inventory where the smallest amount of inventory is where the most amount of buyers are and a lot of the inventory is in the higher price points. In Basalt there are currently 66 houses listed at $500,000 and under. In the last year we’ve sold 40 so there’s about a one-and-a-half of inventory currently listed in that price range. There seems to be good, solid activity in the $500,000 and under price range. That bears out also in Carbondale. The upper-end inventory is slower.

Ted Borchelt: I would agree with Greg. In general, you’ve seen a third to 40 percent reduction in values, maybe a little less for some prime properties, riverfront and some very rare properties, unique properties where buyers fall in love and they just have to have it. Maybe a little more than 40 percent when you’re looking at the highly distressed, bank-owned situations.

It appears that statistically inventory might be decreasing but my guess is everyone in the room here has a handful of properties they know there’s a seller on, they just don’t have it listed for sale — they’ve taken it off, they let it expire. But perhaps at some point in the near future they want to sell the property.

AT: Have prices bottomed out?

Borchelt: I think buyers are looking for a point, but I don’t think it’s a point, it’s a trough. It might be a long and sustained trough, but I think we’re very near the bottom. When a property is priced well, and realizing it’s come down a third or 40 percent from its high, I think there are buyers out there. …. So have we seen the bottom? I do think there might be just a little bit of downward pressure, but I think buyers are recognizing this opportunity isn’t going to last forever. I’m seeing some buyers’ fatigue. They started to look in 2008, they looked in 2009, they looked in 2010 and they’re ready to pull the trigger and they’re seeing some great opportunities out there. Might it drop a few percentage points more? Perhaps, but if you’re buying the for the long term, it’s a great time to be a buyer.

Hunter: By the time you realize the bottom has happened, the best properties are already sold. So, the buyer that’s waiting and watching for the bottom, all of a sudden the top six or eight properties he’s been watching are gone and now the second-tier properties are available but he’s missed the opportunity on the best buys.

Patty Brendlinger: I’m in agreement with the 30 to 50 percent [drop in prices], 50 percent is a little drastic and those are usually bank-owned properties. But about 30 percent off the [top] market. There’s a lot of inventory, no doubt. The higher amounts of inventory are in the bigger subdivisions like Cerise, Willits and River Valley Ranch. There’s 43 homes on the market in River Valley Ranch. If you’re a seller now, you have to price it right to get it done. Are you in that 30 to 50 percent off now when you list, possibly not. My opinion of the bottom, I actually think we’re kind of bobbling along at the bottom. … I encourage buyers I work with to make your offer now, even if it’s another 10 percent off, make it now before everybody else does or before springtime hits when we have more listings come on because the properties look better in the spring. So I do think we’re not at the very bottom but we cruising right now. There’s no better time to buy. Rates are creeping up a little bit but rates are incredible so why not capitalize on that.

AT: Where do you see the market going this year?

Borchelt: I see improvement as far as the number of transactions. I don’t think there’s going to be an improvement in pricing or any appreciation in the near term.

Brendlinger: We just had an all-company meeting last week. I think our percentages are already up for January by about 8 percent, so I think number of transactions will improve. I don’t know about dollar volume.

Hunter: Our business was up substantially in 2010 and I think we’re going to be up again in ‘11. Sellers have realized that the pricing that existed three or four years ago is gone. There’s enough sales to show where market value is today, and a good listing broker shows where their home is against the market and the smart seller is positioning to get into that range so it will sell.

AT: Are sellers becoming realistic to what’s going on in the market?

Hunter: Some are and some can’t. Some bought at the height of the market and their decision is whether to go into a short-sell situation and sell or hold and try to find a buyer that’s willing to pay for what they saw when they bought the house. The reality is, there are people who were caught.

AT: Give me one example that gives you optimism about the real estate market and one that gives you concern.

Brendlinger: Market conditions that give me optimism are pricing right now. I agree with Greg: There are certain sellers that are stuck, they’re upside down. But I do think there are a lot of sellers out there — like Ted said — that aren’t on the market right now that would like to sell. My last two sales have been unlisted properties.

The concerns are the short sales and foreclosures. It’s a struggle for me to convince a buyer to have patience through a short sale. I think the mentality now is for them to wait until the bank actually owns it and they find it an easier purchase, so that’s putting our buyers off even longer and some buyers are looking 12 to 24 months. I put myself in their shoes, if I was a buyer I’d probably do the same thing. So that’s a concern, the short sales and foreclosures and the list increases so it puts buyers off even longer.

There’s a big myth out there with residential financing. People are fearful they won’t qualify, they won’t get it, that this on their credit — and I think it’s softening a little bit. … People assume they can’t qualify when they actually can.”

Borchelt: Starting out with the positive, we’re seeing a big increase in showing activity in the midvalley within our company in the last few weeks. We’d expect it to slow down in November and December, which it did, basically just shut off; then since early January it’s been fantastic, so I think that’s a wonderful sign.

Concern certainly is short sales and foreclosures.

Hunter: The midvalley has always had three sets of buyers. We had the end user, we had the investor and we had the landlord. When the market fell apart, the landlord and investor went away leaving us only with the end user. With prices rolling back the way they have, I see investors coming back into the market a little bit. The numbers are starting to make sense again from an investment standpoint, so to bring that buyer back into the fold adds a whole other layer to the market that have been gone for three years.

The high-end market of the midvalley [is a concern]. When Aspen’s prices came down a third, there were a lot of people that built spec properties in the midvalley from ‘04 to ‘07, in the $1.5 million to $3 million range. When Aspen’s prices rolled down a third to 40 percent as well, it started to squeeze the price point that those guys were trying to cater to — the buyer that was unable to buy in Aspen or Snowmass. He can now afford to buy closer to town, which wasn’t the case when the [midvalley] project was started. It’s going to have to be a really good property at a really good price to capture the higher-end buyer.

Borchelt: There was a lot of spec building in ‘05, ‘06, ‘07 for that five-bedroom or bigger, 5,000-square-foot house or bigger that I’m just not hearing that people want right now. Will they want it in the near future, or was that something that was built for a market that might not exist for a long time? I don’t know. That’s kind of in that $1.5 million and up range in the midvalley and I’ve heard someone say you make an offer on the 3,000 square feet and you get the rest for free.

Brendlinger: This crisis is a global crisis — not just a valley crisis or a nation crisis. I feel that the people who used to look at the 5,000-square-foot home are more sensible in that they don’t need that, environmentally they don’t need that anymore. I think that’s globally where we’re going.

AT: To wrap up, summarize how things are out there right now.

Brendlinger: I hope I err on the side of always being positive. In a down market, there’s lots of opportunity. … I’ve had some great years and I think it’s changing the way I think in this climate. You have to think differently. You have to call people that aren’t on the market. You have to encourage buyers to write the lower offer.

Borchelt: The valley hasn’t ground to a halt. There are still plenty of deals getting done. You just have to work hard, you have to work smart. I’m very optimistic for 2011. I think there are some great signs out there. The casual Realtor out there that might want to do this part time, it’s not a part-time job.

Hunter: I think ‘11 is going to be a lot better than ‘10. A lot of the sellers I’m working with realize it’s not coming back to what it was before, so the new bar has sort of been established. To me, that creates nothing but opportunity for buyers. You can get a lot of house for a lot less money these days.

scondon@aspentimes.com