Breckenridge Ski Resort and the town of Breckenridge are inviting everyone out the day before Breckenridge Ski Resort’s opening day for a free Wake Up Breck collector’s mug, coffee and good conversation. Members of Breckenridge’s management team and town leaders will be on hand at the following coffee shops in town to distribute 1,100 free mugs and free coffee:

Starbucks; Clint’s Bakery & Coffee House; Cool River Coffee House; The Coffee Cart at City Market; Amazing Grace, Coffee Depot at Main Street Station and Daylight Donuts. As special thanks; Breckenridge’s hometown hero and Olympic hopeful Steve Fisher will also distribute mugs and autographs at Cool River Coffee House.

To jumpstart the winter season the mugs will be stuffed with coupons from local businesses to generate excitement for Breckenridge’s opening day the following day, Thursday, Nov. 12. Get to Breckenridge’s local coffee shops early because the free mugs, free coffee and the coupons are first come first serve.

For more information on Breckenridge Ski Resort’s opening day, visit www.breckenridge.com.

Like many people selling their homes during the recession, the Houston, Texas, resident had to slash the price before attracting a buyer. He said he cut $700,000 from the price of the home, which was listed at $3 million.

“I would say finding buyers today is not easy,” Pywell said. “I think there’s certainly signs in the last couple of months that people are looking again. I think you’ve got to be prepared to discount the pricing somewhat to get people motivated to buy.”

Apparently, more people are motivated lately.

Real estate spiked within the past 30 days in the Vail Valley, with a slew of residential properties going under contract, the Vail Board of Realtors said.

Seventy-seven residential properties went under contract between Aug. 10 and Sept. 10. That compares with 22 contracts between Jan. 1 and July 10, statistics released by the Board of Realtors show.

What caused the jump?

“Consumer confidence is up because our economy is not getting worse,” said Scott Bandoni, a real estate broker with Prudential Colorado Properties in Beaver Creek.

Although Vail Valley real estate hit a slump in October 2008, things could be looking up, some say.

“I think people are recognizing that we already hit the bottom back in June or late May,” said Chad Brasington, chairman of the Vail Board of Realtors.

With slow sales have come low home prices, and they’re attractive to buyers.

“There are some great deals out there,” said Amy Dorsey, branch broker of the Park Hyatt Slifer Smith and Frampton office in Beaver Creek and president of the Colorado Association of Realtors.

For sellers, the downside is their homes are losing value, Bandoni said.

“What you paid for a property in early 2008 is going to be sold for less in middle of 2009, so it’s not all roses,” he said.

Who’s buying?

Two very different types of buyers are snapping up real estate, Bandoni said. First-time home buyers and locals have been buying homes under $500,000, he said.

In fact, homes under half a million dollars account for 39 percent of home sales so far this year, up from 30 percent last year, said Larry Agneberg, a broker with Prudential Colorado Properties in Lionshead.

This year, 119 of the 304 homes that sold as of the end of July fell in that price range, he said. In 2008, 422 of 1,292 homes sold for under half a million, he said.

On the other side of the spectrum, the upcoming ski season has been driving second home-owners to buy luxury homes, Bandoni said.

“That’s helping some people get into the market right now because they want to use their place for the winter time,” he said.

Why sell now?

Sellers have their reasons for unloading their properties now, instead of waiting for an upswing in the recession.

Pywell enjoyed vacationing in his Cordillera home but found it a bit desolate in the winter so he bought a home in Beaver Creek in May 2008. Even though Pywell knew he would have to slash the price of his Cordillera home to sell it during the recession, that seemed like the logical thing to do. The house was sitting empty and Pywell no longer wanted to pay $50,000 per year for taxes and other costs.

“I’m just pleased, really, that someone came along and appreciates the home, is going to take the home off us,” he said. “We just need to move on and just realize the market is what it is in today’s world.”

Likewise, Michigan resident Clint Sampson recently signed a contract to sell his Avon townhouse. He and his wife owned the investment property for nine years, put it on the market three months ago. They’re expecting to get $590,000 for it — close to what they paid for it.

“It was part of my portfolio and we thought we might at one time spend some time out there,” Sampson said. “But then we bought our retirement home in northern Michigan on Lake Michigan, so we decided that probably wasn’t going to be what we would do, so we looked at rebalancing our portfolio.”

‘Time will tell’

This spike in contract activity may not necessarily signal the end of the recession, Agneberg said. This is, after all, a busy time of year historically for real estate as buyers prepare for the ski season.

“Time will tell,” he said. “We’re all hoping it says busy up through ski season. Just this recent flurry has people a bit more optimistic. We’ll just hope that it maintains at least this level if not more.”

By Lawrence Yun, Chief Economist

September has come again, and most folks are back from vacation. Kids are back in school. Traffic (in most locales) has returned to its usual nightmarish levels. Many of us are asking ourselves “where did the summer go?”

Well, summer is not the only thing that has ended. The world-wide economic recession is also essentially over. Led by countries such as Brazil, India, and, in particular, China, the economies of the world are digging themselves out of that recessionary ditch. Many other countries appear ready to emerge from the economic doldrums just as strongly. Poland, Chile, Mexico, Turkey, South Africa, and Vietnam could all re-emerge with stronger economies in 2010. Let’s hope that as these and other countries travel the upward road to recovery their leaders and policymakers face up to global challenges and opportunities that stem from laying down the necessary institutional reforms that respect private property rights and the transfer of properties.

The U.S. economy, also, appears positioned to start that upward climb to recovery, and those improving foreign economies are also helping to pull the U.S. economy out of its recession as well. Healthier foreign economies mean increased exports from the U.S. Indeed, the net export picture in the U.S. has improved notably this year.

Another factor that will contribute to a reviving U.S. economy is the huge inventory restocking that needs to take place over the next several quarters. In the wake of the financial crisis in the fall of 2008 (and as part of the aftermath of the Lehman Brothers collapse), corporate credit was virtually nonexistent. And most companies kept their precious cash close - not spending it for any inventory purchase. Now, with inventory all but depleted, orders have been rising.

The most important factor, however, helping to kick-start the economy is the improving picture of housing. The housing component of the federal government’s stimulus package has had the intended impact we had hoped for: decidedly lifting home sales, trimming inventory, and beginning to stabilize home prices. A big part of that successful “housing” stimulus was the first-time buyer tax credit. In fact, as of August an estimated 1.2 million first-time homebuyers took advantage of the tax credit that went to effect in February and joined the ranks of property owners. In the process a chain reaction was unleashed. Many existing homeowners were able to sell their homes to first-timers, and thus purchase their next home.

Let’s look at just a few of the recent figures that should cheer us. Existing home sales - both single-family and condominiums/co-ops - rose 7.2 percent from June to July to post a seasonally adjusted annual rate of 5.24 million units. That is the highest month to month increase in at least 10 years. And perhaps even more telling is the fact that resales were higher by 5.0 percent compared to July of 2008. This is the first time in nearly four years that we have seen a positive year over year increase.

Pending sales, too, are on a roll. They continued their upward trend in July, posting positive gains on both a month to a month and year over year basis. In fact, July’s index reading of 97.6 was the highest since June of 2007. Affordability, while declining slightly, is still at historically high levels and well above levels seen last year.

To insure that this positive momentum continues - and thus help keep both housing and the economy firmly back on track - a couple of things need to happen.

For one, that first-time homebuyer tax credit needs to continue for a bit longer. Its current expiration date is November 30 - and that is fast approaching. Given the lengthening time it has been taking to close on a home sale recently, a buyer would need to sign a contract by the end of September to assure the settlement occurs by the end of November. (NAR is working with policymakers encouraging an extension of this home buyer tax credit.) The tax credit does add to the already high budget deficit figures. But the economic recovery and the consequent gains in employment and tax revenues have been in the past and will continue to be into the future the principal factor determining a country’s fiscal health. Furthermore, given that homeowners pay nearly all of the federal income tax, extending the temporary tax break for the housing sector at a budget cost of about $15 billion to help reverse a deep downturn is well justified. (The other aspects of the huge $787 billion in stimulus can be debated.) The need to get the buyers back could be even more critical at least through the middle of next year because of the incoming rise in newly foreclosed properties. The lingering toxic combination of a high unemployment rate and a sizable number of “underwater” homeowners will mean high foreclosures at least through the spring of 2010. These inventories need to be quickly absorbed.

Of course there are risks. A big wild card in a sustainable recovery is the commercial real estate market. Unlike residential real estate, commercial real estate did not receive much of a stimulus. This sector still faces strenuous challenges, particularly related to the issuance of commercial mortgage securities. On the positive side, the Federal Reserve has put more focus to the issue and it is likely more credit could flow into the currently frozen market. Recent improvements in bank profits and reserves should lead to more lending for small businesses and for commercial real estate. In addition, the improving economy will steadily induce companies to demand new commercial spaces.

Yes, the recession is essentially over - from a weird economists’ definition based on production and not based on employment. But a full job recovery will take some time. Jobs will (finally) begin to be created from early 2010. Still, it will take at least 3 years to fully recoup the more than 7 million jobs that will have been lost during this economic cycle. But because of the economic liberty and secure property rights accorded to Americans, the country, despite the harsh short-term economic setback, will no doubt rise up again.

Last week, Standard & Poor’s reported that its S&P/Case-Shiller U.S. National Home Price index of real-estate values increased this past quarter over the first quarter of 2009, the first quarter-on-quarter increase in three years. Its index of 20 major cities also rose for the three months ended June 30 over the three months ended May 31, with only hard-hit Detroit and Las Vegas experiencing declines. The week before that, the National Association of Realtors reported that sales volume of existing homes was up 7.2% in July from June.

In short, the data suggest that real-estate prices hit a bottom some time during the second quarter, and have now begun to rise. There’s no way to be certain that this marks the end of the long, painful correction that followed the real-estate bubble, but clearly prices are no longer in free-fall. That means if you’ve been sitting on the fence, it’s time to act.

Ordinarily I’d never try to time the real-estate market, but I can understand why buyers have been cautious. Few want to buy in down markets, just as stock buyers avoid bear markets. And for most people, of course, buying a house is a much bigger decision than buying a stock. But with real-estate prices nationally now down about 30% from their 2006 peak and showing signs of turning up, the prices aren’t likely to go much lower. Every real-estate market is local, and so there may be a few exceptions. Overall, though, I can’t imagine a better time to buy than now.

In addition to bargain prices, buyers also should find plenty of homes to choose from. The inventory of unsold homes was 4.09 million units in July, up 7.3% from June, according to the National Association of Realtors. And mortgage rates this week were at a two-month low of close to 5%, according to Zillow. Even the stricter appraisal process is working to the advantage of buyers. Appraisals are coming in far lower than most sellers have been expecting, forcing them to face the new reality of sharply lower prices. And with stricter standards, lenders aren’t going to let buyers borrow more than they can afford, which protects buyers and helps to keep prices down.

Unless you’re really prepared to accept the demands (and headaches) of being a landlord, I don’t recommend direct ownership of real estate as an investment. The days of buyers lining up to flip Miami Beach and Las Vegas condos are mercifully gone.

There are much easier ways to make money in real estate, such as real-estate investment trusts or buying shares in home builders and other housing-related businesses (such as Home Depot). Historically, the mean rate of return on real estate has been around 3%, according to research from Yale economist Robert Shiller, who co-developed the Case-Shiller index. Shares in REITs and other stocks have often done much better.

But there’s a good reason homeownership has been such a central part of the American dream. It delivers security, pride of ownership, a sense of community and decent investment returns as a bonus. I felt glad for my driver in Florida. He represents the other side of the foreclosure crisis. For every hardship story, and no doubt there are many, others are realizing their dreams of home ownership and getting what may well turn out to be the deals of their lives.

As a well-polished realtor, you’d never suspect that Donna used to be a cowgirl. Along with her five sisters and one brother, she worked a cattle ranch in southern Idaho. I don’t know how many acres the ranch is. A while back, I learned that asking such things is a bit impolite and somewhat like asking a city slicker how much money he has in the bank. But the family ranch has more than a few acres and enough cows to keep everyone busy. In the wide open spaces of the west, it’s amazing how a handful of cowboys (or cowgirls in Donna’s case) could effectively control hundreds, sometimes thousands, of cattle and get them moved from point A to point B. This ability has always confounded me, especially when I see how a mom and dad at the mall can have trouble keeping three kids together. Well, what makes driving cattle possible is the herding effect. I found on the internet (you can find anything on the internet) that a trail boss would look to have about one cowboy for every 250 head of cattle. Get some real experienced riders, and you might make do with one for every 400 head. In short, a few key individuals can have a great impact on leading a much larger entity.

From cows to cape cods, there’s also a herding effect in home sales. People always find safety in numbers, and when homebuyers sense a change in direction the psychological shift in attitude can have a rapid and dramatic impact on home sales. Events can shape market trends, but just like the cattle drive crew, a small group of respected opinion makers can also have a considerable influence. When it comes to the housing market, one of the most highly respected tracking methods is the Case-Shiller Home Price Index. Standard and Poors provides this description of the index: “The Case-Shiller Home Price Indices measures the residential housing market, tracking changes in the value of the residential real estate market in 20 metropolitan regions across the United States. These indices use the repeat sales pricing technique to measure housing markets. First developed by Karl Case and Robert Shiller, this methodology collects data on single-family homes re-sales, capturing re-sold sale prices to form sale pairs. The index family consists of 20 regional indices and two composite indices as aggregates of the regions.”

Shiller has been busy of late in the talk show circuit, because his carefully watched index recently made news by recording the first quarterly increase for home prices in the last three years. After a long ride up, followed by a long ride down, the index has finally turned the corner with an increase from May to June. Out of the 20 major markets, only Detroit and Las Vegas continued to see prices fall in June. As the graph shows, our local D.C. market actually experienced an upswing earlier in the year. For that market, prices have been on the increase since March. We make note of this because the Case-Shiller index is so highly regarded that it can inspire the herding effect and set us off in a new direction. The index is imperfect and sometimes criticized because it only looks at major metropolitan areas. But we consider it a pretty good barometer of the market as a whole.

Despite the encouraging data, Shiller is a scholarly guy with a Ph.D. in economics from MIT, so he’s not prone to emotional overreaction. Shiller wrote a book titled “Irrational Exuberance,” a term first coined by Federal Reserve Chairman Allen Greenspan in his description of the overheated “dot com” economy in the mid to late ’90s. There was even a second edition to the book “Irrational Exuberance”, so it shows Shiller is not one prone to ring the all clear unless the numbers clearly make the case. Additionally, a one month change in the index does not make a trend. But, after three years of declines, it does make news. Plus, the anecdotal experiences we have in our own office would seem to be consistent with the macro-economics of the Case-Shiller Home Price Index. Just by the number of showings we see on homes and the number of contracts being written, it would appear that we’re coming out of the trough. Nevertheless, there’s a lot of economic turmoil out there, and Shiller warns that substantial uncertainty still lies ahead.

Still, we wouldn’t be surprised to see the housing market show some real signs of life as we move out of the summer doldrums and into the fall. If housing prices show some evidence of recovery, lenders may begin to relax loan requirements and the need for large down payments. This, coupled with an improving stock market and a reduction in housing inventories, could further fuel home sales. And due the herding effect, if people start to sense that they’re missing the bottom, they may begin to really rush in, hoping to get on board before this train leaves the station. However, the recent recession has burned people in a way unseen since perhaps the great depression. As a result, we expect a good deal of caution, especially when it comes to big purchases like a house. With cash for clunkers, people are willing to put their toe in the water on buying a new Toyota Corolla. But laying out 400 grand on a new house is a little different.

We’ll keep an eye on future changes in the Case-Shiller index and let you know if the numbers keep pointing up. Importantly, this index is not prone to head fakes or unwarranted changes in direction. The three consecutive month-to-month increases recorded for the Washington D.C. region are a good sign and point to a possible recovery that could be ahead of the nation as a whole. We’ll keep you posted.

Tip of the week

When you’re in a housing market where prices are on the mend, remember that homes sold in the past can be less relevant in determining the current value of property. Sellers have been pretty beat up for a long time, and as the market improves, they’re going to hang tough a little bit more on their price. So if you’re buying a house in September, a similar one that sold last January might not accurately reflect how much you should pay. When looking at comps, be sure to factor in changing market conditions.