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Trailhead Lodge at Wildhorse Meadows is at the center of the Steamboat real estate rumor mill.  Trailhead Lodge is about finished, and the people who put money down are set to close this month.  The big question around town is:  How many people are going to drop out?

And the unspoken, implied question is:  Is Trailhead Lodge going to be a flop?

I don’t know the answer to that question, but I think Trailhead Lodge will do just fine.  Here’s why:

The Trailhead Lodge sales event on July 25, 2007 had to be one of the best-timed launches in real estate history.  The launch was held months after Intrawest purchased the Steamboat ski mountain when Steamboat real estate prices were literally appreciating up to 5% a month.  Loans were available for those who had a pulse and the imagination to make up an income amount that would cover whatever they wanted to buy.  People didn’t actually have to earn the money they “stated” in the loans, they just had to say they did.

That was the summer when only good times lay ahead.   So when the Trailhead Lodge sales crew hit the streets of Steamboat, they were greeted by enthusiastic investors ready to put 20% down to ride the appreciation wave for two years.  During that heady real estate time, people expected their units to be worth more than they paid when it was time to take title.   They thought they could simultaneously close on their condo and sell it to another buyer the same day and pocket the huge profits.

The selection event for Trailhead Lodge sold 61 of 86 available units for $56 million in real estate sales. The developers were thrilled.

It’s worth noting that Trailhead Lodge was the second hugely successful launch at Wildhorse Meadows. In late 2006, all 41 single family homesites at The Range at Wildhorse were sold for a combined $21.6 million.

There are eight land parcels in Wildhorse Meadows.  The Range, Trailhead Lodge, and First Tracks (the affordable housing component required with all new Steamboat Springs developments) are three of them.  The other five will include 150 loft-style condos and townhomes, and a hotel. (The Steamboat Today reported that these parcels have since been refinanced with long-term financing.)

Here’s why the project works, even if people drop out:

The original developer bought 44 acres at the Wildhorse parcel from American Ski Corp for $7.5 million in early 2004.   In addition to land costs, there were permits, infrastructure, development, marketing, new gondola costs, etc.

Even if 20 reservation holders drop out, Trailhead is still almost 50% sold. Plus, they get to keep the 20% down payments from the buyers who don’t close.

There are projects in downtown Steamboat that wish they had almost 50% of their units sold.

The bottom line is that some people–I don’t know how many– are not going to be able to close at Trailhead.  Financing is harder to get, especially for condotels like Trailhead Lodge.  To get a loan for a condotel, buyers have to put down 25-30% and pay a higher interest rate.

The long-term prospects of Wildhorse Meadows appear bright:

• The Range has a spec home in the $3 million range under construction.
• Trailhead Lodge has started closing units, including a 1200 sq. ft., two bedroom condo for over $782/sq ft.
• City Council is working with Wildhorse/First Tracks to make the affordable housing units nobody could qualify for salable.
• Trailhead Lodge looks great, and will be one of the few brand-new projects once things turn around.
• Wildhorse will have a gondola connecting it to the base area, even if it isn’t the gondola we expected.

Just as people only believed positive news in 2007, there are a lot of people now thinking only negative thoughts.  Those will be the same ones thinking, “I could have purchased a place at Trailhead for $xxx back in 2009.”