We don’t usually celebrate being average. But after so many years of low performance, the Summit County real estate market finally dragged itself slightly above the average number of sales for the past 20 years. Let the celebration begin!
Average prices have returned to within $30,000 of the peak reached in 2008 and are above $500,000 for the first time since 2010.
And all this despite the lowest number of properties for sale in 30 years.
Keep in mind that there have been only 4 previous years – 2007 through 2010 – when average prices were above a half-million dollars. Only three of those years brought prices higher than those in 2015.
Appreciation in 2015 at 8.3% was higher than the 20-year average price change of 5.5% per year.
In a market driven by discretionary spending, where no one has to buy or sell, this is a good indication of the mood of those who can afford to own here. And it shows some optimism for future years. No one throws money at a luxury like a second home if they aren’t confident in their own future economic prospects.
Even those sitting on the sidelines, who might be willing to sell after watching their investment struggle for seven or eight years, are showing confidence values will continue to strengthen. Now that they are back to even, they’re in no rush to sell. Hence the lowest number of properties for sale in decades. However, this condition could change quickly if uncertainty rises.
Remember 2010? That year there were 3000 properties for sale and 1000 sold all year.
Fewer than 500 residences were for sale at the end of 2015. And fewer than 300 building sites were listed, the lowest number in at least 5 years. (Some of those lots have been on for 5 years.)
Rising interest rates don’t affect our market as much as in urban markets. A lot of our buyers pay cash or put so much money down that they get the very best interest rate available. And frankly, a lot of our buyers are old enough to remember that even a 4.5% interest rate is incredibly cheap.
The real beneficiaries of higher interest rates may be those looking for construction financing. Banks seem to be more interested in making all types of loans now that they won’t be locked into a sub-four percent rate for 30 years. Amazing, eh?
Prices are going to continue to rise over the long term, but over the next year or two, there’s no telling. We may be at a near-term high point or this could continue for a long time.
It only takes a stock market crash, recession or attack to cause people to tighten up. But this extremely low inventory will not last.
As prices rebound and owners’ priorities change 2016 will bring a higher number of sellers into the market.
The question is will there be enough new listings to cause prices to stagnate?
If you were waiting for prices to rebound to where you bought, your time is here or very close. If you are waiting for the next crash to buy, hope you brought a book. It could be a while.