It’s another autumn in Summit County.
Leaves turned just before it snowed but were still golden as our brief Indian summer weeks began.
New residents and old hands alike are anticipating ski season.
The Porsches are migrating to Summit County as they do every year before the newbies realize they don’t work here in the winter.
And a lot of us will take a vacation to warmer places before winter actually sets in.
Yes, it’s another autumn in Summit County.
It’s another autumn in Summit County.
The historically low number of properties for sale in Summit County continues in the first half of 2017. The most undersupplied part of the market continues to be lower priced properties, and right now that means under $700,000 in our market.
For instance, there were a total of 4 properties offered in Summit County for under $200,000 on July 1.
On July 1 there were a total of 576 residential properties for sale out of a total 890 listings for all types of property: land, commercial, etc. This is less than half of the historically normal number for the first weeks of July when the inventory typically reaches its peak for the year.
Fewer than 200 of these residences were priced under $700,000. Nearly 700 of that price had sold in the first half of the year.
The most oversupplied part of the market is in the $900,000 and up range.
280 residences were priced at $900,000 or more. By July 1, fewer than 200 had sold.
Homes and condominiums under $700,000 averaged 76 days on the market including time to close. Those priced above $900,000 averaged 225 days on the market.
Overall, twelve percent more properties had sold in the first half of 2017 than in the same period of 2016 for an average price 17.5 percent more than in 2016.
The average sale price in Summit County is now nearly $660,000, the highest in history by about $100,000.
The low priced part of the market seems to be appreciating faster than the higher end pushed by the lack of supply.
While sales volume has not regained the level last seen in 2006 when nearly1300 properties sold in the first half, 924 sales is the best since 2007.
The question is: if there were the same number of properties for sale this year as in 2006, would there be as many sales? My guess is probably not.
The seemingly hot market is artificially caused by the lack of product to sell. Every broker has a list of buyers waiting for something in the size, price and location they need to come on the market. For the past several months, when something “affordable” appears, it hasn’t lasted through the next weekend if it’s priced correctly.
That may be changing. As more properties come on the market, they seem to be staying a bit longer. It may take a couple of weeks now to sell. If this trend continues, it will be a sign that the pent-up buyer demand is being filled and fewer buyers are getting on the list.
The last time average prices increased this rapidly was in 2005 through 2007 when increases of 15 to 25 percent per year were happening. It has taken 10 years since that kind of appreciation happened and in that 10 year period, there were four years when the average price declined.
For now, if you are a buyer looking for a second home or investment for the long term and you find the right property at the right price, don’t let short term uncertainty stop you. This has never been a fix and flip market.
If you are an owner thinking of selling, you should decide soon while conditions favor the seller and prices are back at the historic highs. Or settle in to keep the property until the next opportunity.
OK…so we have a Buyer and a Seller who signed a contract for the sale of a home yesterday and last night the Buyer woke up out of a sound sleep, sat bolt upright and screamed “What am I doing?! That crafty Realtor has my earnest money and is probably making reservations for Cabo San Lucas right now. I’m toast!”
Meanwhile, the Seller is sleeping soundly and dreaming of the new minivan he’s going to buy with the money from selling his house. “I’m set…nothing can go wrong, I’ve got a contract. The Buyer has to buy or I get his earnest money. Should I get the red one with the flames or the blue one with the flying unicorn mural?”
Guys, you’re both wrong. Didn’t your Realtor tell you about THE THREE BIG OUTS? Well, listen up.
Every Colorado Real Estate Commission approved contract has several ways for Buyers to go under contract for a property and still have time to investigate and terminate the sale with no penalty.
BIG OUT #1: The Inspection. By a certain date in every contract, Buyers have the right to have an inspection done (or not) and either terminate the contract or present a list of things they want corrected by the Seller. If that list is not negotiated out in writing by a second date, the contract automatically terminates and the Buyer is gone if she wants to be.
BIG OUT #2: The Title and Homeowner’s Association Documents. All the title and HOA documents for the property must be delivered to the Buyer by a certain date. By a second date, the Buyer may object to the title and/or HOA documents. If the association documents are not acceptable, the Buyer is out of the deal automatically upon notice to the Seller. Let’s say he wants to rent the property out but the association documents forbid rentals. He’s gone if he wants to be.
BIG OUT #3: The Loan. After receiving notice of loan approval from the lender, usually just before closing, the Buyer may still terminate if, in her sole judgment, she doesn’t like the loan.
These are just the BIG OUTS. There’s several little ones, too.
Generally, Buyers are well protected by our Colorado contracts… if they pay attention to dates.
Sellers always take the risk that one of these outs will sink the contract. The best we can do is to cut the exposure time for these contingencies. We try to get the inspection and title objection deadlines out of the way in a couple of weeks or less. The loan deadline will always be the longest exposure, but pre-qualification or pre-approval by a lender can lessen that risk.
To lose any earnest money, the Buyer has to be oblivious to the process, miss all the dates, not make loan application, buy a new pickup truck the week before closing or just not show up to close. It happens, but rarely.
That’s why your crafty Realtor rarely vacations with forfeited earnest money and Sellers shouldn’t get too excited about the minivan before closing.
Trains to the Mountains? You mean like those cute little ones in Switzerland? Those will never work in America!
Despite years of construction of new express lanes and other improvements, I-70 continues to be a hindrance to visitors. Numerous closures result from seemingly average snowstorms. And summer isn’t much better on weekends and holidays. Every year, new record traffic counts are set at the Eisenhower Tunnel and it’s a rare day that you don’t find a slow-down or stoppage somewhere between Denver and Summit County. Colorado neglected road maintenance for decades because of tax cuts and it really caught up with us.
The Colorado Department of Transportation has found that it costs our mountain communities $800,000 PER HOUR when the road is closed. Yet years of studies by the State have only come up with one solution: more lanes.
Support for a rail system has had its ups and downs, but pressure for one is building from local governments and citizens. Tax cutting naysayers are still standing in the doorway, however. Those European solutions don’t work for America, you know. Eventually, the cost of lost revenue will outweigh the cost of building a more efficient transportation system and perhaps then we’ll get some action.
In the mean time, people are finding more immediate ways to cope with the traffic problem. An increasing number of Front Range residents are buying property in Summit County just for a place to stay on Friday and Sunday nights and so avoid the skier rush Saturday mornings and Sunday nights. Many of these buyers are younger folks looking for low cost properties just to crash in over night. They often move up to more expensive property after a few years and keep the first place as a rental.
In the early days of our real estate market, weekenders were the market. Basic condominiums and homes with small kitchens and baths and often having no laundry facilities or garages were built to accommodate them.
Over time, they were replaced by semi-permanent second home owners who wanted larger places where they could spend weeks or months. The older, smaller units fell out of favor for a while and became long-term rentals or affordable housing for local residents.
But the Front Range market that low-end properties were originally built to serve is coming back again. And that demand is causing the “low end” to get really expensive. Who ever thought that a one bedroom Dillon Valley East would be worth $180,000?
As long as people keep moving to Colorado at this rate, traffic will get worse and housing prices will increase. Even a fancy Swiss-style rail system won’t stop that.
Lately in the real estate business customers are either extra mature and not real tech savvy or 20-somethings who can’t understand why you didn’t instantly respond to their tweet of 3 minutes ago.
So match up a buyer who’s 20-something and a senior seller and it can be a challenge.
Young Buyer: We haven’t heard back from the seller yet? We sent the offer over 10 minutes ago.
Senior Seller: What’s their rush? Can’t you just mail me the offer? My son/daughter/friend will come over and fix my e-mail on Thursday.
And often that’s the match up.
Sellers have often owned these second homes for decades and may even be original owners.
Occasionally, it’s their kids who become the sellers after inheriting the property. Then the issue is not response time or tech ability. It’s the emotional issue of selling a place the family grew up with.
The young buyer hits a big speed bump when he or she discovers you don’t just go online to get the loan for a condominium or property with an HOA. You need to actually talk on the telephone to a local lender who can actually do the loan. It’s not instant like in the Quicken Loan TV ads.
Usually we can guide everyone to a successful conclusion. We get a relative to handle the time critical parts of the transaction for the senior seller and can usually calm the young buyer down enough to get through the “old school” loan process.
It’s not just real estate, folks. My job is psychologist, family counselor, financial planner and dispute resolver. I’m not officially any of these, but I do play them all on TV.
Silverthorne’s new performing arts center opened in June… no more squeezing into a small drafty historic building to see plays and concerts. This will be one of the better $9 million investments the Town ever makes. The agin’ers who are still mad about the Rec Center after 20 years will be apoplectic over this, I’m sure.
Every road in Summit County… is coned off just in time for July 4th. Nothing happened for 40 years then in June every road project began at the same time. Don’t these guys talk to each other? Oh… maybe they do.
There’s good news and there’s bad news… Summit County has the highest life expectancy in the USA at 86.3 years per a University of Washington study this year. However, another recent study finds Summit and Eagle counties have the highest health care costs in the country. So, to recap: In Summit County you’ll live forever but you’ll be eating cat food ‘cause it’s all you can afford.
A new bike race will visit Breckenridge as a race venue this year… the Colorado Classic will be in town August 11. No long distance multiple pass routes this year, just local circuits. Lots of world class men and women racers will be here, however. We’ll see if shorter is better.
Another in the continuing series Signs That The Apocalypse Is Imminent: New developments are beginning again in Winter Park. Each time in the past when large new construction projects have begun in our neighbor over Berthoud Pass, an immediate recession has killed the whole thing. Instead of new housing, those guys really need a tunnel under Berthoud Pass.
It’s Summer again in Summit County. The crowds are back and the festivals are in full swing every weekend. (there’s a Bacon Fest… really?)
Boats and paddlers on the lake and happy visitors flit from shop to shop. The number of outdoor cafes and bars has increased every year so now you can sit and watch the strollers as you have a glass of wine. Summer… again… my 45th in the mountains. Enjoy your stay!
Chuck Leathers, CRS
After a dismal performance in February, March brought a strong rebound with an above average number of sales and a record high average price for the 1st Quarter.
Through March, 382 properties had closed, still a long way from the 543 which sold to date in 2006, but the highest number since 2008.
The average sale price for all properties sold through the Summit Association of Realtors MLS blasted through last year’s 1st Quarter record and ended at $672,900.
The 1st Quarter average sale price jumped by over 18 percent from the 1st Quarter of 2016, the largest increase since the 2007 to 2008 increase of about 17 percent.
It is likely that prices will not finish the year at this level, but they will probably be close. And a little slower increase would be a good thing. Overheated prices are not healthy as we have seen in the past.
As we all remember, things went south for four years after the euphoria of 2008 but prices have finally and fully recovered.
It would seem that the laws of supply and demand have finally caught up with our market. For the past three years, the inventory has steadily declined to its present historically low number of properties for sale. Despite this lack of supply, prices had risen at a relatively sedate five to eight percent per year until now.
Rising interest rates will have an effect on this market, but mostly in the lower end where buyers are more likely to need a mortgage. Undoubtedly some have been priced out by the recent increased borrowing cost. In addition the lack of supply and resulting price inflation is still centered squarely on the most affordable part of the market.
Buyers who want in before the market gets farther away from them need to act as soon as a new property appears on the market. This means picking a broker and getting on an automatic search and notification program to even have a chance to see new listings before they go under contract. Zillow won’t cut it any more. Too slow.
A pre-qualification letter is crucial as your competition will probably present one with their offer. Only the most committed, prepared and active buyers are having success these days.
You would think that these conditions would bring more for sale by owner and pocket listing sales, but the number of properties offered on for sale by owner web sites and that mysteriously appear in the MLS as sold before listed has not risen much. Almost all transactions in Summit County still involve a Realtor.
Secret sales are not in anyone’s best interest. You never know if the home was sold to a relative, if the owner financed it, there are no pictures in the MLS, you don’t know what the offering price or maybe even the real sale price was. Full disclosure makes for honest markets.
Smart sellers know that more buyers exposed to the property means a better chance of multiple offers and the best possible sale price.
And smart sellers are getting their properties on the market as soon a possible while these conditions last.
These days, you really never know what’s going to happen next. Now more than ever the next Depression may be only a snarky tweet away.
Cancel the emergency… that big pile of dirt and all the earthmovers parked in front of Lookout Ridge isn’t the start of big box construction… yet. The Town says it’s just being levelled . But can a big box store be far away?
If you’re thinking about trying Sauce on the Blue… better make reservations. After 10 years of vacancy in the Silverthorne Town Center, the space is finally a restaurant and a great one at that. When the Performing Arts Center opens right next door, you won’t be able to get in the place.
Science comes to the rescue again… Aspen and Evergreen may require DNA samples from dogs so owners who leave dog poop behind can be tracked and fined… seriously. Wouldn’t it be cheaper to just offer a bounty for cellphone video of dog owners scuttling away from their mess. There could be a Youtube channel just for this: “Shame on you for residue”
Once again, it stopped snowing in March… after huge storms from December to February, March looked more like June. Kite skiing stopped early as the lake got slushy. That’s OK… with job killing CO2 regulations gone, we’ll all be too busy at our new high paying oil and coal patch jobs to ski anyway.
Guess the Colorado moose re-introduction program has been a success… They’re hangin’ around the Safeway in Frisco, racing skiers down the runs at Breck, standing on my front porch and generally trending and going viral on the web all winter long. Every moose gets 15 minutes of fame these days.
The stock market is teetering at spectacularly high levels. Investment professionals insist there’s gonna be a new health care system, a huge tax cut and huge public spending on roads and stuff. Stocks dip or soar on every new tweet.
Meanwhile, inflation is rising, the Fed is raising rates, and home owners are hoarding real estate such that there’s nothing for sale.
What does that all mean?
It means that there will be even more renters than owners in the future.
Why did hedge funds and REITs grab massive amounts of property that got foreclosed in the Bush Depression? And why are they holding on to it instead of liquidating and putting their huge gains on the sure bet that stocks will hit 30,000 this year?
Because they’re not stupid. The worse the economy is for average people, the more renters there are. And, if we leave aside that we are establishing a permanent underclass of tenants, why would this be a good thing?
Well, other investments go up and down, but rent almost never goes down.
In Summit County, as in most resort areas, it’s an even better bet for landlords. People might stop buying second homes, but they still take vacations. So we still need workers and workers need housing. And we certainly won’t pay workers enough to buy any, so what will they do?
RENT, of course!
So what can you learn from the hedge fund geniuses who brought you credit default swaps and other wonky stuff that caused the melt down of 2009? Buy real estate and rent it out. Let the suckers play the Wall Street slot machine. You rent to the workers running the place.
But what about those benighted workers?
Well, the Federal Reserve says that you guys will be worth about 40 times less than your landlord unless you make the leap into ownership. Right now you have a median net worth of $5000 versus the $200,000 the guy you just rented skis to probably has.
Yeah, I know, you don’t want to be tied down to property, or own a car, etc. And in the past that was OK until it dawned that eating dog food in your old age wasn’t appealing.
You used to be able to make up time and finish well.
That ship has sailed. Renters need to start earlier and work harder to catch the elevator these days, especially in resort areas. But it can be done.
I did it – you can, too.