The first half of 2015 has been really encouraging. Our seven-year recovery continues and whatever “normal” is, we are close to it again in many ways.
So far, the average sale price has increased by 6.2 percent over 2014’s first half and 7.2 percent over last year’s final average price. The market reached the 20 year average price increase for the first time since 2007. (That’s right, despite everything, Summit County values have averaged over 7% increase each year for the past 20 years). The average sale price is now $531,900, up $30,000 from last year to date.
The average sold price per square foot, year to date, increased by over 15 percent to $302 psf.
Despite a record low number of properties for sale, 24 percent more properties have closed so far this year than last year to date. 197 properties closed in June alone, nearly 19 percent above the fifteen-year average and 49 percent above last June.
Properties are selling quickly averaging 9 percent fewer days on market and selling for one percent closer to asking price (95.7%) than last year to date.
While the average price is usually higher in the first half of any year and probably won’t finish this year higher than right now, all of the other numbers will probably stay at these levels or better through December.
Summit County spent seven years in the economic wilderness. Developers who sat out the hard times are returning to build and custom homes are being built at a good clip.
But speculative home building has not returned in any great measure and that keeps land in the basement, selling for an average 90.5 percent of list price and 423 days on market. Deleting the 8 sales of land that sold for a million or more, the average land sale runs to $263,000.
Every other market sector though – condominiums, homes, townhomes – are doing better than in years. There are still only 3 years when average prices were higher than right now and in another year, the average price could be back to the record of 2008.
That means, however, that about 5000 owners, the number of sales in 2007, 2008 and 2009, will just be breaking even. The effect of the bubble years will be felt for some time after prices recover to those levels. This means that supply will probably remain low for a few more years as the number of buyers increases to average and sellers wait for a little profit.
On the first of July there were only 1356 properties for sale in Summit County. Last year there were 1759 on that day, nearly 30 percent more. And the number of properties typically peaks in the first week of July then slowly declines through the rest of the year. Having 30 percent fewer properties for sale at the peak probably means a screamingly tight supply in late October.
In this market, sellers don’t have to sell.
They usually have good equity, or no loan at all, are still using the property and can rent it to cover costs. But eventually every one of them will come to a point when selling makes sense. If a lot of them do that at the same time, prices will certainly be affected. That probably won’t happen this year.
And hopefully there will still be enough buyers to soak up the inventory. Because in this market, buyers don’t have to buy, either.
If they get transferred from Dallas to Denver, they have to buy and sell. But unlike the cities, this is a “feel good” purchase and people need to feel good about their finances before springing for a second home.
Every time there’s economic trouble second homes are the first thing to feel it. 9/11, the second Iraq War, Y2K, the 1986 stock market crash, every one of these events brought our market to a standstill. But none were as devastating as the Lehman Brothers melt down and subsequent Depression we are just now leaving behind.
But after every event, including this one, the market came back stronger.
The key is to buy a second home to enjoy and keep for as long as it makes sense. Don’t buy on impulse and be aware of the special nature of the second home market.
That means you should get some advice from someone who knows this market and has seen all this happen.
Call me. I’ve been here for 30 years and I’ll be here when you need me.