The State of the Market is improving but still weak. Just like after a prolonged illness; it takes time to regain your strength, and the Summit County real estate market is slowly getting stronger. Very slowly.
Average price has been stuck in a narrow range between $450,000 and $500,000 since 2011. So far this year the average is just 5 percent above that of 2011. Prices are going sideways.
It is hard to tell how much better sales would be this year if there were a normal inventory but the lack of property for sale must certainly be keeping a lid on volume.
It is encouraging that properly priced properties continue to sell in weeks or days and for prices that are at least slightly higher than the last sales. But if there were a normal demand for an inventory this low, prices would be increasing a lot faster.
Through the first 3 Quarters of this year, nearly 1300 properties have sold, the highest number since 2007 when just under 2000 sold.
By contrast, two years later in 2009, only 678 had sold by the end of the 3rd Quarter. 1300 looks great compared to that.
Prices are increasing, but so far this year are only 3.3% ahead of last year to date. Sale prices of previously owned properties (resales) are up by nearly 5%, though, indicating that there is still discounting in the fairly small new construction market and low supply is affecting resale prices more than new construction.
New construction is used broadly here, however. Is a One Ski Hill Place Condominium finished in 2010 and finally sold four years later still new construction? We’ll call it new for this discussion.
Our market is wholly dependent upon buyer sentiment and buyers have been wary of plunging into discretionary second home purchases since the Depression of 2008 began. People who don’t feel confident in their economic prospects don’t indulge in second homes.
But more buyers are returning to the second home market every year, especially as their primary homes regain value and stock market gains improve their sense of wealth.
Rapidly increasing tech and energy jobs in the Front Range help add more affluent population who want a place in the mountains soon after arriving.
The biological clock also works in our favor as second home prospects continue to age. They decide to buy in the mountains while they can still enjoy the activities they come here for despite economic considerations.
It is likely that the low inventory will continue for the next year or so as prices slowly return to the high levels of 2007 and 2008.
Owners in Summit County tend to hold for about 7 years and we are just at that point now for many owners who bought at the peak. They are reluctant to sell for less than they paid in a recovering market and are sticking around longer than they usually would until they can get out whole.
Right now, if you bought in 2006 or earlier, prices look pretty good. If you bought in 2007, ’08 or ‘09, you are probably not a happy camper. Yet.
For now, the opportunity to buy at the recent market bottom is still there and interest rates have not increased. This is changing. By this time next year mortgages will be more expensive as the national recovery continues and the Fed lets rates rise. Beyond that, there will eventually be inflation and then real estate comes in to its own as an inflation hedge.
It’s just a question of who returns to the market first, buyers or sellers. But when it happens, we’ll be off again. Don’t be left in the dust.