Life at Altitude with Danielle Connor
In 2021, we saw pandemic changes easing and lifting- a weight off all our shoulders! Here in Colorado, remaining COVID restrictions were lifted at the end of May. It was then that we finally got to experience so many good things again- concerts, farmer’s markets, weddings, graduations, and all of the beautiful ways we celebrate life. Many people even started to return to work in some sort of hybrid fashion, and kids returned to school. As COVID rates continue to rise and fall, I know we will do our best to grow and adapt together and to support one another. 2022 is upon us, and I can’t wait to see what it brings!
2021 Market Trends
We saw the market really heat up by the end of 2020 and this not only continued but accelerated into 2021. The housing market here strengthened month after month, and was exciting whether you bought a home, sold a home, or watched from the sidelines. Historically low mortgage rates kept buyers motivated, despite an ultra-competitive market where homes would go under contract as fast as they came on.
Summit County’s residential market never saw inventory rise above 250 listings at one time, and dwindled throughout the year, falling below 100 active listings in October. The median list price in December of 2020 was $677.5k, then up to $775k to start off 2021, and the year ended over $900k. That’s greater than a 30% increase! On average, homes sold at 100% of list price all year long, though we definitely saw many sales at 5, 10, and 20% over!! Summit County saw its highest ever home sale in June at $17 million, and in July, over one third of residential home sales were over $1 million.
We saw tremendous year-over-year appreciation rates in all of our other service areas as well- Eagle County at 23% YOY with a median price of $1 million, Park County at 32% YOY with a median price of $500k, Lake County at 29% YOY with a median price of $465k, and Grand County at 22% YOY with a median price of $650k.
A housing crisis was declared in July, calling on the local governments to brainstorm strategies to address it, and opened the door for funding from the state via the American Rescue Plan Act. In tandem with addressing the housing crisis, the County and some of the city/town governments began talks of amending Short Term Rental Regulations and in Q3, there was even a moratorium put in place for a time on Summit County zoned properties. The uncertainty of what was going to change gave the market a bit of a breather, but that only lasted for about a month tops and then it got rolling again! Breckenridge and unincorporated Summit County have already imposed new regulations- click HERE to for our team’s resource on the most up to date information on STR changes.
2022 Market Forecast
Summit County’s housing market continues to prove its resilience, and I am excited to see what 2022 brings. This world-renowned resort area draws people from all over, whether for vacation, for a season, or to live. In a county that’s landlocked with little room for expansion, we continue to work with limited inventory, resulting in amazing year-over-year appreciation for homeowners and a market that is always competitive. It also means that there is never a bad time to buy or sell in the mountains, and we haven’t seen a peak in pricing yet!
Low inventory will continue to drive sales prices up, and I imagine we will see the median close to $1.03 million (a 15% increase) by December based on expert predictions for the coming year. It’s likely that the highest volume of inventory will be on the market May-September based on historical trends, with the highest months being May, June and July. Expect very little to come on the market at the end of the year. Inflation increases have meant increases to nightly rental rates meaning many sellers may opt not to sell and take advantage of stronger rental rates. Expect this to contribute to low inventory in 2022.
The outlook will stay golden for Sellers! Now that Summit County and its cities have finalized STR changes and we have not experienced any more COVID restrictions related to real estate, buyers are more confident in purchasing. Low inventory plus high demand means that we will likely continue to see multiple offer situations and rapid home sales at and above list price.
What will the market hold for Buyers in Summit County in 2022? For investors, there really isn’t a bad time to buy in the mountains. As mentioned above, resort communities will continue to draw people in. Whether for short-term housing or for long-term, investors are important, and they will thrive here. It should be noted that investors will receive the best return on equity growth rather than rental revenue. Buyers of condos should be aware of changes to Fannie and Freddie guidelines being implemented this year that will impact the eligibility of condo projects. These specifically relate to maintenance, deferred maintenance, safety or structural integrity, and financial reserves. It will be more imperative than ever for Buyers to do their due diligence when it comes to reviewing Association documents and work with an informed lender. Fannie and Freddie will also begin working to limit their buying of 2nd home loans and tightening lending on condominiums which may further impact rates specifically for those buyers.
First time homebuyers and buyers of primary residences will likely face the same challenges here in Summit that buyers across the country are experiencing. Experts predict rising rents and home prices that rise faster than wages, making affordability a challenge along with one other big change- climbing mortgage interest rates with current rates of 3.25% – 3.5% rising to potentially 4% or more by Q4 2022. On a $500k home, this is an increase of about $100 – $150 / month.
Why are rates rising? The federal government plans to taper bond buying beginning in March. They began buying bonds to support the price of bonds by adding demand in the bond market. The long and short of it are that when the Fed is buying bonds, there is lots of demand which keeps rates low. When they stop buying, demand will be diminished and higher returns (and in turn, higher rates) will be needed to sell those same bonds.
The average DOM is hovering around 10 today (1/3/2021 as I write this), down from 17 in December of 2020. Because of interest rate increases, we will likely see the same number (or more) days on market in 2022. Because the expansion of working from home has put pressure on the market with people wanting to take advantage of their new lifestyles, we expect the DOM will stay close to the same.
Where will the most cost effective areas for buying a home be? Since deed-restricted communities are limited, the local workforce and many first time homebuyers in the mountains will find that surrounding communities will be great places to buy and to rent- think Leadville, Kremmling, Alma & Fairplay. Buyers may also start to get creative and look at purchasing homes with the option of an accessory dwelling unit to supplement their mortgage payment. Please reach out to us if you’d like to learn more- Happy 2022!