Buckle Up

Colorado Resort Markets
Continue their Ride.

By Ingrid Palmer

A

s we head into what is typically the busiest season for real estate sales, interest rates are climbing and mortgage loan applications are slowing, according to the Mortgage Bankers Association. For much of the country, home prices right now are sky-high and those big price tags are causing people to think hard about whether now is the best time to purchase a new home.

Things are a little different in Colorado’s resort areas, however. Inflation and the economic fluctuations that affect much of the country’s real estate numbers don’t have the same impact in resort towns where many buyers purchase homes with cash.

“Activity is still strong in the mountain communities across all sectors,” said Dan Fitchett, President of Colorado Resort Markets at LIV Sotheby’s International Realty. “Prices continue to escalate, and sales continue to outpace the previous year’s numbers. Houses that might have sat on the market for a few weeks three years ago are now selling in hours, often sight unseen. Nothing is slowing down.”

“Activity is still strong in the mountain communities across all sectors….Nothing is slowing down.”

-Dan Fitchett, President of Colorado Resort Markets at LIV SIR.

Colorado resort markets—Summit County, Grand County, Vail Valley, Telluride and Crested Butte—each have their own unique vibe, but certainly have something in common, which is that they are all growing. “Each of our markets are within 10% of each other in gross dollar volume sales,” said Fitchett. “However, the number of transactions has declined and the price per house has gone up.”

In Crested Butte, a laid-back town that used to fly under the radar, the average sold price rose 150% from the beginning of 2021 to the beginning of 2022, according to LIV Sotheby’s International Realty’s Micro Market Report. “Crested Butte gained a lot of exposure during the pandemic,” said Jaima Giles, Vice President and Managing Broker for LIV Sotheby’s International Realty’s Crested Butte office. “Last year, the majority of our clients were looking to live here full-time. Now, it’s about fifty-fifty between buyers wanting a primary residence and those seeking a vacation home. But the people who moved here last year are staying. They’ve found that living in this community works for them and they’re excited to be here.”

Like Crested Butte, the nearby City of Gunnison experienced a 106.8% increase in average sold price, more than doubling from the first quarter of 2021 to the first quarter of 2022 and proving that you don’t have to be next to a ski mountain to get caught in the real estate frenzy. “The properties that were two million dollars are now five million. The $200,000 properties are now $600,000,” said Giles. “It’s been incredible to see this happen in such a short amount of time.”

Despite rising interest rates, a cacophony of political noise, and the uncertainty surrounding world events, these statistics prove that some things haven’t changed. “People come to our towns, they get excited about our lifestyle, and they seek out properties to buy,” said Fitchett.

The majority of recent sales are from cash buyers or those who have their financing pre-arranged, particularly in the luxury market. “When you’re considering a home priced over three million dollars, buyers either have the cash on hand or they have assets they can dispose of to buy the property they want,” Fitchett said. But it’s not just the luxury market that is soaring; it’s all property types across all price ranges.

In Telluride, for instance, where the majority of buyers are purchasing vacation properties and there is currently a moratorium on short-term rentals, demand remains strong. “Typically, we see the highest demand for properties closest to the ski area. With accelerating prices, there is growing demand for neighboring subdivisions, communities and mesa properties,” said Peggy Raible, Vice President and Managing Broker for LIV Sotheby’s International Realty’s Telluride offices.

Summit County’s 31,000 residents have a front-row seat to this real estate rush as well. Most properties here spend 20 days or less on the market, and its single highest-priced sale jumped a whopping 130.4% from quarter one of 2021 to quarter one of 2022. The popularity of the area known as “Colorado’s playground” cannot be underestimated, with its easy access to Denver and four world-class ski resorts.

Grand County’s home sales increased 28% from early 2021 to early 2022. The Town of Grand Lake saw fewer properties sold—a 30.8% decline from this time last year—but at higher price points. Fraser, Granby, and Kremmling, all more rural areas farther away from the ski hills, are also growing fast.

Why choose Colorado?

04

National
Parks

07

Mountain
Ranges

28

Ski Areas
& Resorts

300

Avg Days of
Sunshine Annually

350+

Craft
Breweries

Factors Impacting the Resort Market

1

Economic Recovery

2

Low Inventory

3

Sustained Demand
for Homes

4

Rising Interest Rates

“We have seen an influx of eight- to ten-million-dollar listings in our market recently,” said Aaron Shriner, Vice President and Managing Broker for LIV Sotheby’s International Realty’s Summit and Grand County offices. “Four years ago, the highest listing was $10 million. Now, there’s a lot of new construction priced above that mark. However, Summit and Grand Counties are still the two most affordable resort markets in Colorado.”

Low inventory is exacerbating the high prices in the resort markets. During the first quarter of 2022, the Vail Valley saw a 63.1% overall drop in days on the market, from 111 to 41. Telluride saw a 29% decrease in listings sold from 2021 to 2022 yet a 22% increase in total sales volume. And the average days on market was 137, down from 248 in 2021. “It’s remarkable that we are seeing stock market volatility, rising inflation and higher interest rates and all of these trends have not impacted buyer demand and absorption rates in our mountain markets,” said Raible.

“Currently, there is no standing inventory,” explained Fitchett. “People cannot come in and look at listings and make a decision after inspection anymore. Sellers are not accepting those kinds of offers.” Instead, buyers are relying on videos, photos, friends, and their real estate broker.

Buyers across Colorado’s resort towns are feeling the pressure of these intense market conditions. Many are making offers on properties with limited contingencies, and some even waive important items like inspections in fear of losing out. “This is why it’s more important now than perhaps ever before to align with an experienced, full-time real estate broker who has their pulse on the community,” said Fitchett.

Alex Griffin, Vice President and Managing Broker for LIV Sotheby’s International Realty’s Vail Valley offices, wholeheartedly agrees. “The complexity of transactions has increased dramatically and hiring an experienced Realtor to navigate them is key.”

With the number of days on market significantly declining in nearly every resort town, buyers need to be aligned with someone who has experience, knows the area well, and knows when properties are becoming available. “Read bios, search the web, ask around, and call to speak to brokers directly,” advises Fitchett, who said clients should interview at least three brokers to find someone who is active and experienced, and a good personality fit as well. On the flip side, sellers need to strategically price their homes for success in the market. “If a seller has the location, functionality, fit and finish that everyone wants, they will have multiple buyers ready to jump,” Griffin said.

“But you can overprice a property right now and end up chasing the market down on the back-end. If a home doesn’t sell right away, the property can get a stigma as buyers may wonder what’s wrong with it. The biggest mistake you, as a buyer or a seller, can make in this market is the money that you don’t make – hence why hiring a competent agent is integral.”

Some new changes have been enacted that help alleviate the sense of panic buyers are experiencing these days. “With this low inventory situation, many sellers are setting specific days and times to bring in offers, which at least gives the buyers a day or two to strategize and really think about an offer before submitting it,” said Giles.

Real estate brokers are feeling the fatigue as much as the homeowners and buyers. “We are the facilitators of these sales and right now the humanization factor is critical. We work with locals and newcomers, all types of buyers and sellers. It’s important for us to understand and listen to each person’s situation and feelings about each sale, because it’s emotional and this is not a market of need,” said Giles.

Heading into the peak summer months, Giles plans to focus on communications and preparing buyers for another summer of challenges with pricing. “The summer season is always fast and furious,” she said.

Experts believe there will be some slowing to the price increases in the future. “It’s still a good time to sell because we haven’t found the ceiling yet,” said Shriner. “And it’s still a good time to buy because there remain some good investment opportunities. We’ve had more than 5% appreciation year-over-year for the past four years, so buyers can count on continuing value.”

There’s no doubt that the demand for housing in Colorado’s resort towns has never been stronger. Even before the pandemic spurred city dwellers to abandon the concrete jungle for a more tranquil lifestyle, resort properties were selling well. Today, industry experts see very few people putting on the brakes when it comes to buying and selling mountain homes.

For details on LIV Sotheby’s International Realty’s Quarterly Micro Market Reports, please visit ColoradoMicroReports.com