The National Association of Realtors released their 2019 US Vacation Homes Report; Colorado made quite the splash with 6 of the top 10 most expensive towns and 5 of the top 10 vacation towns in percent of vacation homes. There were several surprises. Which counties appreciated fastest? What is the warning in the data?
How was this study conducted?
The National Association of Realtors NAR identified a county as a vacation home county if the vacant housing for seasonal, recreational, or occasional use made up 20 percent or more of the county’s total housing stock. 6.6% of 3,141 counties throughout the United States were considered vacation home counties in 2017.
What is in the data?
Colorado, as most know, is home to numerous resort communities due to the abundance of outdoor recreation (skiing, hiking, biking, and Hunting/Fishing). This has made Colorado a desirable destination for second homeowners. From the data below Colorado has 5 of the top 10 resort markets based on percentage of second homes.
| Rank | City | % of vacation homes |
| 1 | Nantucket, MA | 55.5% |
| 2 | Dukes, MA | 55.5% |
| 3 | Cap May, NJ | 50.6% |
| 4 | Pitkin, CO | 50.6% |
| 5 | Jackson, CO | 50.6% |
| 6 | Grand, CO | 50.6% |
| 7 | Summit, CO | 50.6% |
| 8 | Eagle, CO | 50.6% |
| 9 | Vilas, WI | 42.8% |
| 10 | Lincoln, WI | 42.8% |
What is the surprise and warning in the data?
The headlines got a little more interesting as I dug a bit deeper into the data. There was one surprise and one warning that are notable.
- Surprise: Colorado had 8 counties in the top 25 fastest appreciating markets with an average appreciation from 2013 to 2018 a staggering 67%! The median sales price in vacation home counties rose 36% during 2013 to 2018 compared to 31% for all existing and new homes sold during the same period. The build-up in financial wealth, although concentrated, has helped boost the demand for vacation homes. These eight Colorado counties appreciated at over double the national average amongst resort communities.
| Top 25 vacation counties with highest price gain (2013-2018) | ||
| Rank | City | Price Appreciation |
| 6 | Lake, CO | 94.3% |
| 9 | Grand, CO | 74.4% |
| 10 | Park, CO | 72.1% |
| 14 | Chaffee, CO | 66.1% |
| 20 | Fremont, CO | 58.0% |
| 23 | Huerfano, CO | 56.1% |
| 24 | Summit, CO | 56.0% |
| 25 | Custer, CO | 55.8% |
| Average | 66.6% | |
- Warning: Two counties in Colorado were also in the top 10 for home loan originations as a percentage of sales. This means that more second home sales were closed using leverage (loans) than most other markets throughout the county. The two counties were Grand county (Winterpark) and Summit County (Breckenridge, Keystone, Copper). As we saw during the last recession, markets with less leverage performed better. For example, compare Winter Park (Grand County) to Aspen. In Aspen less than 20% of the recent purchases had financing compared to Grand County at 60.5%. The Winter Park and Summit county markets are riskier than Aspen. When a recession hits, more owners could need to sell in Winter Park or Summit County than Aspen as they have a mortgage. Don’t get me wrong, the risk is not that large even in Winter Park where over 40% of the purchases are in cash. These statistics were just surprising to me when I saw two of the top Colorado counties in the top 25 usage of leverage.
| Top Home loan originations as a percent of sales (2013-2018) | ||
| Rank | City | % using financing |
| 3 | Grand, CO | 60.50% |
| 8 | Summit, CO | 51.40% |
Colorado performed well landing 5 of the top 10 resort markets with 8 markets in the top 25 regarding appreciation. I don’t see any big changes that would knock Colorado off the leaderboard anytime soon. The same resort communities above will continue to excel as there are no new ski mountains coming online and the success of each community is very difficult to replicate.
Resources/Additional Reading:
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Written by Glen Weinberg, COO/ VP Fairview Commercial Lending. Glen has been published as an expert in hard money lending, real estate valuation, financing, and various other real estate topics in the Colorado Real Estate Journal, the CO Biz Magazine, The Denver Post, The Scotsman mortgage broker guide, Mortgage Professional America and various other national publications.
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