CO Short term rental elections 20% tax rates approved, what are the results and what does this mean to you and Colorado ski real estate?
Regardless of party affiliation, this has been a big voting season for Colorado real estate…
It is not surprising that Colorado ski towns like Breckenridge and Steamboat are finally slowing down. After years of double-digit price gains, are the mountains finally turning a corner? Is the big slowdown due to the nightly rental regulations restricting the number of licenses or is something else driving the slow down? Where does Colorado ski real estate go from here?
The numbers were a bit surprising with drastic slowdowns in sales in the first four months of the year.
Summit Country (Breckenridge, Copper, Keystone, Frisco, Silverthorne)
Routt County (Steamboat, Oak Creek, Hayden, Stagecoach)
The numbers are astounding. In both Breckenridge and Steamboat the amount of inventory has plummeted while at the same time the number of closed transactions has also plummeted.
The headline in the Summit Daily Newspaper was: Short-term rentals, inflation and rising interest rates all had an impact on Summit County’s real estate market in the first quarter of 2022. This was backed up with quotes by several local realtors pinning a big portion of the large drop in sales on the new nightly rental regulations.
Unfortunately, the assumptions of a large drop in sales due to new regulations is not backed up by the data. To understand the drivers of the reduced sales, I looked at Steamboat for comparison. There is allot of discussion on nightly rentals, but Steamboat has done nothing to materially limit nightly rentals. Yet Steamboat also had a huge drop in the number of closed transactions and was down 22%. There is no way that Breckenridge’s drop in sales can be pinned on nightly rental regulations. If the regulation of nightly rentals was the culprit we wouldn’t also see such a large drop in a market like Steamboat who has done nothing yet to limit nightly rentals.
There are 3 macro trends happening in real estate along with one more local trend, the lack of inventory is at historic lows.
Although the decline in sales was huge, it is imperative to take this with a grain of salt. Most homes are sold in the mountains are sold during summer and fall. Currently now is “mud season” in the mountains with considerably less visitation and demand so the numbers could be a bit skewed due to the lower volume of transactions
Although it is shocking to see sales numbers down by almost 30% year over year it should not be surprising. Mountain real estate has been on a tear with double digit increases the last five years. The market is now “normalizing” as rising interest rates, shift to services, the declining “wealth effect”, and lack of inventory contribute to slower sales. This recent shift in the mountain real estate market likely marks the peak of prices in this cycle. Look for prices to stabilize as inventory continues to rise. Fortunately, I don’t see a cliff on the other side of this peak.
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Written by Glen Weinberg, Owner 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 Bloomberg, Businessweek ,the Colorado Real Estate Journal, National Association of Realtors Magazine, The Real Deal real estate news, the CO Biz Magazine, The Denver Post, The Scotsman mortgage broker guide, Mortgage Professional America and various other national publications.
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