Crazy times we are in, real estate in Summit county (home to Breckenridge) increased 51%…
Happy summer to everyone, it sure doesn’t feel that way in the mountains with a dusting of fresh snow on the peaks this week. Do you know what pass this is? There are some big changes coming down the pipe not just for the weather but in Colorado ski real estate. From Steamboat to Telluride and everywhere in between I’m noticing a drastic change in purchase transactions due to the recent pandemic. Property types that were out of favor are now the new flavor of the month. Who are the new winners? Will these changes last?
Why the big changes?
The pandemic quickly changed people’s habits and desires including ski real estate. Think of a newer ski condo in any mountain town where there could be hundreds of units in a high-rise type building with interior corridors, central elevators, and large forced air systems circulating air amongst the common spaces. During ski seasons these properties operate like hotels with individuals owning each unit with thousands of new people passing through each day. You can quickly see the risk.
How do these properties that are individually owned ensure that the virus does not spread throughout the property? Unfortunately, the properties are not hotels so getting consistency amongst all unit owners and visitors will be next to impossible.
At the same time, the rental market for many of these same condos has decreased considerably since the pandemic took hold which has led to an increase in inventory. Furthermore, demand has tempered for the same reasons that people are hesitant to rent these units. Long story short, the condo market in large complexes has softened considerably and will likely soften more.
Who are the winners?
In economics, whenever there is distress in one part of the market, there are always winners and unfortunately losers. From the pandemic, there are three primary winners in ski real estate.
- Land: Ironically, I was surprised to see raw land near ski resorts going as quickly as it has. I’ve seen some lots sitting on the market for 10 years that are now selling with multiple offers in Steamboat, with the same occurring in many other mountain towns.
- Free standing single family: People want their own space and the ability to ride out future pandemics in comfort. In ski towns throughout Colorado, many second homeowners from large cities moved to their ski home to weather the pandemic. I don’t see this trend reversing, if anything it will only accelerate.
- Ranches: Ranches have been slow movers the last 4 or 5 years as older generations aged out of the large properties and their kin no longer wanted the hassle of such a large property. The pandemic has put these properties back in vogue as they are gobbled up for their unique qualities and remoteness. Remote is now back in style in real estate as long as there is a good internet connection!
Will this be a long-term trend or just a blip?
I don’t think the impact will be long term. Once there is a vaccine, old habits for the most part will come back and demand for condos will increase. At the same time, I don’t think the demand for single family and land for building will change much. Ranches, on the other hand, will likely slow in the next year or so as people realize they don’t actually need that much space and that it is a lot of work and money to maintain the property.
Although there is no pending apocalypse in ski real estate, there are some big changes in the pipe. Single family homes and larger ranches will outpace the ski in ski out condo at least for a little while longer. The million-dollar question is how long? If the vaccine is not as successful as hoped, it could be quite a while.
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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 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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