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…
The Summit Daily recently posted an article that Fall is a great time to hike a 14er. I took the pic below of a 13k foot peak the same week the article came out. Probably not a good time to attempt a peak ascent in the snow. The article on 14ers is eerily similar to a recent realtor publication touting that prices are up 13% in Denver leading to a “balanced market”. The chart above shows a radically different story.
Anytime I see an overly broad statement like fall is a great time to hike a 14er, I get suspicious. From the pic below of a 13k foot peak, it would be extremely dangerous for an inexperienced hiker to attempt a 14k foot summit. The fall can be a great time or a terrible time depending on the actual conditions that day. So, the statement fall is a great time to hike a 14er is pretty useless as it doesn’t give you actionable information. For example, if they said the first two weeks of September are typically a great window for a peak attempt that is a bit more helpful.
The reason I highlight the 14er article is that I see time and time again in real estate publications that prices are up for the year. This is just like saying fall is a great time to hike a 14er. Who cares! The information is too broad to be of much use.
When you sell or buy real estate you are doing it in the present or anticipating it shortly. You cannot go back in time so yearly statistics don’t help much. You need to know what is going on right now to make the appropriate decision. The chart below is a prime example. On an annual basis, Summit County (home to Breckenridge, Copper, Keystone, Frisco, etc..) looks great, but beneath the headline, storm clouds are forming quickly.
To ensure I am comparing apples to apples, I use the data published by the Colorado association of realtors by county/metro area. The data is reported the same throughout the state so I can easily compare areas along with time periods.
For this analysis I picked May and August (as of writing this article, August was the most recent). The reason I picked May is that is somewhere near the peak of the market and rates really started changing after that and accelerating into the fall.
I see all the headlines that Denver is up 13% for the year and Summit County is up 23% for the year. Unfortunately, this information is not very helpful if you are buying or selling today. You need to know what the market is doing today and where it is heading. I chose Denver as it is the hub of the state and Summit as it is home to 3 ski areas in Colorado.
Denver Metro: There is no doubt that the current real estate slump in Denver is not the normal fall cycle. The average home price is off 14% and inventory has more than doubled. Median price has also fallen 11% since May. Denver is going through a correction that likely will accelerate as rates continue to rise
Summit County: Summit county is up 23% for the year. Both the median and average sales prices have dropped around 22% while inventory has increased 78%. This is not due to the nightly rental regulations as the statistics I am using are single family homes to factor the noise out from the condo/townhome market. There is no doubt that after an unbelievable runup in prices that Summit county is cooling quickly. Historically, Summit County has a higher correlation to Denver so as Denver cools so does Summit County. It appears these historical trends are holding true in this cycle. Look for more downward pressure on prices the remainder of this year into next.
The numbers above speak for themselves that residential real estate is in for a rough ride the remainder of this year and into next year. The good news is that after a gangbuster market the last 10 years, there will be some buying opportunities. Now is the time to be patient as the numbers are foreshadowing that the market is going to get worse before a huge improvement.
Just like hiking a mountain, you need know what is happening now and where things are heading. Broad statements like fall is a good time to ascend a peak or real estate is up 13% for the year are way too generic to be of much use. The change in prices from May to August is an ominous sign for real estate. Don’t get me wrong the sky is not falling, but the market has done a 180 degree change that buyers and sellers need to adapt to. On positive note, we are definitely in a buyers’ market which should create some opportunities.
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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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