Regardless of all the talk of a recession, soft landing, or something in between. Many…
Do you know where I took this picture in Colorado? I wrote back in June about big changes coming to Colorado’s resort communities. What has happened since June? Were the predictions accurate? Where does ski real estate go from here? The great urban exodus is causing big changes in resort communities throughout Colorado. Which ski town increased 18%?
Who are the winners in the great urban exodus?
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!
I was dead on with my predictions, single family homes have been flying off the shelves of ski towns with inventory dwindling and prices increasing.
What has happened in Colorado resort markets since June?
Since June the real estate market in various resort communities has been busy. Although July data isn’t final yet, as of the writing of this article, the summer is primed to set real estate records with a buying frenzy remnant of 2007. I was recently speaking with a good friend I Breckenridge who got a call out of the blue from an east coast exec. He flew in on a Tuesday and made a 4 million cash offer the next day. Similar stories are happening throughout the resort communities.
In Steamboat from June 2019 to June 2020, the median sales price is up 18.3%(source Colorado Association of Realtors.) in Aspen during the first two weeks of July, 111 properties went under contract, compared to 46 the same period in 2019. These same trends are playing out throughout the high country as prices increase and inventory declines
What is driving this trend of increasing prices and low inventory?
- Second homeowners: Many second homeowners are turning their houses into primary residences and moving to one of the Colorado ski towns full time. Furthermore, other second homeowners are utilizing their properties substantially more. Both of these changes are considerably reducing supply as neither group is inclined to sell.
- High building costs: Building costs in many mountain communities is $500/ft and up, so a 3k foot home will cost 1.5m + costs of the land. There is a huge shortage of highly skilled workers and few available lots which substantially increases building costs.
- Lifestyle enabled by remote work: the pandemic has ushered in a period of “forced” remote work and many workers and business owners quickly realized that they could operate in a remote environment which has opened up opportunities to relocate to more desirable locations like a Colorado Ski town.
What does the future look like for Colorado ski real estate?
Although I don’t think the current torrent pace of the market will continue indefinitely, inventory will remain tight and prices will continue to outpace the rest of the country. The three primary factors driving the market will continue as the pandemic drags on and families relocate to perceived safer locations. Markets like Steamboat, Vail, Telluride, Aspen, Breckenridge, and Crested Butte will do much better than most real estate throughout the country during this recession.
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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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