What a few weeks it has been. The stock markets have been up, then down. Interest rates have also spiked only to fall shortly thereafter. I’ve been asked by several realtors in various ski towns, what is the impact of Ukraine and real estate prices in Colorado. Will there be a surge in prices as buyers search for “safe places” and safe assets like we saw during COVID?
What has happened economically since the invasion of Ukraine?
- Fed on track for rate increases: the federal reserve has confirmed that rate increases are on track and they might need to have larger increases in subsequent meetings as inflation remains stubbornly high
- 10 year treasury declined / mortgage rates declined: It is interesting that the federal reserve is clear that they are raising rates, but at the same time interest rates are falling. Remember the fed only controls the short term markets and not long term treasuries, which mortgages are pegged off. Treasuries are “set” by market forces, in this case, there is a huge flight to safe assets like US treasuries during times of war and uncertainty. As more people buy treasuries their prices go up, and in turn yields (long term rates) go down. This creates a whole new problem for the federal reserve and could force them to increase rates even more.
- Stock market has declined substantially: As mortgage rates went down due to a flight to safer assets, the stock market has also gone down substantially as investors are nervous about riskier assets. As stocks go down, wealth decreases which at some point decreases consumer confidence.
Will there be a flight to “safety” in Colorado ski towns?
With everything going on since the Ukraine invasion, it makes me wonder if we will see another Covid type repeat in Colorado ski towns where there is an insatiable demand. During Covid, there was a huge “flight to safety” as people wanted to be in smaller, safer markets. This led to huge price jumps in every ski market in Colorado with some topping 50% increases year over year.
With the war in Ukraine continuing, will Colorado ski towns see the same response in real estate to the current crisis? I think the factors today are a bit different, I don’t think there is the same perception of personal “safety” from the crisis in Ukraine but there is now a big push out of risky assets into safer assets which fits with Colorado ski real estate.
Will there be an increase or a decrease in Colorado ski real estate prices?
Although we will not see another huge increase in real estate prices in the mountains like the Covid bump, it will remain desirable as buyers look for safe places to park assets as opposed to the stock market. This will keep Mountain real estate a desirable asset to own which will keep prices high albeit the appreciation rates will be slower than the past 3 years.
Summary
I don’t think that the Ukraine invasion is market moving unto itself for Colorado ski real estate, but the invasion does put further pressure on other assets which will drive high net worth individuals to diversify their portfolio into safer assets. From a real estate perspective, mountain real estate will continue to be a “haven” for investors looking to hedge against downside risk. Although I don’t think we will see the same appreciation we saw during Covid, the mountain communities look to stay at their highs with little respite in sight for buyers as prices look to increase a bit further.
We are a Colorado Private/ Hard Money Lender funding in cash!
If you were forwarded this message, please subscribe to our newsletter
I need your help! Do not worry, I’m not asking you to wire money to your long-lost cousin that is going to give you a million dollars if you just send them your bank account! I do need your help though, please like and share our articles on linked in, twitter, facebook, and other social media. I would greatly appreciate it.
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.
Fairview is the recognized leader in Colorado Hard Money and Colorado private lending focusing on residential investment properties and commercial properties both in Denver and throughout the state. We are the Colorado experts having closed thousands of loans throughout the state.
When you call you will speak directly to the decision makers and get an honest answer quickly. They are recognized in the industry as the leader in hard money lending with no upfront fees or any other games. Learn more about Hard Money Lending through our free Hard Money Guide. To get started on a loan all we need is our simple one page application (no upfront fees or other games)
Tags: Hard Money Lender, Private lender, Denver hard money, Denver Colorado hard money lender, Colorado hard money, Colorado private lender, Denver private lender, Colorado ski lender, Colorado real estate trends, Colorado real estate prices, Private real estate loans, Hard money loans, Private real estate mortgage, Hard money mortgage lender