As well-paid knowledge workers who can do their jobs anywhere now flock to these “Zoom towns,” home prices are surging and housing inventory is dwindling. What is a “zoom town” ? How is Colorado benefiting from this new trend? What towns qualify as “zoom” towns? Will this be a long term or short term phenomenon? How much more can real estate in the zoom towns appreciate?
What is a zoom town?
A “zoom town” is a place where highly paid knowledge workers have flocked to ride out the pandemic and work in style outside of a major metro city with ample recreational opportunities. These places are typically smaller and very desirable to visit with world class amenities. They are called Zoom towns as a reference to the video conference app, Zoom, that is heavily used by the knowledge workers.
What towns fall into this category in Colorado?
Colorado likely has the most zoom towns that fit this profile. Every ski resort town from Crested Butte, Durango, Steamboat, Aspen, Vail, Breckenridge, Winterpark, etc… Furthermore many front range cities are also becoming zoom towns from Fort Collins to Evergreen and Golden. The Coronavirus has propelled each of these cities with low inventory and increased demand
What is the short term impact on real estate?
If you have been to any mountain community this summer, this is the busiest I have ever seen it in the last 16 years. It is like a July 4th holiday weekend every day of the summer with towns packed with tourists and new residents. At a recent remote trailhead on a Tuesday, historically I would see a handful of locals, this year there were 50 cars and 40 of them with out of state tags!
The virus has amped up demand to unprecedented levels, especially for single family homes. At the same time inventory in most resort communities was very low prior to the pandemic and now basically zero. This has led to a rapid increase in prices. Official statistics are not out, but I would suspect many mountain communities will see appreciation 15%+ especially on the lower end. This trend looks to continue for the next several years as high net worth location neutral workers flock to the “trendy” mountain towns in groves.
What will the long-term impact be on real estate?
Typically, in a normal economic model, increased prices would lead to an increase in supply until the two come into equilibrium. Unfortunately, this cannot and will not happen in any of the mountain towns. There is basically no available inventory of land and it is very difficult and expensive to build. This will lead to increased prices over the long term until some tipping point is reached where prices rise high enough that demand is tempered.
I have no clue what the magic number will be for each resort town. For example, in Aspen, the average home price is around 5 million with the median over 2 million yet Aspen continues to increase further with no slowdown in sight. Even in more “affordable” mountain towns, it is nearly impossible to get a single-family home for under one million.
Summary
The mountain towns throughout Colorado are going to take a giant “leap” in prices over the next several years. In the long-term appreciation looks to continue until a magic price is reached that will temper demand. If Aspen is any indication most resort towns have a long way to go before this is reached.
Additional Reading/ Resources
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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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