Editor’s note: This story has been updated to correct which Breckenridge zone is seeing less home sales.

The United States Federal Reserve on Wednesday raised interest rates yet again as officials seek to curb consumer spending and temper inflation. The rates, now between 5.25% and 5.5%, are the highest in more than 20 years. 

It impacts a range of payments including on cars, credit cards and mortgages. It may be a leading factor for why Summit County’s housing market has seen a significant decline in real estate transactions compared to the same time in 2022. 

“What it does is say, ‘hey mortgage company, your money that you borrow to lend to a homeowner is now getting more expensive,'” said Dishon Lutz, associate broker for Real Estate of the Summit and president for the Summit Association of Realtors. 

Some homeowners are locked in to a fixed interest rate, while others may have an adjustable rate that is more contingent on the housing market, Lutz said. 

In some instances, the latter can provide lower mortgage payments than a fixed rate. They can also be risky — as interest rates climb like they have been for more than a year, so to do those mortgage payments. 

For those on a fixed rate who purchased their homes before the interest rate spike, they are now experiencing what real estate professionals call golden handcuffs. They are benefiting from lower payments now, but if they sell their home they’ll face steep increases with a new mortgage. 

In some cases, it can mean doubling of monthly payments for homeowners, Lutz said. 

“I would say our market is not very fluid. People are feeling very stuck,” said Leah Canfield, a broker associate for Coldwell Banker Mountain Properties in Breckenridge. 

“Being able to have fluid movement without a lot of friction I think is the sign of a healthy market. And right now we’re kind of in a stagnant market because of those factors,” Canfield added. 

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According to a July report from Land Title Guarantee Co., county transactions were down 20% in June compared to June 2022. Overall, transactions are down 25% year-to-date since 2022. 

Monetary volume from sales was down 25% in June compared to the same month in 2022 and is down 34% so far this year compared to the same time last year. 

Homes are also staying on the market longer. According to Canfield, internal Realtor data shows the average days for a listing was 34 from April to June of this year, up from 12 days for those same months last year — a 180% increase. 

Canfield said that could be due in part to listings that have continued to remain on the market for months, which tend to be homes selling for over $5 million. Those properties have an average of 97 days on the market Canfield said. 

Median days on market, which is less skewed by those properties, is up 10 days compared to 4, a 150% increase. 

Paired with interest rates, Canfield said another reason for the decline in transactions and increase in days on market could be local short-term rental regulations. In the past two years, limits on the amount of properties that can hold a short-term rental license have been enacted, with the most recent being for unincorporated parts of the county. 

The town of Breckenridge, for example, has varying limits on short-term rentals based on three different zones. Zone 1, for example, allows 92% of all properties to have a short-term rental license and includes the downtown. Zone 3, which allows for only 10% of all property to have a license, includes most of the town outside from the downtown area. 

Canfield said she’s seen more home buyers struggling to sell in Zone 3 compared to Zone 1. 

“If you cannot get a short-term rental license, the property is seeing more of a decrease in its value and having a harder time bouncing back from the price softening we’re seeing,” Canfield said. “We’re seeing that already and I expect that to be true, at least over the short-term.” 

As properties remain on the market longer, it’s typical for prices to inevitably drop. 

For the first time since 2013, the county’s average home value appears to be decreasing. Land Title data shows the average average value for a home is currently $2,004,223 as of June, down from $2,060,049 last year. 

“We’re starting to see a softening in prices, nothing shocking, nothing really rocking our market,” Canfield said. 

Still, while a slight drop in prices could signal more buying power, demand continues to outmatch supply, according to local real estate professionals. 

“What’s kept pricing high and not this drastic drop in pricing is the lack of inventory on the market,” Lutz said.