Low inventory, rising interest rates and short-term rental rule changes coalesce and provide never before seen opportunities in the Summit County real estate market
Summit County’s 2021 real estate market blew everyone’s expectations out of the water, across the board. The owners of Nelson Walley Real Estate expect more of the same in 2022, and most likely for several years beyond.
As Ned Walley and Debbie Nelson look to the challenges for the year ahead, three major themes emerge that buyers and sellers should be aware of – issues that Nelson Walley’s respected and successful longtime local real estate experts can help buyers and sellers navigate.
Those include (a) the current all-time low inventory of properties for sale in Summit County, (b) the not-so-far-off implications of interest rate hikes for second homes and high-balance loans and (c) the real-world impact of the controversial short-term rental regulations now in effect, or being considered, in every municipality in the area.
Making the best of the inventory shortage
Debbie Nelson, broker/owner, said February 2022 places both buyers and sellers in a very unusual situation, as there were only 81 market-rate residential properties listed for sale in the entire county (this excludes deed-restricted units for local housing). Of those, just 28 are priced $2 million and under. Consider that during the same period in 2014 there were 1,040 residential properties on the market. This equates to an almost 90% decrease in inventory over an 8 year period.
“Properties have become very difficult to find, so we’re spending most of our energy focusing on helping current owners understand the complexities of our market, most specifically, if this is the best time for them to sell,” she said.
The market is so tight, she noted, that homeowners must seriously consider if they’ll even be able to find another home in the county, despite the very real temptation to maximize on the value created by scarcity.
“If it’s someone’s primary home, we really only suggest selling it if they’re leaving the county, as it is a fabulous time to sell,” she said. “But if they’re going to continue to live here and we can’t find them something, then we can’t in good conscience encourage owners to sell.”
Nelson recently attended a conference where economists suggest that the current housing trends might continue nationally for another 4 years, which likely means an additional 5-6 years for the High County since we typically lag primary home markets by 12 – 24 months.
That said, broker and owner Ned Walley notes that the current market also allows NWRE to offer its expertise to those who are in a position to consider all their options.
“This is the most lucrative time to sell that I have seen in my entire real estate career, especially if you are an investor or 2nd home owner,” he said. “We’ve never really seen such a sweet spot where owners can extract such premium value. As a result, more and more owners are reaching out to us.”
Interest Rates on the Rise
Nelson Walley’s expert team is also offering some proactive advice as significant changes impacting second-home and high-balance home transactions are expected to jump by at least 1% this April. In a move that’s completely unrelated to what the Fed is doing with its interest rate hikes, government-created enterprises, Fannie Mae and Freddie Mac will be upping the rates on both second-home loans and for those who carry balances between $647,200 and $822,375, regardless of if it is a primary or second home loan.
“This does impact a good portion of our sales,” Nelson said. “These new rates will definitely have an impact on a buyer’s ability and willingness to purchase, which is why it’s so important to hire a professional to help navigate these murky waters.”
Short-term rental rules also require some forethought
While new short-term rental regulations have been finalized in the Town of Breckenridge, (significantly reducing the number of STR licenses), and Unincorporated Summit County (restricting the number of nights that some properties can be rented each year), both Nelson and Walley say significant uncertainty remains about potential rules in other county communities, as they’ve just begun those conversations.
“In Breckenridge, it’s going to have a major impact as there simply will be no new STR licenses, and it’s going to take two to three years at minimum before that changes and new licenses will start to be issued again,” Walley said.
While he understands the issues that have prompted the rules, Walley said he feels these restrictions will soon start to negatively impact property values across the County, further supporting why now is a good time to sell.
“It is a bit disconcerting that local governments are primarily focusing on the owners of real estate to help solve the housing crisis, when in fact this is a community-wide problem,” Walley said.
Is a Summit County real estate purchase or sale in your future for 2022? If you want to discuss your home’s valuation and NWRE’s suggestions for receiving top dollar for your home, please call Ned or Debbie at Nelson Walley Real Estate on 970-368-4448.
Andy Stonehouse’s column “Mountain Wheels” publishes Saturdays in the Summit Daily News. Stonehouse has worked as an editor and writer in Colorado since 1998, focusing on automotive coverage since 2004. He lives in Golden. Contact him at firstname.lastname@example.org.
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