Market Insights: How stock volatility impacts local real estate
Special to the Daily
What a roller coaster ride the Dow Jones has been recently. In this Market Insights column, I’ll provide you with the real-time data about what is happening in Summit County real estate. How can I do it? I track the sales every day, week, month, annually and over the decades.
Here is what I have seen since July 21 when the Dow started dropping (and since August 4 when it started becoming extremely volatile). Please note this article is based on Breckenridge data only. I track Breckenridge for three reasons. First, it is the largest segment of our real estate market; second, the Summit market tracks parallel with Breck; and, third, it’s at my door step, since my office is on Main Street in Breckenridge.
Sales have been extremely steady and very, very stable. As a matter of fact, since July 21, the number of sales are up about 60 percent over the year-to-date weekly average. WARNING: This average is very misleading. This increase is due to the ‘summer sale season.’ History shows it is normal, and happens, this time of the year, every single year. I don’t believe it is connected to the stock market.
My point: The buyers are here and are buying. However, I want to provide you with a market insight that you cannot ‘hear’ from the data. All summer I have driven back and forth from one end of this beautiful slice of the Colorado Rockies to the other a zillion times. On each trip, I have been accompanied by buyers. Their reactions to the volatility, which I hear and experience first hand, fall into three categories:
The largest group believes that Summit County real estate prices are low, are very good value and they feel comfortable buying today. These buyers are purchasing today for the enjoyment of their children’s children.
These people are fed up with watching their net worth climb and decline like a yo-yo. As a result, they tell me they are not listening to their finance advisor as much as they used to. I heard them say, “I am thinking for myself more. I’m not so sure our financial guy is really ‘our trusted advisor’ these days.” These buyers see that Summit County real estate is more stable than most major Western ski resorts so they are buying here.
These are the buyers who judge their net worth on market peaks. In essence, their ability to buy is determined by the stock market. Here is the great news for Summit County. These are, far and away, the smallest segment of clients with whom I drive throughout the county.
As you can imagine, this article is a very hard point to illustrate with a specific property, so this photo is an example of the kind of great value buyers are picking up right now. This home, with stellar views of the Breckenridge ski resort, was purchased on September 27, 2000, for $729,000, unfurnished and without many upgrades. Yesterday the price was dropped to $729,000. At the peak of the market, in early 2008, it was on the market for $1,200,000!
Focus, focus, focus. If you are determined to buy or sell real estate in Summit County, focus on this market. Know what is going on. Don’t guess the impact the stock market might be having. Get the facts and use the facts to guide your decisions.
Daniel Webster Johnson is a broker associate at Resort Brokers Real Estate in Breckenridge. He can be reached at (970) 393-3300 and/or Daniel@YourMountainBroker.com.
*Data provided by the Summit
Association of Realtors.
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