Summit County real estate was so hot in 2020 that new conforming loan limits here for 2021 have soared to $822,375, the highest limit in the entire state of Colorado.

Debbie Nelson and Ned Walley, the owner/brokers at Nelson Walley Real Estate, can’t recall the last time Summit’s conforming loan limit was higher than Eagle County’s, let alone highest in the state. But given all the surprises experienced in 2020, they’re not surprised to be entering 2021 in more unchartered territory. 

Of course Nelson and Walley can’t predict the future, but as clients continue to ask what 2021 will bring, they do have some thoughts about some of the trends that are carrying over from 2020. 

Conforming loans

In a market as hot as Summit County, and with inventory at record lows, any news that makes buying easier is good news. A conforming loan is the only type of mortgage that federally-backed Fannie Mae and Freddie Mac will guarantee and buy in the secondary mortgage market. It’s the type of loan that lenders prefer, as they are much easier to underwrite.  Conforming loans’ lower interest rates also make these loans most attractive for buyers.

“For buyers, this makes it easier to get loans on properties — it will be very helpful for the higher prices we’re seeing on properties around Summit County right now,” Nelson said. “We’ve heard of some lenders who pushed closings from 2020 to 2021 because the loans became so much simpler to underwrite.”

The fact that Summit County’s conforming loan limit is so high points to another trend that was prominent in 2020: Summit County is truly a bedroom community for Denver due to its proximity compared to other mountain resort towns. 

Walley thinks the higher conforming loan limit also points to another prediction for 2021 — that inflation due to the amount of money the federal government has printed to keep the pandemic economy afloat will rear its ugly head soon. 

“Money will inevitably become worth a little bit less than it is worth today. We’re seeing many savvy investors leverage properties at their current valuation to take advantage of future upsides in equity growth.” he said. 

Low inventory

The start of the year is when Summit County real estate enters its lowest inventory period. There are less than 175 active residential listings on the market right now in Summit County, of which 1/3rd are in the $2,000,000 and up luxury segment, which Walley said makes it difficult to manage buyers’ and sellers’ expectations.

They saw this in 2020 with comparable sales — buyers want to see comps to justify a purchase price, but those comps became almost immediately outdated due to the frenzied demand. 

“We had to look at our buyers and say, “you either want this place or you don’t want this place,’” Walley said. “The comps became almost obsolete.”

Are we in another bubble that could burst?

The standard answers to standard real estate questions are being turned upside down for 2021. Nelson said their brokerage is  contemplating whether to tell clients to wait to list homes until the spring, which used to be the norm, or to list now. 

“The lack of inventory is changing our process,” she said.

She also looks back to when the pandemic really hit the U.S. and how the stock market tanked, putting an almost full-stop to local real estate transactions. But then, both came roaring back with a vengeance. 

“2020 was a prime example of how local real estate is tied to the stock market,” she said. “But the bubble in 2008 was tied to the complete failure of the mortgage industry. We’re not seeing that anymore — there are so many guidelines in place to prevent people from getting in over their heads.”

Also worth noting is the amount of workers who no longer need to go to an office every day. Nelson and Walley are seeing buyers swap their Front Range and Summit County homes in terms of which they use as a primary vs. secondary residence. Nearly half of all buyers in Summit County are from the Front Range, with about 32% from out-of-state and 22% local.

“I spoke to a buyer this week, a couple with no children, who wants a 3-bedroom — one for sleeping, and two for offices,” Nelson said. 

Experience brokers matter in a competitive market

With so many factors at play, from buying frenzies, record-low inventory, a trend from second homes to primary homes, a higher conforming loan limit, and more, it’s absolutely essential for buyers and sellers to work with real estate agents who bring experience and deep market knowledge to the table.

Nelson and Walley are outside-the-box thinkers who bring corporate world experience to their long Summit County real estate careers. That’s what they believe helps them continue to close successful deals for their clients during an unprecedented time. 

“It’s so competitive, you have to be 110% on your game or you’re not going to win for your clients,” Walley said. “You need as much experience as you can get. With Debbie and me teamed up, that’s what we deliver.”