Summit County’s summer real estate trends may favor buyers, but agents say local workers will likely remain priced out
Real estate transaction percentages have declined from 2021 to 2022, creating a buyer’s market for the first time since 2019.
However, that doesn’t mean it’s a better market for the local workforce.
Two real estate brokers in Summit County gave context, explaining that a combination of increased interest rates, short-term rental regulations and a chokehold on development could be contributing to this decrease in total purchase volume.
Purchase volume is the total dollar amount of real estate transactions for a calendar year.
From 2020 to 2021, the purchase volume of real estate transactions in Summit County skyrocketed. April, May and June brought increases of about 242%, 304%, and 176% respectively.
Flickinger attributed the high percentages to a high demand for Summit County properties and a prolonged period of low interest rates.
One theory he had about the high demand was a population boom on the Front Range.
According to the U.S. Census Bureau, Denver City’s population as of April 1, 2010, was 600,158. As of April 1, 2020, the population grew to 715,522.
Historically, Flickinger said Summit County’s real estate market has been 40% Front Range buyers. With that population increasing, demand shot up.
Another reason percentages were so high were “historically” low interest rates.
“That increases everybody’s purchasing power,” Flickinger said. “It doubled — if not tripled — some people’s purchasing power because the interest rates were so low, and that was unsustainable.”
Now, interest rates have risen. While they were at 3% a few years ago, rates are now 5% for primary homes and 6% for secondary homes.
Comparing the spring and summer months of 2021 — when percentages boomed — with the same months in 2022, the purchase volume of real estate transactions in Summit County has either barely increased or decreased significantly.
April increased by only 2%, May decreased by 12% and June decreased by a significant 37%.
Leah Canfield, a real estate agent with Coldwell Banker Mountain Properties, said a consequence of high interest rates are less second home purchases because many second-home owners in Summit County are unable to afford their homes without short-term renting them, she added.
In May, the Summit Board of County Commissioners voted to begin a nine month short-term rental license moratorium.
In addition, the town of Breckenridge voted in late August to approve a set of short-term rental regulations that created specific short-term rental zones and established limits on licenses.
Canfield reported seeing plenty of interested buyers turn away from Summit County once the possibility of a short-term rental license looked to be out of the question.
So what are the effects of these changes in the market?
Canfield said, this summer, active sales have increased from last summer, while pending sales have been almost cut in half.
“So what that means is that people are listing their properties, and they’re sitting on the market,” Canfield said.
Both she and FIickinger said this trend may continue, creating a market that is more favorable to buyers.
“Really what it’s done has created a more healthy real estate environment where buyers and sellers are now kind of on parity,” Flickinger said.
Instead of rushing through and competing with cash buyers, Flickinger said primary buyers have more time to adjust contracts to their liking.
Even so, the problem of price still stands, which will lead to more empty homes according to Canfield.
“Unfortunately, that doesn’t necessarily translate to more opportunities for locals,” Canfield said.
Even though there are more houses sitting on the market, there is only one single-family home that is listed under $1 million.
Therefore, while interest rates have increased and short-term rental regulations have slowed the purchase of homes, the housing stock that is available is not providing more options for the local workforce who may need something more affordable.
“Because when a house, on average, is $2 million and the homeowner has to rent it for, you know, 10, 15, 20 thousand dollars a month in order to cover their expenses and their mortgage, then it’s not affordable to a local anyways,” Canfield said.
So while Summit County’s real estate market has become more favorable for buyers, Canfield said if a buyer is on a budget, the search for a home within the county will — at the very least — be difficult.
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