What can Summit County buyers expect from the 2023 housing market? It’s a mixed bag, industry experts say.
The year kicked-off with a decline in single-family home prices and sales. Brokers say it could mean more buying power even as other factors spell uncertainty.
Decreased home prices. More housing inventory. Rising interest rates. Short-term rental regulations.
There are a plethora of factors currently at play in the housing market, which Summit County real estate experts say could benefit both buyers and sellers this year. While brokers don’t expect a paradigm shift in the market compared to past years, they said a cooling down trend may have already begun after the COVID-boom that saw prices skyrocket.
“We’ve gone through this transition over the past year to a more stable market where you aren’t seeing the median sales price skyrocket like it did over the past few years,” said Dishon Lutz, associate broker for Real Estate of the Summit and president for Summit Association of Realtors.
Home sales in the county were down 37% in 2022 compared to 2021, according to a report from Land Title, even as prices reached new heights. In 2022, the average home sale, which includes both single- and multi-family homes, such as condos, was $1.3 million, according to Land Title data. The average price for a single-family home exceeded $2 million, the highest value on record.
According to a recent report by Dana Cottrell, a Summit County broker and spokesperson for the Colorado Association of Realtors, the price of a single-family home decreased in January by about 10% compared to the 2022 average — to a value of $1.85 million.
The report also found there were 20 single-family homes sold in the county last month, down from 35 sales in December 2022. For multi-family homes, there were nine sales, down from 35.
The availability of housing also rose at the end of last year, according to data from the association, which reported 109 single-family homes on the market in December 2022 — up from 61 in December 2021. Inventory for townhomes and condos increased from 233 to 263.
For Lutz, it represents a shift towards more buying power even as sellers remain well positioned.
“We’re in a healthier market for consumers,” Lutz said. “They’re able to negotiate on terms of the contract.”
The reason comes down to a basic scenario of supply and demand, the latter of which has dwarfed availability for years. While housing supply is still far from meeting the need, Lutz said the increase in availability and slowdown of sales gives buyers more time and options.
“You don’t have to be as aggressive as you did previously,” Lutz said, though homes can still sell on the market within a matter of days.
“It’s still a good time for sellers to sell,” Lutz said, “meaning the competition for a seller is still somewhat down.”
Leah Canfield, a broker associate for Coldwell Banker Mountain Properties, said while buyers may have more opportunities this year than they did in years past, both national and local factors still pose a challenge for those trying to break into the housing market.
Interest rates, which have been continuously increased by the U.S. Federal Reserve in a bid to tamp down consumer spending and slow inflation, rose from a range of 0.25% and 0.50% at the start of 2022 to 4.5% and 4.75% as of February.
That means a steep increase on mortgage payments, which, coupled with the county’s recently passed short-term rental regulations, could restrict movement in the housing market, Canfield said.
For homeowners using their property as a short-term rental, many have been locked into an interest rate closer to zero if they purchased those homes before inflation began to climb. As the county seeks to reduce the amount of short-term rental properties over the coming years with a new cap on licenses, Canfield said some of those homeowners may be reluctant to sell their property.
“There are certain sellers saying ‘I have to hold onto my home,’” Canfield said.
And even as this year began with a drop in single-family prices, Canfield doesn’t expect that to be the new normal.
“Prices haven’t really changed as much as people thought they might,” Canfield said. “The new normal is going to be less sales volume.”
Still, Canfield said there are more reasons to be optimistic as a potential homebuyer. More of her clients are coming to her ready to close on a deal, she said, signaling more confidence in the housing market from buyers.
But how long that will last Canfield said is hard to say.
“If somebody wants to buy a home here, they should be looking now,” Canfield said.
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