What in the heck happened to the Summit County, Colorado real estate market this year?! I’ve been scratching my head throughout this entire sales season. We came off of a general election year which historically sees a bit of a slow-down – and typically results in a bit of a rebound the following year. The stock market has been very strong this year which again, typically means we will have a strong sales season. Yes, interest rates were higher than the record lows from the past decade, but because we have so many cash transactions (especially in the luxury market), we didn’t think that would impact our market as much as it does in metro markets. All of this led me, along with other local realtors, to believe that this would be a solid year for real estate sales in our resort community.
Market dynamics are very different for a resort and second-home market. Keep in mind that for about 70% of our buyers, our properties are a WANT, not a NEED. YTD, 30% of our buyers have been local while the other 70% are either second home or investor buyers. As we all continue to tighten our spending habits due to increased costs in our daily lives, “wants” tend to be the first thing to go. Why? Let’s take a look:
- · High Costs: Second homes are more expensive and are typically seen as non-essential, making them more vulnerable during times of economic uncertainty and higher prices.
- · Economic Uncertainty: Broader economic jitters are making buyers cautious.
- · Reduced remote work flexibility: The Covid era moved us into a highly remote job market which fueled the demand for vacation destination properties. Now we are seeing more and more employers requiring their employees to return to the office, so that market has dwindled considerably.
- · Mortgage Rates: Approximately 50% of our residential real estate transactions include a mortgage. That means that 50% are cash transactions. So while the higher interest rates (compared to historic lows over the past decade) have some effect on our market, it is not a driving factor.
So – were our sales really lower than last year or previous years? NO!! In fact year-to-date through the 3rd quarter, we are ahead of 2024 & 2023 in both number of transactions and Gross Volume. Here are the numbers through the 3rd quarter for 2023-2025:
- · 2023 had 880 transactions with $1,174,890,908 in Gross Volume
- · 2024 had 885 transactions with $1,333,349,234 in Gross Volume
- · 2025 has had 964 transactions with $1,475,300,128 in Gross Volume
Like any time of sales market, Supply and Demand are the driving factors and our supply increased, but our demand did not keep pace.
Why hasn’t demand kept pace with supply? I believe that there are 2 driving factors in Summit County:
1. Rising costs of home ownership. Of course this includes the price of the home, but it also includes the cost of maintenance, HOA dues, insurance rates, and utilities. This has a two-fold effect: First of all, many second homeowners find they do not use their 2nd home as much as they had anticipated and therefore decide to sell because of these increasing costs and lack of use (causing an increase in inventory), and secondly, buyers are impacted by these costs as well – and as the dream of owning a mountain home begins to materialize, so does the realization of what that dream will cost often resulting in a decision to NOT buy (causing a decrease in demand).
2. Short-term rental restrictions. Like it or not, short-term rental (STR) income creates the ability for many 2nd homeowners help to offset the costs noted above. Contrary to what many people may think, you do not get rich off of STR’s. You simply hope to help cover some of your costs for owning the property. Restrictions that were implemented over the past few years have had a very negative impact on sales throughout the County.
There you have it – Supply and Demand – Economics 101. What does this mean for Sellers and Buyers?
Sellers: Listen to your real estate agent and their pricing recommendations. Anticipated prices from the spring of 2025 changed greatly as the year went on as more inventory became available. Listing high thinking it gives you more room to negotiate just doesn’t work. When you don’t price within the range that the market will tolerate, you end up chasing the market down, and in the end will likely get less for your property than if you had properly priced your home.
Buyers: The market has shifted – and you, as a buyer, are now in the driver’s seat. That doesn’t mean that you can throw out incredibly low-ball offers and get a great deal, but it does mean that you have more to choose from, are not under the gun to make a quick decision, and you may also be able to negotiate additional terms into your contract such as a credit from the seller to help pay your closing costs.
In the ever changing world of real estate investment, Summit County still remains a strong investment when compared to the stock market. Let us here at Nelson Walley Real Estate help guide you with your next sale or purchase!