The Summit County Colorado Real Estate market is feeling the full force of the recession. In fact, market data shows that the market decline began about the same time that Bear Sterns collapsed. Prior to that time, Summit County had been fairly immune to the problems facing much of the rest of the real estate industry throughout the US. There are many reasons for this, among them:
- Compared to the rest of the country, Summit County has a fairly low percentage of sub-prime borrowers and the loan defaults that plagued other markets was not much of a factor in Summit County.
- Summit County did not experience the speculative bubble that occurred in some other markets. Being a four sessions destination resort market, most Summit County real estate Buyers purchase for the purpose of personal use and/or tourist rental income, not with the intent to sell in the short term.
- In the absence of the speculative bubble, and being surrounded by mountains and National Forest, over development in Summit County did not take off as it did in other markets.
Of course, there are counter-examples to each of the above points which are included only as a comparison to other markets and to give a general overview of the real estate market in Summit County leading into the first quarter of 2008. To a large extent, the Summit County real estate market had been, and continues to be, defined by the overall US economy and not necessarily the trends within the real estate industry as a whole.
And with the exception of a hand full of talking heads and Wall Street bail-out recipients, most of the rest of us know that the economy is not doing well.
The recession has resulted in a decline of Summit County real estate sales prices, number of sales, and overall sales volume. Meanwhile new listings continue to come on the market resulting in an abundance of inventory.
One of the hardest hit sectors of the Summit County real estate market has been vacant land as the following chart will show:
|Market Snapshot for Summit County Colorado Land Listings and Sales:|
(Jan 16, 2010)
To investigate the above table further, the following will examine the lots that sold in Breckenridge Colorado during 2009 in the $400,000 to $500,000 price range:
- The first was a resale of a lot in the Highlands at Breckenridge for $403,000 on 08/14/09. In this case, the Seller had paid $550,000 for the land on 05/31/07 when the market was it its peak.
- The second was a sale by the developer of Western Sky Ranch in Breckenridge of a 4.98 acre lot for $499,000 on 09/22/09. Being a developer sale, there is no previous sales information for this property. But, the closest comparable sale within Western Sky Ranch for the adjoining lot of 3.58 acres which sold for $725,000 on 01/04/08, also prior to the market contraction.
- The third was another resale in the Highlands at Breckenridge on 11/03/2009 for $465,000 which was originally listed for $599,000 on 06/16/2009. The Seller of this property purchased it in 1996 for $165,000.
- The fourth was a sale in the Warriors Preserve subdivision which was originally listed for $595,000 on 01/03/2008 and which sold for $415,000 on 12/11/2009. The Seller’s purchase information is not available.
- The fifth was a lot in the Warrior’s Mark West subdivision for $420,000 which was originally listed for $550,000 on 06/16/2009. Once again, The Seller’s purchase information is not available.
Five sales in a narrow price range do not define the entire Breckenridge real estate market for vacant land. Breckenridge does not define Summit County as a whole. And the market for vacant land does not directly translate to that of residential property. But the most generalized Summit County Colorado market data also shows inventory up, transactions down, and prices reflecting these facts.
There are also some positive signs for what the future of the Summit County real estate market may hold:
- Interest rates are down. As of this writing, the interest rate on a 30 year fixed mortgage is about 5%. A year ago it was about 6%. This means a lower monthly payment of about $63 per $100,000 borrowed. Alternatively, a $1,000 a monthly payment a year ago would cover a mortgage of about $167,000. Today, this same payment would cover a mortgage of about $186,000.
- In anticipation of inflation, money is moving toward hard assets. The recent record high prices of gold reflect this. Real estate is also a historic hedge against inflation and the discrepancy between the price of gold and the price of real estate is near the highest in US history. In other words, it now takes fewer ounces of gold to buy an average home than almost ever before. And with bullion and numismatic gold becoming increasingly difficult to find, and the inventory of available real estate on the rise, how long can this trend last?
- Colorado is one of the states projected to be the least impacted by the recession. Unemployment in Colorado is lower than the national average, personal income is higher, and the Colorado economy has significant high-tech, natural resource, and alternative energy sectors.
- Bloomberg recently reported that Vail Resorts Inc., which owns both Breckenridge and Keystone, is projecting skier visits and overall bookings to be up this ski season over last and one component of the Summit County real estate market is rental income generated from renting homes and condos to tourists.
With inventory up and prices and interest rates down, this may be the ideal time to invest in Summit County real estate. For more information, contact Ted Amenta – Summit County real estate agent.