Summit County Real Estate Market Update

Our Summit County, Colorado real estate market continues to be strong.  It is a topic of conversation everywhere I go these days.  Yesterday I met with some Realtor friends for lunch and some client friends for dinner, and the market conditions were discussed in both places. 

When the rest of the country is in a slump with no real signs of any upward swing yet, and the mortgage market in the mess it is in, people assume that our market is also down.  That is not the case! 

Why would Summit County, not be affected?  In my opinion there are several reasons.  Of course they are generalizations, but tend to be true for most of my clients.

• Baby boomers are the prime buyers of second homes.  They are pretty insulated from the economy.  Boomers are in their highest earning years, are close to retirement and they have been saving money  most of their lives. They have benefited from the increase in stock prices over time.
• Baby boomers know that current interest rates of 6.5 to 7% are still good rates.  They have seen 10 or 11% or more, and have the history behind them to know these rates are low.  They are willing to take out fixed rate loans and so did not see the cost increases that affected others so negatively as adjustable rate loans adjusted up. 
• Baby boomers did not refinance in order to roll in other debt.  They look at their homes as a savings account while younger people tend to look on their homes as a checking account, taking out equity for purchases of boats, jet skis and other items they “need”.  Our tax code has encouraged it by having interest paid on a mortgage be deductible while interest on a loan for a boat or car is not.  People who borrowed against their homes until they owe more than it is now worth are some of the people in foreclosure.  As the price of homes has declined and the market has slowed, they are not able sell them to get out of debt.   
• Our inventory levels of property are low, with many areas approaching build out and fewer new properties being built.  It is the law of supply and demand, with less supply and more demand driving up prices.  Here, if someone has financial problems, they are usually able to sell their home and perhaps break even as it would have appreciated since they bought it. 

Yes our market is strong, but I think we are a bit overbuilt in the $1,000,000+ category.  In that price range, we have enough inventory for a couple of years of sales, and I am seeing people come off their optimistic prices they set early in the summer.  Also, jumbo mortgage interest rates have jumped dramatically, although I think that is temporary and they will come back down soon.  Many of our high end buyers pay cash.  Lower price ranges (under $600,000) are as strong as ever, and we are seeing multiple offers when we are lucky enough to find good property under $450,000.  It is an interesting time, and it remains to be seen if  the softness in the real estate market in the  rest of the country will affect our prices here.  I will keep you updated as I get a personal perspective on it!

The statistics are courtesy of Land Title Guarantee Company. 

Posted by Summit County Real Estate Agent Joanne Hanson at 7:13 am in Summit County Real Estate. Subscribe to comments RSS feed.

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