Summit County real estate market predictions for 2008

The general softening in the National real estate market seems to have had little impact on Summit County real estate, at least, so far.  However,  I can’t help but think that we will feel some spill over in the lack of confidence in the economy in general. 

The mortgage melt down affected sub-prime loans, which are usually used on primary residences, not second homes.  We did see some impact on the ability to get a jumbo loan at a decent interest rate for a little while, but that blew over fairly quickly.  And about 1/3 of the closings in Summit County are cash, with no loan involved. 

The first half of 2007 we had little inventory available for sale,  but lots of Buyers wanted to find a vacation home.  As a result, prices pushed up very quickly.  For the first eleven months  of 2007, the number of transactions were down from the year before, but prices were up.  In month of November alone, the number of transactions were down 14% but even that late in the year, prices of closed sales were still up 14% over November 2006.   If media outlets looked at the number of transactions only, they would assume that our sales declined because our market was following the rest of the country.  In truth, there were few properties available to sell, and it meant that often properties had multiple offers and it was a Seller’s market.  Some Sellers took advantage of the market by pricing even higher in hopes that their property would sell at a record price.  In some little niches, like waterfront property (of which we have little anyway) the Sellers were able to get the prices they wanted, but in other cases, the prices had to be reduced in order to sell.  This fall, we saw more price reductions as people got more realistic, but even so, there are still homes that have been on the market longer than they would have been this summer.   As I am writing this on the last day of 2007, we don’t have year end statistics yet, but as soon as I have them, I will post them. 

What does that mean for 2008?  It is hard to say, and spring will probably give us an indication.  I do think that we are seeing a softening in the market, especially in the $600,000 to $1,500,000 price range.  The upper price range seems to be staying strong and the low end (if you can call under $600,000 low end) is also strong.   We still have Buyers, but they are concerned about paying too much when they think the market might be on a downward trend.  If they see something as a good value, they will buy it.  As a result, I think that Sellers will need to check the last sales and the time frame in which they sold before they price their properties.  I suggest caution because I think we have seen our prices peak and now we will plateau for a while.  I don’t anticipate prices dropping as they did a few years ago, because we still have demand. However, Sellers will need to be realistic and not overly optimistic in their pricing. 

Why is there less inventory?   In my opinion, there are two main reasons. 

First, baby boomers who bought their properties in the last few years  are not ready to sell yet unless they need more bedrooms for their kids and grandkids.

Second, Summit County is very close to being built out.  Frisco, in particular, has little land left on which to build.  The days when we had whole condo complexes with 50 to 80 units come up on the market are behind us, and now, if builders are able to find high density land, they are lucky to build 10 or 12 units at a time.  There is little new construction compared to past years.  As a result, we have to rely on resales, but when owners are not ready to sell, we have no inventory and the result is the price increases we experienced this last year. 

Watch for my market thoughts in the spring.  Winter is traditionally slow, as people either use or rent their condos during ski season and then put them on the market in April and May.  Buyers are busy skiing, and although they may take the time to get a feel for the market, many people tell us that they will come back in summer and buy when more is on the market and they have more time.  By May, we should have an indication of what our summer season will be like.  Meantime, if you are a winter buyer, it is still a good time to buy as there are fewer people competing for the property you are looking at and your chances of finding something you like are still good! 

Posted by Summit County Real Estate Agent Joanne Hanson at 8:45 pm in Summit County Real Estate, Summit County Homeowner Resources, Summit County Colorado Vacation homes, BlogRush. Subscribe to comments RSS feed.

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