A decade of real estate: Average single-family home price up 64% in Summit County
FRISCO — Since the beginning of the decade, Summit County has had a relatively stable real estate market. Looking at the Land Title Guarantee Company’s historic market analysis from November 2019, year-to-date gross volume of real estate sales has gone up every year since 2010. In the last few years those rising numbers have shifted from being a shared product of rising home values and sales volume, to primarily reflecting higher home prices from limited inventory.
Dennis Clauer, owner and broker of Real Estate of the Summit, commented on the upward trend that has occurred since the Great Recession.
“The financial and economic meltdown that occurred in September of 2008 took a heavy toll on the overall stock market as well as real estate values throughout the United States and Summit County did not escape the devaluation,” Clauer said in an email. “Real estate values locally continued to decline from 2009 – 2011 and remained in a trough in 2012, and began an upward ascent in 2013 through January 2020.”
After limited growth with a 0 to 1% change from 2010 to 2011 following the last recession, things began to rapidly improve. Gross volume jumped 17% from 2011 to 2012, from 2014 to 2015 gross volume increased by a whopping 27%. Recent years have seen slower, steady gains — by the end of December 2019, the gross volume analysis was a 9% increase compared to 2018.
Increasing values, decreasing volume
While gross volume analyses show solely increases over the last year, the historic market analysis of the number of real estate transactions in the county tells a different story. For the last two years, the number of transactions have been slowly decreasing with a 4% decrease from 2017 to 2018 and a 3% decrease from 2018 to 2019.
According to Thomas Coolidge, president of the Summit Association of Realtors, the discrepancy between the gross volume and transaction data indicates that while inventory has leveled out, prices are still increasing.
“It’s a function that the inventory is shrinking,” Coolidge said. “There’s just so many properties and they’ve been bought up over the last 10 years and there’s been a lot of absorption but there’s just not a lot of turnover and prices are continuing to increase across Colorado.”
This trend shows in the percentage of luxury home sales (homes sold for more than $1 million). In 2019, home sales over $3 million were 9% of all residential sales for the year. For both 2017 and 2018, houses over $3 million only made up 4% of sales. Total luxury home transactions made up 48% of all sales in 2019 while luxury sales made up about 42% of sales in 2018 and 37% in 2017.
A statewide trend
According to a report put out in 2018 by the Colorado Association of Realtors, the Colorado housing market experienced “back-to-back years of 10 percent bumps in the median sales price of a single-family home.” The group’s most recent article reported that Colorado finished the decade with record-low inventory.
While this combination of rising prices and shrinking inventory is a statewide phenomenon, it is especially apparent in resort communities. In December, the Vail Daily published a five-part series explaining the high housing costs brought on by low inventory issues associated with the area. The Aspen Times published a real estate article in January stating that the average price of a single-family house in Aspen was $7.4 million through October of 2019.
“We’re seeing this in all of the resort markets, and the properties that come on to be developed take a longer time now to get approved, so it takes longer to get it into the marketplace,” Coolidge said.
Coolidge added that all new development is getting snatched up immediately, which makes him optimistic about the upcoming months as several new projects hit the market. Coolidge said that once these projects come in, which are mainly in Silverthorne and Dillon, there will be a major uptick in product sales on the real estate reports.
“There’s that lag when you get into new development when inventory shrinks,” Coolidge said, referring to the time it takes for a property to turn over to the buyer. “If the developers are comfortable with where they feel the markets going to go, then they’ll continue to bring new inventory on the market.”
Aside from prices, Coolidge said one of the major changes in the Summit County real estate market that he’s seen in recent years is its appeal to the international market.
“Summit County in the Colorado market is beginning to grow on an international level, so it’s attracting buyers around the world. So we’re seeing that, and then of course there’s the big socioeconomic movement of people coming from all over the world,” Coolidge said. “We’re becoming a very culturally diverse economy.”
Jack Wolfe, a LIV Sothebey’s International Real Estate broker associate, commented that it has been an “incredible 10-year appreciation of real estate.” According to the Land Title data, the average price of a single family home has increased by approximately 64% from 2010 to 2019.
“For me it was like having a big rubber band being pulled back when you look back at 2008. Since then, because of that rubber band, we rebounded extremely well,” Wolfe said.
Impact of short-term rentals
Wolfe pointed out that as a mountain community still in close proximity to the Front Range, Summit County is much less volatile than other Colorado mountain communities and has stayed friendly for Colorado families who want to come up for a week or two. He also mentioned the impact that the short-term rental market has made on the real estate market over the last few years.
“We’ve started to transition from an owner-user mentality to an owner-investor mentality. There isn’t a single-family home that I list that we don’t have a management company provide an estimate of what short-term rentals should be. Summit County’s had a history of not having a lot of hotels here, so now condominiums and single-family homes have filled that void,” Wolfe said.
Wolfe commented on the issues that have come up with short-term rentals in the county that local governments have attempted to mediate and keep from getting “out of control.” He said owning a single-family home is both a privilege and a responsibility if the owner plans to rent out the home. While short-term rentals have long been a substantial part of the real estate market in Summit County, Wolfe discussed how these rentals have blown up in recent years due to services like AirBnb and VRBO.
“If you would have asked me 10 years ago about VRBO, it just wasn’t present. There were management companies that were doing short-term rentals, but it wasn’t anything like it is now,” Wolfe said, noting that he really didn’t see the services pop up until about five years ago. “My partner and I recently closed on a $2.6M home and they did not allow short-term rentals, and we definitely saw an impact on the sale of that home.”
Clauer noted that the increase in demand is due in part to the current interest rates, which have been in the 2.75% to 4% range. Both Wolfe and Clauer pointed out that many people who telecommute or only have to commute to the Front Range occasionally have chosen to live in Summit County for the lifestyle.
“There is a huge desire to live in Summit County from individuals that are location neutral (can work from anywhere and are choosing a lifestyle) which again creates additional demand and absorbs inventory,” Clauer said in an email.
Wolfe noted that a lot of his customers don’t necessarily want to turn their home into a short-term rental operation, but want to know that they have the option in case they change their minds down the road. As for the future direction of the Summit County real estate market, Wolfe sees the county as a community that is maturing in terms of development.
“With the maturing of Summit County, by definition, we’re not going to keep growing,” Wolfe said. “Anytime you put a limitation on growth, I just see prices are going to be solid and increase. I don’t see that we’re going to take a big dip here or anything like that.”
“As Summit County approaches build-out and the population and appetite for resort real estate grows, expect further continuing upward pressure on Summit County real estate values,” Clauer said.