The Vail Valley market continues to demonstrate strength and resilience despite headwinds from stubbornly high interest rates, limited inventory, and other macro factors that challenge norms and predictable market cycles.
On a more positive side, sales in the luxury and resort markets continue to provide market strength. The third quarter of 2023 saw a 29% increase in value compared to the third quarter of 2022, but a slight decrease in sales volume (-8%). This number speaks to the strength of the luxury goods market.
The sub-$1.5 million market continues to lag due to limited inventory and rising interest rates. Sales under $1.5 million decreased by 34% to 136 sales in Q3 2023 compared to 206 sales in Q3 2022.
Comparing the last two third quarters to the most recent “normal” market in 2019, there is an even bigger disparity as there were 343 properties sold for less than $1.5 million that year. Rising prices have certainly increased values, and combined with rising interest rates hovering in the 7% range, it has become increasingly difficult for buyers seeking financing to purchase a home in Eagle County.
The biggest question for buyers right now is when to buy. Experts agree this is a double-edged sword. On the one hand, if you’ve found the right property and can afford the current payments, buy now. Waiting until interest rates drop may reduce your mortgage payments, but there is ample evidence that high demand is ready to flood into the market when rates drop (and inventory increases). there is. This increases competition for housing and keeps prices rising. It is also possible that an even more difficult purchasing environment will be created.
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Our market is in a unique cycle that most people have never experienced. Overall, the good news is that inventory levels are seasonally appropriate (although the market needs more) and buyers are facing less competition for homes.
Luxury/resort market
Tisa Olsen, a broker with Berkshire Hathaway HomeServices Colorado Properties, said the current state of the luxury/resort market presents unique challenges for both buyers and sellers.
For buyers, frustration centers around finding properties with a very limited selection that meets the discerning tastes of luxury buyers. Low inventory increases competition, leading to bidding wars and homes selling within days.
“Buyers need to be ready to act quickly when a property that meets their needs comes on the market,” Olsen says.
Olsen also points out that there is still an opportunity for willing sellers to take advantage of the significant gains of recent years.
“But it’s not a free-for-all,” Olsen says. “Fast selling properties are well priced and sellers should price strategically based on fair market value of location, condition, amenities etc. More sellers profit. As buyers realize the unique opportunity to take advantage of this, inventory should increase, which is good news for buyers.”
downvalley market
Scott Marino, a broker with Berkshire Hathaway HomeServices Colorado Properties and an expert on the Down Valley market, said single-family homes under $1.5 million are still lagging behind. Of the 50 properties currently on the market, 60% are new developments and likely won’t be available for occupancy until next summer.
As with the luxury/resort market, sellers have a clear advantage as long as they are priced appropriately.
“Buyers have demonstrated that they are not willing to overpay for a home above fair market value, especially if interest rates go up,” Marino said.
“Some sellers are hesitant to list their properties and are hesitant about having to pay a higher price for a new home,” Marino said. “But it works both ways. When prices drop, sellers usually get less profit on their homes. The best advice I can give is whether you’re ready to buy or ready to sell. If you’re ready, act now. There are no signs of dramatic changes in prices or interest rates anywhere. In the fall, buyers are looking to buy before the start of ski season and the start of the holiday season. It’s a great time to be looking into it.”
Michael Slevin is president and owner of Berkshire Hathaway HomeServices Colorado Properties, which his father, John, started 52 years ago. The company has grown to 12 offices in 10 Western Slope counties and mountain resort communities from Grand and Eagle counties to Western Slope counties.