Photo by Liz Copan/Summit Daily Archive
As the year-end approaches, Summit County Real Estate Reports show accumulating data that reveals 2022 market trends. From rising interest rates to strong demand for housing, real estate of Summit County has had an interesting year.
“That flying out of cities and into more rural areas, or – the Rocky Mountains, where everybody wants to live and come play – that really drove up our prices here in Summit County, more than anything else,” said Chris Lankhorst, Slifer Smith & President of Frampton’s Real Estate Market.
Land Title Guarantee Co.’s Summit County market analysis for the end of October shows that while prices have soared, transactions have declined. Even so, due to the increase in real estate transactions from 2020, 2021 and early 2022, the analysis shows that prices have decreased.
Lankhorst said that due to the exceptional real estate boom that occurred during the COVID-19 pandemic in Summit County, 2021 can be considered an outlier.
“Since 2008, 2009, we’ve been climbing climbing climbing, and then all of a sudden you come to 2021, where everything kind of peaked,” Lankhorst said. “We peaked so high and appreciated so fast that … 2021 will be that outlier.”
This led to a decrease in the historical variation of the market. 2022 is the first year since 2016 that the monetary volume in the market – the total value of all real estate sales in the county – has fallen. In 2015, the market fell by around 2%. The comparison since the beginning of 2022 shows that the market has fallen by 25%.
While this may seem significant, real estate trends from 2021 indicate that the decline may not be as severe as it appears.
Former Summit Realtors president and realtor Dana Cottrell said there were days in 2021 when she could only find two properties for sale in the town of Dillon, and sometimes there were none .
“(Prices) don’t normally accelerate at the rate they did after COVID,” Cottrell said. “It was really, really an anomaly. I’ve been involved in real estate for 25 years and I’ve never seen prices go up like this before.
Lankhorst explained that if the real estate trends of 2022 were compared to 2019, they would not seem as significant. In fact, the county has $400 million more in sales than the same period in 2019.
One factor that has increased is the average price of a single-family home. In 2021, the average price for a single-family home was around $1.72 million. The average year-to-date price of a single-family home so far in 2022 is just under $2.08 million, an increase of about 21%.
Cottrell also pointed out that 2022 saw the end of the 2021 frenzy, which could have distorted single-family home prices. Lankhorst called it the “hangover.”
The only two months in 2022 where real estate sales were not down from 2021 were January and April. January saw a 28% jump while April barely topped the 2% bump.
Cottrell added that demand was falling more and more each month over the year.
As people flocked to every sale she handled in early 2022, in June, she said bids had dwindled. So, interest rates jumped. Where interest rates used to be around 3%, they are now reaching 6% or 7%, which increases the cost of a mortgage and, according to Lankhorst, the purchasing power of the buyer as well.
That’s when Cottrell said the offers fell.
“It was really dramatic,” she said.
According to market analysis, each month of 2022 saw a decrease in the number of transactions compared to 2021, with the lowest being October this year, which saw a drop of 49%.
Lankhorst said it’s increasingly affecting local families. Although Summit County has been plagued by expensive housing since the 70s and 80s, Lankhorst said, it has become more severe lately.
In October of this year, approximately 41% of buyers were from the Front Range, 32% were domestic out-of-state buyers, and only 27% were locals. Cottrell said that in the past, transactions were more evenly divided into tiers. Now the locals are at the bottom of the scale.
“I think right now it’s even more true because of the flight to the mountains, the flight to these rural areas outside of the cities, and it’s getting harder and harder,” Lankhorst said. “We’re running out of land in Summit County, there’s nothing left to build on.”
Lankhorst and Cottrell said a spike like Summit County’s in 2021 is unlikely to happen again.
Lankhorst explained that people who have the 3% to 4% interest rates they have received in years past are unlikely to move because their new interest rate would likely double. If his theory comes true, Lankhorst said the inventory would become more balanced.
“If you’re a local and you think you want to get into a bigger place…it gets really tough when you’re only looking at 3% to 7%. It’s such a massive increase,” Cottrell said.
Ultimately, Cottrell and Lankhorst said a year like 2021 is unlikely to happen again. Whether the market leans toward buyers or sellers is still up in the air, but both expect Summit’s boiling real estate market to cool down.