These are unprecedented times for the American real estate market: prices continue to rise since the pandemic, and demand continues to outpace supply in most of the country’s major centers. And as we saw last year in Colorado, the situation is even more incredible, with record prices and deals never seen before.
The scale – and the accompanying hyperbole – can make some buyers (and potential sellers) wonder if the peak is approaching, and whether they should worry about what seems too good when selling a resort property.
Debbie Nelson, owner / broker at Nelson Wally Real Estate, encourages stakeholders to take a deep breath and consider some of the realities of the current market. And, especially for potential sellers, if this seems like a great opportunity to maximize the extremely high demand for inventory, it might be the perfect time to speak with a well-established real estate professional with close ties to the local Summit County community.
“We still have incredibly low stocks and prices continue to rise,” she said. “But we’re not in a bubble. The supply just doesn’t meet the demand. “
Summit County continues to attract citizens
As well as around the same time last year, Colorado’s mountain communities have become some of the most in-demand real estate markets in the country as city dwellers continue to seek a more relaxed and family-friendly environment.
And given that telecommuting looks like an ongoing opportunity for many American employees, wanting to have a home in an environment that offers the equivalent of a year-round vacation for city or coastal residents means things get very, very stressful, Nelson explained.
“We currently have 1.5 months of inventory of all residential property in the district and only 1.3 months of inventory of residential property worth less than $ 1.5 million,” she said. “Remember, six months stock is a balanced market.”
Inventory deficit stimulates demand, prices
The situation, Nelson said, is unlike anything she has ever seen in her decades of public service.
“Over the past 12 months, 3,166 housing units have been sold in Summit County,” she said. “To achieve a balanced market in six months, we will need 1,584 housing units on the market. And to carry out an inventory of real estate worth $ 1.5 million or less in six months, we need 1382 objects. Now we have 154. This is a completely new territory for us. “
It also created what could be the best selling market in Summit County history, and Nelson said the incredible speed of selling real estate immediately is changing local real estate rules.
Prices hit record highs again in May 2021, with median home sales prices in the county reaching $ 954,160. Multi-family homes cost an average of $ 774,577, and single-family homes cost an almost incredible $ 1,743,878 – a situation that seemed impossible just three years ago.
These record prices mean that the price per square foot for single-family homes rose to $ 553 at the end of May and to $ 645 per square foot for apartment buildings.
Nelson said the pace of sales is also creating immense competition as consumer enthusiasm shows no signs of slowing down.
“The average number of days on the market in May was only 18 days for all residential properties,” she said.
Tips for navigating an escaping market
Ned Wally, Nelson’s co-owner / broker, said these slightly confusing circumstances absolutely require trusted local professionals – whether it’s navigating the market looking for a great deal for a buyer, or taking the time to calculate the numbers and analyze the right steps for those who sees it as a time to sell.
“Our phone keeps ringing and this is the market talking to us,” Wally said. “Rumors are definitely spreading.”
A crowded marketplace also makes it absolutely imperative to work with a real estate team that understands the combination of the timing and value of proper property marketing and placement in order to maximize returns for sellers. Sometimes, he said, sellers simply cannot believe what demand and rising prices will mean to them, especially if they have had cold feet in the past when it comes to testing the market.
“We had a recent listing arrangement and got along very well – we told them about the real value of their home and they liked what they heard,” he said. “They told us that this was not what other companies were telling them, and they hesitated a little. But they took a step of faith with us, and it worked. “
Both Nelson and Wally stressed the importance of sound pricing strategies for success in the current environment.
“We know there is a fine line in real estate pricing,” Nelson said. “The cost should be high enough so that we don’t leave money on the table for our sellers, but low enough to attract enough interest to attract a few buyers.”
The firm is confident in its pricing strategy, and last year’s data confirms this estimate.
“Our sales price-to-list percentage for all 44 properties we sold in the last 12 months is 99.25%,” Wally said. “And keep in mind that some of those previous 12 months have been during short-term COVID-related price drops. Even taking into account the fact that in the past few months we have been promoting the market, the company’s price in the last six months was 101.3% of the selling price to the list price. “
As the value of homes in Summit County continues to climb, Nelson and Wally said they plan to continue working with their sellers to help them understand what’s possible in the current market and be confident in the recommended price for their home.
“The biggest challenge now that the value of single-family homes is increasing by 3% per month in 2021 is convincing sellers that the values we are proposing are indeed correct,” Wally said.