With some properties seeing multiple offers and selling above list price, others struggling to sell at lower prices, it appears that the Summit County real estate market is quite confused. Stats say that average sales price is climbing even though we are definitely seeing declines in parts of the market. Just looking at the Summit County real estate market as a whole is not painting an accurate picture of what is really happening now. The saying goes, “Real estate is local.” I don’t know any real estate agent that would disagree with that. However, the current market is not local. We are experiencing a hyperlocal Summit County real estate market. A more in depth look at the current market is necessary to gain understanding and insight.
Focusing on the hyperlocal sales
With hyperlocal in mind, it is necessary to take a deeper dive into the statistics. We are focusing on two bedroom property sales during the first four months, January through April. Then, to add context we looked at those same months over the last five years. We are using sales in Copper Mountain, Keystone, Frisco, Wildernest and Dillon Valley. Any deed restricted sales are removed from the statistics.
Average sale price peaks & declines
These different segments had varied peaks in the average sale price. Both Keystone and in Frisco saw average sales price peak this year. 2023 saw peaks in Copper and Dillon Valley, and Wildernest in 2022. The average sale price, from it’s lowest point to it’s highest point, increased the most at Copper going up 90%. Dillon Valley had the second largest increase at 78.3%. Then Keystone, Wildernest & Frisco. Even with the lowest gain during this period, Frisco still saw a 70.4% increase in average sale price.
When there is a peak, there must be a decline. The average sale price peaked in Keystone and Frisco this year so prices haven’t fallen in those areas yet. In fact, if prices continue to rise, this year may not wind up being their peak. The other three areas have already seen declines. Copper has decreased 3.4%. and Dillon Valley has had an 18.6% decrease since their peaks in 2023. Wildernest has dropped 21.1% since the 2022 average sale price peak.
These numbers tell me that, of these areas, so far Copper is experiencing a larger price increase over the last 5 years while Wildernest is seeing the lowest overall gain.
Why is this happening?
Why different areas are experiencing a variety of results is a difficult question to answer with certainty but we have a couple of theories. Short term rental regulations and/or a split between the upper and lower priced properties, a K shaped recovery, could be causing or contributing to the hyperlocal Summit County real estate market.
Short term rental restrictions impact the desirability of a property. Anytime there are restrictions on a property, it shrinks the potential buyer pool. If a property doesn’t allow pets, those buyers that want to bring their dog with them are no longer interested in that property. When a property is restricted to those working in the county, all of the second home buyers are no longer interested. If the property doesn’t allow short term rentals in the near future, those that want to short term rent it will not buy it. The more significant the restriction or the more restrictions there are, the smaller the group of buyers that are interested in a property. That reduces the demand for a property. The rule of supply and demand then kicks in. If more restricted properties come on the market, both supply and demand are negatively affecting the property. In order to sell, demand must increase. Reducing the price is one way to increase demand.
Both Dillon Valley and Wildernest have short term rental license caps that are lower than the current number of short term rentals in the area. It could likely be a decade before short term rental licenses are available again in these areas. Copper and Keystone are considered resort areas and have no license caps. Frisco has a cap on rental licenses but it is close to the current number of licenses in use. There may be a waiting period to get a license in Frisco but it is likely a short wait.
Putting rentals aside, perhaps the hyperlocal, Summit County, real estate market is due to a split between the higher end and lower end properties. Also known as a K shaped recovery, the higher end continues upwards while the lower end slumps. Those buyers that have money and are, therefore, less impacted by higher prices have continued to buy. Buyers that are more price sensitive have slowed down. The higher end properties have stronger demand which is continuing to push up pricing while the lower demand in the more entry level properties is hurting prices. High interest rates, high insurance costs and the jump in property taxes are all things hindering the more price sensitive buyers. Wildernest has always been a more affordable area of the county, as is Dillon Valley. Both have seen average sale prices peak followed by double digit declines.
The new short term rental regulations in combination with the more affordable properties may likely impact the properties more significantly. Dillon Valley has typically had less short term rental demand than Wildernest. Because of that, short term rental restrictions may have a smaller impact on pricing in Dillon Valley even though both Wildernest and Dillon Valley have the same restrictions.
Meanwhile, Copper, Keystone and Frisco have fewer or no licensing restrictions. Perhaps the STR availability is contributing to higher prices in these areas and helping to create the hyperlocal real estate market. Not only are these areas continuing to get buyers that like the area, they are starting to attract buyers that may have otherwise purchased in Breckenridge or similar areas but have been chased away by the short term rental restrictions.
Accurate statistics are important
You may notice that Breckenridge is missing from this data. I tried to include areas of Breck but I wanted to separate it out based on rental zones. In doing that, it limited the sales so much, the statistics were not accurate. I felt it was better to just omit the info.
Separating out 2 bedroom sales in a small area for just four months of the year makes the number of sales small. Averages are easily skewed when a small number of sales are used. Average sale price is generally not my favorite statistic to use. However, it seems to be the best statistic available in this case. Take all of this into consideration when looking at the statistics.
We are here to help
The best way to know and understand what is happening to the value of your property is to let us evaluate it for you. The best way to understand which properties and areas are the best fit for you is to let us help you figure it out. Whether you are a seller or a buyer, we will put the knowledge and information we have to work for you. Reach out today.
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