Eagle County Real Estate Market Report: Strong third quarter comes with underlying challenges

The Vail Valley market continues to demonstrate strength and resiliency despite headwinds from stubbornly high interest rates, limited inventory, and other macro-factors challenging norms and predictable market cycles. 

On a more positive front, luxury and resort market sales continue to give a boost of strength in the market. The third quarter of 2023, compared to Q3 of 2022, saw a 29% increase in dollar volume and just a small decrease in unit sales (down 8%). The numbers speak to the strength of the upper-end market.

The below $1.5 million market continues to lag behind, with both limited inventory and higher interest rates taking their toll. Sales below $1.5M fell 34% to 136 in Q3 2023 versus 206 for Q3 2022.

When you compare the last two third quarters to our most recent “normal” market in 2019, there is an even greater divide when 343 properties below $1.5M sold that year. Price appreciation has certainly elevated values and combined with higher interest rates hovering in the 7% range, it’s become increasingly challenging for buyers seeking financing to purchase a home in Eagle County.

The top-of-mind question for buyers now is “when to buy.” Experts agree it is a double-edged sword. On the one hand, if you find the right property and can afford the current payments, buy now. Waiting until rates come down may yield a lower mortgage payment, but there is ample evidence that there is high demand ready to come into the market when the rates go down (and inventory rises) — which will create increased competition for homes, keeping prices elevated and potentially building a more challenging purchasing environment.

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Our market is in a unique cycle few have experienced. Overall, the good news is that inventory levels are seasonally appropriate (though the market needs much more) and buyers are facing less competition for homes. 

Luxury/Resort market

Tisa Olsen, a broker associate with Berkshire Hathaway HomeServices Colorado Properties, notes that the current state of the luxury/resort market is presenting unique challenges for both buyers and sellers.

For buyers, the frustration is centered around seeking properties amid a very limited selection that meets the discerning tastes of the higher-end buyer. The low inventory has intensified competition, leading to bidding wars and having homes sell in a matter of days.

“Buyers need to be prepared to move quickly when a property that matches their desires comes on the market,” Olsen said.

Olsen also notes that there is an opportunity for sellers who have a desire to sell to still capitalize on the substantial gains from recent years.

“But it’s not a free-for-all,” Olsen said. “The properties that are selling quickly are priced right and sellers must be strategic in their pricing based on fair market value, which includes location, condition, and amenities. As more sellers come to realize the unique opportunity to capitalize on gains, there should be increasing inventory, which is good news for buyers.”

Downvalley market

Scott Marino, also a broker associate with Berkshire Hathaway HomeServices Colorado Properties and a Down Valley market specialist, says that the single-family home under $1.5 million is still lagging behind. Of the 50 properties currently on the market, 60% of them are new developments that likely won’t be move-in ready until next summer.

As with the luxury/resort market, sellers are at a distinct advantage as long as the pricing is right.

“Buyers have proven they are not going to overpay for a home outside fair market value, particularly with the higher interest rates,” Marino said.

“I am seeing some seller hesitancy about listing their property and having to pay more for a new home,” Marino said. “But it works both ways. If prices drop, sellers will typically get less for their home. The best advice I can give is if you’re ready to buy or ready to sell, do it now. There is no indication that there is going to be a dramatic shift anywhere – in prices or interest rates. Fall is a great time when buyers are looking to get in by the start of ski season and before the holiday season begins.”

Michael Slevin is the president and owner of Berkshire Hathaway HomeServices Colorado Properties, started by his father, John, 52 years ago. The company has grown to 12 offices in 10 Western Slope and mountain resort communities, spanning from Grand and Eagle Counties to the Western Slope.