Biggest piece of Vail Valley real estate business is now a higher price range
By the numbers
1,556: Eagle County real estate transactions through Sept. 30, 2018.
1,551: Transactions through Sept. 30 2018.
$1.64 billion: Value of those transactions through Sept. 30, 2018.
39 percent: Share of 2018 transactions valued at $500,000 to $1 million.
Source: Land Title Guarantee Company.
EAGLE COUNTY — In most ways, the valley’s real estate market this year is a near-copy of activity seen in 2017 — with an important exception.
For as long as anyone can remember, the largest percentage of transactions in the valley were sales of $500,000 or less. This year, the biggest slice of the real estate transaction pie is in the market segment between $500,000 and $1 million.
There are a few reasons for the shift.
John Pfeiffer, managing broker of Slifer Smith & Frampton Real Estate, said prices are rising in the current market.
Michael Slevin, owner of Berkshire Hathaway HomeServices Real Estate, said homes that might have sold in the $300,000 or $400,000 range a year or two ago are now selling in the $500,000 and $600,000 range.
Pfeiffer said another problem is a simple lack of inventory prices below $500,000. While he described the Vail Valley market overall as “healthy,” he said the under-$500,000 segment is “red hot.”
Demand driving prices
As is often the case in real estate, demand is driving pricing. Pfeiffer said that a number of his firm’s clients have taken gains from a rising stock market — these are September numbers, before the nation’s stock markets began a pull-back from previous highs. That resulted in clients having funds available to spend more than they otherwise might, he said.
Slevin noted that new construction also plays a role. After several years of little new construction during, and coming out of, the slump, Slevin said there’s a lot of building going on these days. Many of those units are priced above $500,000.
That works a couple of ways, Slevin said.
Some new construction is priced beyond the reach of first-time buyers. But, Slevin said, that construction, and people moving into larger, or new, homes frees up other homes for sale, creating a kind of domino effect.
“That makes the market move, and that’s important for the health of a market.”
The under-$500,000 market also has a number of homes that were bought by investors during slump. Those homes are often used as rentals, and not many of those homes are selling.
“There’s little incentive to sell,” Slevin said of those investor-owned units. Those units continue to generate cash flow for owners.
While home prices are rising, Pfeiffer said there’s still good news for buyers.
Rates are still favorable
While mortgage rates are creeping up, Pfeiffer said rates are “still historically staggeringly low,” adding that “10 years ago we’d have died,” to have 5 percent mortgage rates.
In this year’s market, Pfeiffer added that early snow has been helpful for prospects.
“It’s been a boon for us,” he said.
Slevin said over the long term, real estate in the valley remains a good investment. But, he added, real estate is about more than a place to put money.
“We always have to remind ourselves that home ownership is more than how much you can make,” he said. “It’s where you grow up, where you raise a family. That component can be overlooked.”
And, while the Denver area’s red-hot real estate market is starting to cool somewhat, Pfeiffer said that market’s gains over the past few years weren’t sustainable.
“You have to have those coolings to … avoid bubbles,” Pfeiffer said.
Slevin acknowledged that it’s easy to read headlines and apply those to the local market. That’s a mistake, he said.
“You need to listen to and speak with … Realtors in our marketplace,” he said. You have to look from a local perspective, not just the headlines.”
Vail Daily Business Editor Scott Miller can be reached at email@example.com and 970-748-2930.