Eagle County Real Estate Market Report: Reason for optimism in uncertain times      

Media headlines are generating uncertainty around the local and national housing market, and lower inventory coupled with higher inflation and interest rates have created a pause in the residential real estate market. Depending on whom you listen to, the U.S. economy is or will be in a recession soon. 

While the Vail Valley and Eagle County’s very active market needed to rebalance, opportunities await those who are ready to make a move to buy or sell. 

Thankfully, we have history to look back on to help project where we are headed. Housing is traditionally one of the first sectors to slow as the economy shifts, but it is also one of the first to rebound, according to Ali Wolf, chief economist at Zonda. Additionally, Freddie Mac notes that interest rates also decline during a recession. Over the last six recessions dating back to 1980, interest rates have declined 1.8 percentage points from the peak seen during the recession to the trough. Both points bode well for what is developing to be a more balanced market.

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What it means for buyers, sellers in the Vail/luxury market

Timm Kluender, managing broker for Berkshire Hathaway HomeServices Colorado Properties’ Vail-Lionshead office says, “While national headlines about rising interest rates may portend a softening of the real estate market, it’s important to remember that real estate is local. The Vail luxury market might not be immune to market forces, but it does have some unique characteristics that make it more resilient than other areas in the national spotlight.” The good news for buyers is they are buying into a strong market, one that has historically held its value in past economic downturns. What makes it so strong?

• More than 80% of Eagle County is public land. Vail is completely surrounded by national forest and wilderness areas and has an even scarcer supply of buildable land. Because the town is essentially built out, the limited supply has and will continue to increase demand.  
• Vail will always be a desirable place to live; the ski resort is world-class, easy to get to, and serviced by a well-run regional airport. 
• There are many legacy properties in Vail, most are owned free and clear of debt and the owners have the resources to withstand just about any market condition. As a result, most sellers don’t necessarily need to sell. 

The good news for sellers is low inventory levels continue to buoy property values.

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“While properties in prime locations are still selling at or near the height of the market, for sellers that have entry-level properties or those that haven’t been remodeled, it’s important to price your property correctly,” said Kluender. “Resort buyers are not necessarily in a position where they need to buy either.” 

What it means for buyers and sellers downvalley

Downvalley, including Eagle, Eagle Ranch, and Gypsum, Kira Taylor, a broker associate with Berkshire Hathaway HomeServices Colorado Properties’ Edwards office, echoes Kluender’s sentiments on the low inventory challenge.

“Inventory downvalley remains low and buyers, while ready to buy, are weighing out the pros and cons,” said Taylor. “Buyers who are ready to buy, shouldn’t wait for rates to come down. Working with a broker who knows the market, along with a trusted lender, can help them understand what they can afford. Buyers also have options with interest rate buy-downs, and Eagle County down payment assistance programs.  If you’re looking to buy, now is still a great time, as we do not foresee prices going down that much. As I say to my clients, buy the house and date the rate.“

“My advice to sellers is that they need to recognize that the market has shifted when pricing their homes.  Homes that are priced based on today’s market value are more likely to attract more buyers, sell more quickly and maximize the sales price, even as demand changes and mortgage rates rise. Homes that are well-maintained and up to date will also be more appealing,” Taylor added. 

Reasons for optimism still exist. As we work our way through a hyperlocal market (i.e., some areas of the market are maintaining or going up while others are seeing pricing pressure), we have expectations that the market will remain active, and sellers and buyers will adjust their expectations. 

Michael Slevin is the president and owner of Berkshire Hathaway HomeServices Colorado Properties, started by his father, John, 51 years ago. The company has grown to 12 offices in 10 communities, spanning from Summit and Eagle Counties to the Western Slope.