Eagle County first-time buyers hit by rising interest rates
April saw the same number of sales below $500,000 and above $5 million
Eagle County’s real estate market continues to be difficult for first-time buyers to navigate.
Home sales of $500,000 or less used to be the county’s largest single market segment. But the county’s biggest segment since 2018 has been homes priced between $500,000 and $1 million.
The most recent year to date figures from Land Title Guarantee Co. show that homes priced less than $500,000 now account for just 8% of the total market. That’s the same percentage of transactions as homes priced at $5 million or more.
Add in interest rates hikes, and there are even fewer people able to buy homes. Michael Slevin, owner of the local branch of Berkshire Hathaway HomeServices Colorado Properties, said interest in January on a standard 30-year mortgage was just more than 3%. The current rate is just more than 5%.
Steffen Mehnert with Keller Williams Mountain Properties said first-time buyers are “being crunched” by the new rates. But, he added, property continues to move. A common strategy these days is to list a home on Thursday, then hold an open house Friday and Saturday. That frequently results in a contract being signed by Monday, he said.
And cash deals continue to play a large role in the market.
Alex Griffin, the vice president and managing broker of LIV Sotheby’s International Realty’s Vail Valley branch, said there’s been a significant increase in cash deals over the past couple of years.
That often leaves locals out of a deal. But, Griffin said, some sellers are trying to work with locals.
Griffin recalled a recent instance in which a seller in Minturn had interest from an out-of-town cash buyer and three local families. The seller gave the local families the opportunity to match the cash offer. The cash buyer still won out, but the seller did give other buyers an opportunity.
Slevin noted there are mortgage products available that allow locals to cope with higher rates, including interest-only loans and adjustable-rate mortgages.
Slevin added while sellers tend to prefer the speed and certainty of cash sellers, “If you’re qualified, you might have an opportunity in the market,” he said.
Slevin said 2020 and 2021 were outliers in the local market’s usual dynamics, adding that he’s seeing something of a return to seasonal norms in the market, although that isn’t having an impact on pricing or demand.
Slevin said as opposed to the last couple of years, many buyers are becoming more discriminating. While many homes are still seeing multiple offers across the valley, and across multiple price points, Slevin said most buyers won’t “pay something unreasonable.”
Mehnert said while prices are still rising, those increases aren’t to the levels seen over the past couple of years.
And, he added, property remains “a really good hedge” against inflation. “We’re seeing people taking money out of the stock market and (putting) it into real estate, Mehnert said of putting money into a tangible asset. Real estate is different, he added, ”Because God isn’t making any more of that.“
112%: Eagle County real estate dollar volume through April compared to the same period in 2021
84%: Eagle County real estate transactions through April compared to the same period in 2021.
$1.482 million: Average Eagle County transaction price through April.
$822,500: Median Eagle County transaction price through April.