In torrid Eagle County real estate market, some local buyers can’t compete
For the first time, locals make up less than half of all buyers
Eagle County’s torrid real estate market continued into February of this year. As inventory shrinks and prices rise, buyer demographics are evolving.
Prices in places have increased dramatically from 2020 to this year. In Eagle, the average single-family home price increased 45% from early 2020. In Gypsum, multi-family units increased a similar amount, 30%.
Eagle-based broker Rick Beveridge, owner of Beveridge Real Estate, said homes in the western part of the valley continue to sell quickly.
“It’s kind of a fury,” Beveridge said, adding that homes in Eagle and Gypsum often see multiple offers, and many buyers are making cash offers.
While the current market keeps brokers busy and sellers happy, Beveridge is concerned about what the market is doing to first-time and other buyers.
“It’s killing affordability,” Beveridge said. “I worry about the kids who grew up here finding a place.”
Beveridge added that there’s a lot of wealth in the current market, and cash offers often rule out “the local guys.”
Still, Beveridge said, a number of local sellers are looking to move up into bigger units.
Pricing is a concern
But pricing is worrisome, in both existing and new units. Beveridge said one townhome project in Gypsum isn’t even pricing units yet because of rapidly rising material prices. Plywood sheets have more than doubled in price in just a matter of months, he noted.
The run-up in prices is also hurting units that in previous years would have been sold to investors as rentals, Beveridge said.
Mike Budd is an Edwards-based broker with Berkshire Hathaway HomeServices Colorado Properties.
Budd said that the Vail Valley currently has only about a two-month inventory of homes for sale. Much of that inventory is priced at $2 million or more.
Budd said without more units priced at $1.5 million and below, the local market has to slow down at some point.
This isn’t 2007
But both Budd and Beveridge said any slowdown in the local market will be far different than the slump that hit the valley starting in 2008.
Interest rates remain historically low. And, Beveridge said, it’s far more difficult to qualify for a mortgage now than it was in the boom years of 2005 through 2008.
Back then, Beveridge said, there were a lot of “liar loans,” with people qualifying for easy money to buy homes they couldn’t afford. That isn’t happening now, he said.
But the dynamics of this market are affecting the buyer profile from its historic norms.
For instance, Eagle County-based buyers have made up significantly more than half of real estate buyers. That’s changed recently. The most recent data from Land Title shows that only 45% of buyers this year come from Eagle County. The number of out-of-state buyers has increased from roughly 30% historically to 37% so far this year.
In addition, sales of units priced below $1 million have always made up a strong majority of the local market. So far this year, sales in that market segment account for 50% or less of all sales.
Budd believes the decline in local buyers is due to rising price points.
How long can this continue?
Budd believes the price appreciation can only go on so long, especially as interest rates inch up.
“I worry about the whole thing,” Beveridge said. “It’s so much harder for the locals — where do the worker bees live?”
$249.2 million: Dollar volume of Eagle County’s February real estate sales.
$10.95 million: Largest single February sale, a home in Beaver Creek.
37%: Percentage of February buyers from out of state.
45%: Percentage of Eagle County-based buyers in February.
Source: Land Title Guarantee Company.