Market trends report for first quarter shows unprecedented demand for real estate
On Real Estate
The positive real estate narrative that consumed the second half of 2020 continued through the first quarter of 2021 with first quarter sales in Eagle County up 53.88%. The increases also included average list price jumping 15.49% and average sales price up 17.18%. High demand in Eagle County remains the theme as new residents and local buyers throughout the valley continue to add pressure to inventory supplies.
While the second half of March 2020 was impacted by COVID-19 uncertainty, the numbers don’t materially change the fact that 2021 saw continued momentum throughout the summer, fall and winter, including a surge of pending sales, closings and a heavy weight on inventory. Pending sales are up over 90% over Q1 2020, diminishing available inventory levels to half of what they were a year ago to end the quarter.
A slightly deeper dive into inventory shows where the demand and consequently the most affected areas are — the under $1 million price point. At the end of this quarter, there were approximately 55 homes for sale – 17% of the available inventory. The positive news is that as the weather warms, the market should see an increase in available homes in all price ranges and areas to help meet the strong demand. Buyers financing homes should feel optimistic about interest rates remaining at historically low levels, helping to meet the rise in prices we have seen over the last several years.
An additional Eagle County benefit is there are several different markets, ranging from the resort areas of Vail and Beaver Creek to the downvalley communities of Eagle and Gypsum. Each one offers its own unique attributes and different price point options, tailored to the needs, lifestyle interests and budgets of buyers.
The resort market saw the largest sales increases, from 158% in Beaver Creek to 600% in Bachelor Gulch. Marla Hillerich, broker associate for Berkshire Hathaway HomeServices Colorado Properties’ Beaver Creek Villa Montane office, attributes much of the sales increase to greater demand from buyers in the $3M plus market, as well as existing homeowners making shifts in their residences.
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“We had a lot buyers emerge during the ski season this year,” said Hillerich. “Around Christmas there were 70 properties for sale in Beaver Creek and now there are 30. Inventory is not being replenished at the same rate it is being sold, though we hope to see more properties come on the market to fill buyer demand during the summer.”
In looking at who the buyers are and what’s motivating them to buy, Hillerich notes, “We have buyers both locally and from out-of-market that have fallen in love with the area. They decided the timing was right to buy and/or size up or down,” she said. “COVID has changed the way people do business and with the option to work virtually and be able to spend more time in the mountains, those on the fence decided this was the year to buy.”
Hillerich also notes that there is less competition among buyers in the $3M-$5M plus market. “There are a lot more buyers looking for properties under $2M or less, so the inventory typically moves faster,” Hillerich said.
Gypsum mirrored the resort market in triple digit increases for Q1, with sales up 178% over Q1 2020. Mary Gorski, broker associate for Berkshire Hathaway HomeServices Colorado Properties’ Eagle office, agrees with Hillerich that available inventory, as well as interest rates, are driving the three-digit increases.
“New construction in Gypsum, along with several vacant lots being sold that had previously been on the market for a year or more, contributed to the significant increase in Q1. We have buyers now deciding that building may be the way to go with the active market,” Gorski said. “Buyers are noticing the limited inventory, particularly in the sub-$1M range and those that were thinking of purchasing within the next year are all starting to actively look.”
Advice for sellers
Hillerich and Gorski agree there is no better time to sell. With limited inventory, anticipated low interest rates that are expected to continue, now is the time to capitalize on market gains.
That being said, buyers are still very savvy and while demand is high, understanding the value of a home and what the market will bear are important factors in pricing a home.
“It’s really important that sellers seek the advice of a knowledgeable broker to help them appropriately list and market their property and be ready to move quickly,” Hillerich said. “There are still a lot of cash offers out there and many buyers want close as soon as possible. Being able to negotiate contracts and offers is another valued added service experienced brokers can provide.”
Advice for buyers
“Having pre-approvals in hand prior to looking at any available property is paramount,” Gorski said. “With most properties that are move in ready receiving multiple offers, it’s important to understand it may take a couple offers before finding that perfect home and going under contract. Options to make offers the most attractive to sellers and increase the chances of getting the property, including increasing earnest money, adding an escalation clause or even possibly removing some of the contract contingency deadlines, improve chances of an offer being accepted. Again, this is where an experienced broker can lend assistance, answering these types of questions to guide buyers through the process.”
The landscape this year, compared to this time last year, paints a vastly different picture and there are no foreseeable signs that demand will slow. The market should open up to more homebuyers in the coming weeks and months as we head into summer.
For additional market trends and information, including Berkshire Hathaway HomeServices Colorado Properties offices, brokers and listings, visit bhhscoloradoproperties.com or call 970-329-2482.
Michael Slevin is the president Berkshire Hathaway HomeServices Colorado Properties.