Vail Daily column: Starter-home demand exceeds supply
Every few months, it’s important to look at the market statistics for non-deed restricted starter homes in Eagle County. The definition of “starter homes” which I have adopted includes those properties meeting these three criteria: provide more than 700 square feet of living space including 2 or more bedrooms, involve monthly homeowner association fees at or below $300 per month and sell for up to $425,000.
The numbers help explain why a much more aggressive approach is required to provide prospective homeowners with much better availability in the months and years ahead.
Cutting right to the heart of the matter, only 225 of the entire population of residential properties which have sold in the last 12 months (more than 1,300 per the local Multiple Listing Service database) meet the definition of starter homes. That’s an absorption rate of fewer than 20 starter homes per month. Also, it’s not surprising that two-thirds of those properties are located in downvalley locations — Eagle, Gypsum and elsewhere.
During the past 12 months, 115 additional sales closed at price points below $425,000. However, all of those properties carry association fees which are greater than $300 per month ($3,600 or more annually). Excuse the pun, but that’s a non-starter for the majority of first time homebuyers.
Since association fees are counted when lenders calculate debt-to-income ratios, association fees greater than $300 per month place those properties out of reach for the majority of starter home purchasers.
What’s worse, there are only 48 active listings available to starter home buyers. That is less than a three-month supply based on absorption throughout the last 12 months. Talk about a seller’s market!
I have a message for all of the stakeholders working on affordable housing, including residential for-profit developers, home builders and others: The supply and demand imbalance at the low end of the market removes much of the risk normally associated with new residential projects. The town of Vail’s experience with Chamonix demonstrates that demand far outstrips supply. A common-sense push to free up developers and builders to accommodate the demand is long overdue.
Let me end with some advice for young people who are determined to “crack the code” and transition from being chronic renters to property owners. Here’s one track that will get you there:
• Improve your positions at work and your salaries.
• Pay down your debts to almost nothing.
• Ask your parents for help with the down payment.
• Get prequalified by one of our savvy mortgage professionals.
• Evaluate 20 or more active listings with an experienced broker before making an offer on the property that will best meet your needs for the next several years.
Kent Petersmeyer works with buyers and sellers day-to-day as managing broker for The Cascade Team Colorado based in Edwards. He can be reached at either firstname.lastname@example.org and 970-456-8203.
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