Real Estate: Availability is thin for entry-level housing in the Vail Valley (column)
July 27, 2018
Every few months, it is 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 properties meeting these three criteria:
• Provide more than 800 square feet of living space including two or more bedrooms.
• Involve monthly homeowners' association fees at or below $350 per month ($4,200 per year).
• Sell for up to $425,000.
The numbers help explain why it is so challenging for young professionals and families with modest incomes are not able to make the transition from being renters to owners — the availability is just too thin.
For the 24-month period ending June 30, and ignoring association fees for the moment, 485 properties were purchased meeting the other two starter home criteria. That's a run rate of 20 properties/month. However, when you include the association fee element, that figure drops by 20 percent to just 16 properties/month.
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(Since association fees are counted when lenders calculate debt to income ratios, fees greater than $300 per month place those properties out of reach for the majority of starter home purchasers.)
For perspective, the 16 sales per month represents approximately 15 percent of the total market for improved residential properties across Eagle County. And 70 percent of starter home availability is concentrated in Eagle and Gypsum, where new construction plays a huge role in providing opportunity. Examples include Aspen Ridge at Buckhorn Valley, Hawks Nest at Buckhorn Valley, the Villas at Cotton Ranch and Two Rivers Village in Dotsero.
Regarding the 16 sales per month run rate, today there are just 32 active listings to select from; that represents a 60-day supply. And first-time home buyers are competing with vacation home buyers to acquire these properties.
I am weary of the emphasis on developing deed-restricted properties to address the shortage documented here. There must be mechanisms we can flush out, debate and employ to motivate for-profit developers and builders to address the supply side of the equation. Yes, land costs are high, but all of the other "barriers to entry" should be removed to grow the supply, and fast.
Kent Petersmeyer works with buyers and sellers as a broker associate with Berkshire Hathaway Home Services Colorado Properties based in Edwards; he can be reached at email@example.com or 970-456-8203.
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