Vail Valley real estate market report: Inventory levels rise, demand remains strong in Q1
On Real Estate
Eagle County real estate is starting to see a shift in the market to more predictable activity, with inventory levels starting to rise — normalizing a trend that used to occur each spring and into the summer months before 2020 and 2021’s impact. The likely difference is that the county will probably see less overall inventory come to market and stay on the market because demand for real estate remains elevated.
The first quarter numbers speak to that. Unit sales in Eagle County declined by 25% in the first quarter of 2022 versus 2021, but dollar volume was only lower by 5%, meaning prices continue to hold strong.
Inventory levels eclipsed to 200 units leading into the start of this year’s second quarter, thanks in large part to some new resort construction projects in Avon. Compared to the end of the quarter in 2021, inventory levels are still down about 40%. Pending sales are also down about 15% compared to 2021, but well above levels in 2020, when uncertainty reigned, as well as 2019 pre-pandemic levels.
What’s the message? While inventory is expected to grow over the course of the next four months and provide home buyers with more options, prices will likely continue to increase overall. If there is pressure on prices, expect it to come from our more traditional local market as interest rates, while still historically low, have crept up over the last month. Remember, these headline rate increases are generally for 30-year fixed mortgages. Buyers are encouraged to check out and know their financing options before making an offer if not a cash offer.
What it means for buyers and sellers
Rick Messmer, managing broker for Berkshire Hathaway HomeServices Colorado Properties’ Eagle Ranch office, notes that in a typical year, available properties peak in August and properties under contract peak in September. While the expected peak of inventory will not be as high as “normal,” buyers are likely to see more inventory than what is currently available, offering some welcome relief. Moreover, the added inventory may slow the explosive increase in prices recently experienced.
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“The massive influx of interested buyers to our market has not ceased all together but is coming in at a rate just a little slower than before. Interest rate increases will also eliminate some buyers as the per month costs of ownership will preclude them from being able to buy or buy what they want.”
Messmer notes that to compete in this market, buyers must be ready to jump at a moment’s notice. Downvalley, sellers are still listing their homes and shying away from off-market listings in order to capture the largest possible pool of buyers. Buyers have to be ready to see a new listing within hours and be ready to write on that property immediately if it fits their needs and checks the boxes. This will, if we see more properties come to market, ease as we get into the warmer spring and summer months.
Marla Hillerich, broker associate with Berkshire Hathaway HomeServices Colorado Properties’ Beaver Creek office, notes that for the most part, buyers in the luxury/resort markets of Avon, Cordillera, Singletree, Beaver Creek, Bachelor Gulch, and Vail, still have more choices, if only that there are fewer buyers looking for homes at price points above $2M.
“The challenge for sellers is that older inventory is harder to command top-of-market pricing due to dated furnishings and overall design,” said Hillerich. “Presenting a home in the best possible light becomes increasingly important. By adding a more updated look and feel to the property, it will typically attract more buyers. In addition, having high quality photography and videos are imperative. Virtually every buyer will start on-line, and you only have one opportunity to make a first impression.”
Hillerich also notes that new construction projects in Avon are giving the luxury market buyer more options. These new projects, along with other sellers updating their current property, are likely to put more pressure on sellers who have older properties. Hence the need to do some staging and updates that allow potential buyers to see themselves in a more contemporary setting.
Multiple offers are still prevalent in the $2 million and above mark and buyers may need to settle for less than what they initially hoped or bring more money to the table. When priced right, a home is still likely to get multiple offers that are above list price. Buyers should be prepared to come to the table with a strong offer and be able to respond quickly when they find a suitable property.
Interest rates and impact
Finally, the other headline word is inflation. The good news for homeowners and active buyers is that real estate has proven to be an attractive hedge to inflation. While this is a decade-by-decade look, it does demonstrate the additional historic value homeownership has to combat macroeconomic influences in the market. As Messmer states, “Inflation is occurring all around us. We do not know, long-term, where prices will go. If there is a home that meets your needs, and you can afford it, stop paying someone else’s mortgage and begin paying your own!”
Michael Slevin is the president of Berkshire Hathaway HomeServices Colorado Properties, a 51-year family-owned business that has grown to include 12 offices in 10 communities spanning from Summit to Eagle to the Western Slope. It is among the top 50 companies in the Berkshire Hathaway HomeServices worldwide network of more than 1,500 offices.