If the last two years in the Summit County real estate market seemed just a little too wild to believe, you’re not alone. A massive surge in interest in mountain properties and limited supply led to the same huge increase in prices, not unlike the sharp increases you’re now seeing in gasoline and other consumer goods. Couple that with national increases in interest rates and strong hints of a recession on the horizon, and things seem poised to change.
According to the broker-owners with Nelson Walley Real Estate, the local market is now at an inflection point – prices will most likely continue to rise, just not as sharply, and the too-hot-for-its-own-longevity sales activity of the past 2 years, especially in vacation rental properties, will be dialed back a notch or two.
“You are going to see what I would call a deceleration in the increase of values, and a return to pre-Covid buying patterns,” explains broker-owner Ned Walley. “There should still be growth in values this year, just not the 24% in a single year like we saw in 2021. Buyers are back to their pre-COVID habits of waiting on the sidelines during May and June to watch as inventory levels increase. I expect we will also see a return to those same pre-COVID patterns where properties start getting snapped up in July and August. We’ll have to wait until late July to see the first indications regarding if we will see a return to normal buying patterns. Will prices drop, or will there still be slow growth? Call me in a month for the answer.”
Time to take a breather – for a moment
With that in mind, broker-owner Debbie Nelson says she and Walley are helping clients understand that they have a bit more time to both market their homes – if they want to take advantage of still record-high prices – and also to do a bit more research regarding how to get the absolute maximum value out of their properties.
“One of our sellers called me recently and asked, ‘is this the highest price we’ll ever see?’ … and I said, ‘Absolutely not, but you’re just not going to continue to see the sustained massive growth of the previous 2 years,” Nelson says. “Growth will be similar to the handful of years before COVID, which still makes real estate a far better investment than the stock market. But I don’t see a huge drop-off in prices, like we had from 2009 to 2011.”
Nelson said the Summit County real estate market faces the impact of three important factors, all of which will help determine the value and the pace of future growth in the business.
“Firstly, the increase in interest rates mostly impacts our local full-timers, who are simply not going to hope to buy – or want to buy – since their buying power has been so diminished,” she explained. “But for the majority of buyers up here who pull out money from the stock market in order to diversify by adding real estate to their investment portfolios, the precipitous decline Wall Street has seen recently is having a far greater impact on the deceleration of Summit County’s property values. And then there’s the local short-term rental regulations, which are stopping the kind of people who wanted to buy only because they could rent, so they’ll probably be more careful about their purchases.”
Prices still enticing for sellers
Despite those economic and legislative complexities, Walley said the local market still presents a huge opportunity for the right home, at the right time. And that means enlisting the help of a longtime-local real estate company to help better understand what can help get a seller top dollar for their home.
“In 2020, the average price for a local property was $441 per square foot. This year, it’s almost doubled to $831 per square foot,” he says. “We take that into consideration, and our approach to all of this is different than other real estate companies. We have five people on staff with real estate licenses, all of whom are actively involved in strategizing and pricing. We are one company, serving one client. And there’s both a science and an art to everything involved, sort of like an appraiser, not just a gut feeling. We look at current pending sales, comps and can tell if features like an extra garage or a feature like that will produce higher value in a certain neighborhood.”
Nelson said she takes pride in offering an insider perspective for sellers that comes from years of personal involvement in the Summit County market.
“For us, the price of a home is very scientific. You can’t just grab a number out of the air. Sometimes, it now takes three to four weeks to sell a property, and we have to anticipate the potential for change in that time,” she says.