Why Is Now a Good Time to Buy a Home
In a short span of a few months in 2020, seven resort communities in Colorado saw property sales worth a little over $15 billion. These sales represented more than 60% increase in the sales volume for 2019. As one commentator put it: 3-5 years’ worth of homes were sold in a single year. Homes in Colorado’s resort communities have never been in higher demand.
For instance, when comparing 2021 sales for Summit County with the previous year, this is what you will find. The number of homes sold increased by 90% and average property prices went up by over 23%. At the same time, the inventory of homes for sale dropped by 77%.
If you have been planning to buy a second home in a Colorado resort town, these figures are enough to make you pause. You may be thinking if now is the best time to make that investment. You don’t want to risk buying into this market only to have it crash in a few years.
If you are in the position where you are asking these questions, this post will address your concerns.
But first, why buy a second home in a resort town versus other locations?
Reasons to buy a second home in a resort town:
An assured market: Even though your goal when buying a second home is not to generate rental income, being able to make money on the property should be one of your considerations. Very few locations offer a ready market like ski resort towns. All year-round, you know there will be demand for lodgings around the area.
An upscale market: Most of the people who need accommodations in a ski resort town are people who have more than enough money. This means you will be able to charge higher rents. Also, the demand for the home will not be so susceptible to the larger economy.
Sustained property values: The combination of a predictable market and the quality of the clientele means the value of ski resort townhome is less likely to suffer. There will always be buyers interested in buying the property, should you want to sell. This is because the activities and lifestyles in these locations will always attract people to the area.
What is driving the real estate boom in Colorado?
If you are asking if this market is being driven by the same forces that caused the 2007 housing crisis, you may be assured that this is different.
The surge in the prices of homes in the ski towns has been in the making since 2017, but most of it was under the radar. The residential housing price index in some ski towns was around $587,866 in 2009 and fell to $492,621 in 2013. But in 2017, prices climbed to $686,314 and $903,385 in 2020.
One of the reasons for this increase was growing interest in the areas due to the recreational opportunities that abound in ski towns and the unique lifestyles residents had access to. For the past years, there has been a steady stream of buyers and renters into these communities, driving up the demand for housing.
The third and most recent factor has been the pandemic. During the height of the lockdown, the wide-open spaces in these locations meant residents could live their lives almost unchanged. Many ski resort towns and neighboring communities are becoming popular zoom towns, as urban dwellers trying to escape the crowds in the major cities.
Is the trend going to last?
The main factor which determines if this trend will endure is a future inventory of properties. There are reasons to believe the supply of homes in ski resort towns is not going to get better in the future and prices are likely to remain high. What are those reasons?
Across all ski towns in Colorado, the rate at which homes have been snapped up is unprecedented. In Aspen, for instance, by September 2020, 336% more homes had been sold than were sold in 2019. Going by the national average, most of these homes will stay off the market for the next 8-13 years.
At the same time, people who could not get their hands on the available properties resorted to custom builds. The result is that in many areas contractors have a list of contracts stretching years into the future. What this means is that new homes are not going to be added at a rate that will significantly affect prices.
Should you buy today?
If you find any property for sale in the ski town, you should definitely buy it. To not do so would be to pass up a great opportunity. The signs show that fewer homes are going to be available in the future and the prices will go even higher. Moreover, interest rates currently favor such a purchase.
So, to sum up, is now a good time to buy a second home in one of Colorado ski resort towns?
Yes, it is!