Breckenridge Real Estate Sales Plummet in July, While Vail Rises
Is Summit County headed for a cooldown?
According to the Summit County association of realtors, sales in July are down 18.3% in July and 15% for the year to date, while Vail was up 47% in July and down about 4% for the year. The decline is being attributed to a “lack of inventory.” But is there more going on with the recent sharp decline?
What is going on with Breckenridge real estate?
Resort markets like Breckenridge have suddenly shifted into a low gear. July is traditionally one of the larger months in ski real estate, so to see a swift decline in one of the biggest months for sales was a bit of a shock. What was interesting is that single family homes are down 18%, while townhomes are also down 7%. One month does not start a trend, but I would expect this soft patch to continue through the year.
3 reasons for the sudden cooldown
- Ultimate luxury item: A ski property is one of the ultimate luxury purchases. As people feel less confident in the general direction of the economy, they will pull back from large discretionary purchases like ski condos. I think this is the largest attributing factor to the decline
- High correlation to Denver: Summit county is a unique ski market with most buyers in state residing in the front range (Fort Collins, Denver, Colorado Springs, Boulder and everywhere in between) due to its proximity. The front range market has showed a noticeable cooldown in sales and price increases. This has led prospective buyers of ski properties to feel less confident as their primary residence is not appreciating like it has in the past.
- Prices have expanded to quickly: Prices have been expanding by more than 10%, per year, in the last 10 years in many resort markets like Breckenridge. As prices have continued to increase, buyers have gotten weary that they might be buying at the top and have hit the brakes on purchases.
Breckenridge Versus Vail: Why the different answers?
I thought this was interesting that Vail increased by so much in July while Breckenridge declined 18% in sold listings. However, Vail is a much different market than Breckenridge. Vail is much more of a national and international market, which makes it considerably less dependent on the Denver market. The price points in Vail are also higher with the average sale price about 25% higher than Breckenridge. This higher price point attracts a different buyer with higher net worth that is less sensitive to the daily market gyrations.
Long-Term Real Estate Trends
Even though Breckenridge and Summit County sales are down for the year, and appears headed for a cooldown, the long-term prospects are good. Breckenridge, like most Colorado mountain towns, is supply constrained. This lack of supply, along with desirable location, will continue to make Breckenridge a good long-term investment.
Although the headline stating that Breckenridge is down 18% is a bit startling, I don’t foresee the bottom falling out of the real estate market as there are not the same excesses in the mortgage market that we saw in the last cycle, and builders have been very conservative with inventory.