Q2 real estate market trends report
After a historic first half of the year, can we expect subtle shifts ahead?
As we embark on the second half of the year, there is both statistical and anecdotal evidence we are beginning to see some signs of a historic “normal” market.
While the headlines will reflect on the strength of Q1 and Q2 compared to a year ago – the Eagle County market is up approximately 75 percent in closed sales from the first half of 2020 and has doubled in dollar volume – we are seeing an increase in inventory coming to market.
This is one factor that can help the market achieve more balance between buyers and sellers. The summer months have also proven to attract more buyers and current demand remains very strong, in both showing activity and open house attendance.
There are a few factors pointing to some potential subtle shifts:
For the first time in at least 14 years, inventory levels in June–September 2020 were flat or declined versus our historic upswing in inventory during the critical late spring to summer months. To start our summer season, we are beginning to see the pace of new listings exceed the rate they are being contracted for – building our inventory and bringing the market back into its more historical pattern.
Pending sales are lower than they were a year ago at this time and have steadily declined since late April – this is normally a time when they are flat or pending sales are beginning to increase – peaking around mid-August. As inventory builds, so too will the pending sales given the strong buyer demand.
The dynamics of our market are unique, and the following market summaries offer more specifics for luxury/resort and Down Valley buyers and sellers.
Comprised of Vail, Beaver Creek, Arrowhead, Singletree, and Cordillera, Berkshire Hathaway HomeServices Colorado Properties’ broker Adam Bartlett offers the following insights for buyers and sellers.
While there are encouraging signs that the buyer frenzy of the past year is experiencing a slight slowdown, buyers still need to come prepared with a solid offer. They should also be mindful when thinking about making offers that are below market value and/or including too many contingencies. It is still a sellers’ market and homes that are priced correctly are still moving quickly.
Another important consideration on pricing is the location; both for single-family/duplexes and condos. Homes and units in more desirable locations and with views are typically going to be priced higher. If you’re willing to be flexible, you can typically garner a lower price. But also make sure you are getting what you are paying for, including location either geographically or in a building, particularly if a price is higher than expected or what the market is showing as fair value.
Buyers are savvy due to access to Zillow and other online platforms that show fair market value for homes and sellers need to be market sensitive on pricing. The big appreciation jumps we have seen over the past year are showing some slow down as buyers start to settle into post-COVID “normal.” This includes asking themselves if they really need a new or additional home, how much time they will be working remotely, and how much they are willing to spend/invest for a property.
We are also seeing a trend with buyers now trying to engage overpriced sellers and make an offer. In the past, if a home was priced too high, buyers wouldn’t even make an offer. Sellers who are serious about selling need to make sure they are in line with the current market and working with an experienced broker can help them price and get the best offer for their home.
Comprised of three communities, including Eagle, Eagle Ranch and Gypsum, Eagle County’s “Down Valley” offers more affordable price points for the size of the home along with a temperate four-season climate, adding to its appeal for buyers. Renee Oleson, broker associate for Berkshire Hathaway HomeServices Colorado Properties, offers insights into the Down Valley market.
It is a great time to sell and capitalize on the market increases and growing interest in the Down Valley. The area is not an inside secret anymore and many out-of-town buyers view the homes and area as undervalued relative to other communities closer to the resort areas. With high buyer demand and low inventory levels, many buyers are making offers above list price with little to no contingencies. With many buyers now able to work remotely and coming from more congested urban and suburban areas, a 30-minute drive to world-class ski resorts, more moderate four-season climate, and having a regional airport within 10 minutes, brings added value to their offers.
Sellers should still list their property based on fair market value, which will attract a larger pool of buyers that can potentially lead to multiple offers. Sellers should be prepared to close quickly or negotiate closing terms if they do not have another home to move into. This is where working with an experienced broker can really help – from pricing to helping find a replacement home while also handling the negotiation and closing details.
As homeowners hear about their neighbors selling their homes at all-time highs with multiple offers, they are getting more motivated to capitalize on market price increases. This upswing in inventory helps balance the market that has been saturated by eager buyers. The hold back from many sellers has historically been a fear of not finding a replacement home. With an anticipated uptick in inventory that seems to be taking place, sellers concerns are likely to wane and help bring more inventory to buyers. Many homes are still getting sold before they hit the MLS so working with a knowledgeable broker who has the established contacts and relationships to know when homes are coming to market puts the buyer – and a seller looking to buy — in a more strategic position to get an offer accepted. Buyers should come prepared with pre-approvals and flexible options, including having to make more than one offer before theirs is accepted.
For additional market trends and information, including Berkshire Hathaway HomeServices Colorado Properties offices, brokers and listings, visit www.bhhscoloradoproperties.com or call 970-329-2482.
Michael Slevin is the President of Berkshire Hathaway HomeServices Colorado Properties.