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Tag: real estate trends

How Do Interest Rates Impact Real Estate Investing? 

Inflation is rising at a historic pace, putting pressure on budget-conscious consumers that hasn’t been felt in decades. Prices for goods and services have reached a year-over-year rate of 9.1%, the highest the U.S. has experienced since 1981, according to data from the Bureau of Labor Statistics.  

In addition to rising prices for everyday goods and services, home prices have leaped even higher than the inflation rate in the past two years. 

In the face of this inflationary climate, the Federal Reserve continues to raise interest rates in an effort to slow spending and tackle the economic problems Americans are experiencing. As a result, the housing market may experience challenges in the months to come. 

How will this affect real estate investors? Each portfolio is different, which means situations will vary. Here are a few things to consider. 

The Economic Impact 

The higher cost of borrowing results in more expensive credit card and loan payments, which usually encourage people to reduce spending.  

For most families, saving will become a top priority. Americans may be less inclined to go on vacation, visit restaurants, and spend unnecessary money. 

This conservative spending also translates to businesses, which may be more likely to reduce investments if the economy feels rocky. This can even have an effect on hiring. 

The Real Estate Market Impact 

When interest rates rise, buyers become more hesitant. They often analyze their pocketbooks, reevaluating whether it’s a good time to take out a mortgage — especially when high interest rates make borrowing more expensive.  

A downturn in prospective buyers could lead to more supply, prompting a drop in home prices.  

Your Existing Portfolio May Be More Profitable 

Rising interest rates can actually be good news when it comes to your existing properties because as interest rates rise, so does rent.  

Assuming you have a fixed-rate mortgage and your monthly payment won’t change, raising your rental prices to reflect the current market will increase your monthly income.  

Selling May Yield Strong Returns 

Investors who are planning to sell their properties may expect strong returns, but it depends on their situation. 

As interest rates rise, there may be less demand for housing because borrowing is so expensive. When demand is down, it can result in two different scenarios.  

If the property is highly desirable, buyers may be willing to make a competitive offer on the home, especially if they’re moving to escape high prices in other cities or states. However, some sellers will find that they must reduce their price to attract buyers. 

For investors who want to sell their investment properties, there are many options to consider when determining where to invest those proceeds. 

READ — Pros and Cons of Investing in Student Housing

New Investments Will Likely Cost More 

Unfortunately, real estate investors will likely face higher home prices, just like the average home buyer. 

Even if you find a property that would normally fall within your budget comfortably, rising interest rates can make your monthly payment more expensive.   

Even a 1% difference in interest rates can result in a difference of more than $100 on a home that’s priced at $200,000. Although that may not sound like much, over the course of a year, this small difference will add up.   

For investors who need to borrow much more than $200,000, the difference will be felt on an even more significant level. You may be able to shop around and find more appealing loans for your investment properties, but it won’t be easy in this economy. 

READ — How to Invest in a Rental Property with No Money Down 

How To Move Forward 

First, remember that real estate is a worthy investment strategy that can usually weather economic storms.  

Financial advisors recommend real estate investing because it can help Americans preserve and build wealth, and the value you’ll reap is much more predictable than other methods of investing, such as the stock market. 

As you evaluate your portfolio, think about your long-term goals and when you’d like to reach those goals. For some investors, it may be best to look for a real estate agent who can help you advance your purchasing goals, especially if you’re already in the business of flipping homes or have capital readily available.  

On the other hand, many investors may want to hold off on acquiring new property. There’s nothing wrong with patiently paying down your mortgages as you wait for the market to turn around.

Your investment strategy in the midst of rising interest rates and inflationary pressure will depend on your portfolio and goals. 

 

Screen Shot 2021 12 28 At 113128 AmLuke Babich is the Co-Founder of Clever Real Estate, a real estate education platform committed to helping home buyers, sellers and investors make smarter financial decisions. Luke is also a licensed real estate agent in the State of Missouri and his research and insights have been featured on BiggerPockets, Inman, the LA Times, and more.

2022 Trends in Colorado Residential Homes

Colorado’s real estate market is one of the hottest in the country, and despite the pandemic-induced market uncertainty, it’s still holding up quite well. Recent reports show that the housing market in the Denver Metro area is taking a turn, and home prices in the region are dropping relative to the other hot markets around the country.

But besides the market dynamics, more interesting architectural trends are shaping the construction, buying, and selling of residential homes in Colorado. Today, homebuyers are very specific with what they want. If they envision an expansive backyard, an outdoor kitchen, or a dedicated laundry room, they won’t settle until they find exactly that.

READ—Colorado is Seeing More Inbound Moves in 2022 Than Most Other States in the U.S.

Whether an investor, resident or a homebuyer moving to Colorado, you’ll notice some obvious architectural trends. Most of these trends are not specific to Colorado but are nationwide trends disrupting the broader residential real estate market. In the sections below, we’ve discussed some 2022 architectural trends evident in the Colorado housing market.

Indoor-Outdoor Design

Indoor-outdoor living spaces are becoming increasingly popular not only in Colorado but all around the world. This trend is characterized by a greater preference for seamless connection and transition from the outdoors to the home interiors. Some main elements of indoor-outdoor designs are outdoor kitchens, dining rooms, and entertainment areas. Others are indoor-outdoor pools and outdoor living rooms fitted with couches, tables, and entertainment sets.

The homes must follow specific design aspects for these transitional spaces to work better. For instance, they should have bigger openings, spacious rooms, and medium & uniform floor levels. Most residential homes that feature indoor-outdoor designs also tend to have a cohesive color scheme with either one or two primary colors. Similarly, the décor choices for these homes complement the indoor and outdoor elements.

More Natural Lighting

Modern architectural masterpieces emphasize natural light, and this trend has been gaining adoption over the last decade. Most homes that provide more natural light come with floor-to-ceiling windows, retractable walls, and skylights. These homes feature reflective objects, natural colors, houseplants, and ample open spaces to enhance the impact of natural light on the interiors.

Besides the distinctive large windows and glass walls, these homes are strategically positioned to maximize the natural light rays and may feature lighter hues and fewer interior walls. That said, most in-demand homes in Colorado are designed to offer more natural lighting, and the trend is getting better.

Heated Flooring Goes Mainstream

Heated floors are some of the hottest trends in residential homes right now. Not only is the cost of installing heated floor systems becoming more affordable, but most homeowners are also willing to incur a premium for a home with this convenience feature. A well-installed heated floor system keeps the home warm and comfortable during the colder months and increases the home’s value in the long run.

The other benefits of heated floor systems include high energy efficiency and easy maintenance. Alternative home heating options like radiators must often maintain a temperature of about 150 degrees Fahrenheit to keep a room warm. On the other hand, a heated floor system only needs a temperature of around 85 degrees Fahrenheit.

Use of Organic and Natural Materials

Residential homes increasingly lean towards organic and natural materials during construction and as décor elements. This trend is primarily driven by consumers’ desire for cleaner, creative and eco-friendly spaces around their homes. Homeowners see natural materials such as wooden structures and stone as healthy, relaxing, and perfect for the environment and body.

Most natural materials are versatile and can be used to match any design or architectural style. Natural stones, for instance, can be used in bathrooms, flooring, countertops, fireplaces, and exterior siding. On the other hand, wood can work perfectly for flooring, cabinets, furniture, and more. More so, these natural materials are applicable for any room, from the bedroom and kitchen to the dining area and patio.

A Focus on Health, Productivity, and Wellbeing 

As more people shift to remote work, many are working from their home offices, and these spaces need to be adapted to ensure higher productivity. There’s also a keen focus on health and wellbeing, and homes with fitness rooms and yoga spaces are becoming popular in the residential market.

Today, many in-demand homes feature elegant bathroom designs, high-end saunas, and spas that allow maximum relaxation, body treatments, and facials. Other design elements that enhance health, productivity, and wellbeing include ambient natural lighting, open multipurpose spaces, indoor plants, and efficient airflow.

The Bottom Line

The above trends in residential home design aren’t exhaustive but represent what’s popular in the Colorado real estate market. You can always refer to these trends for informed decision-making as a homebuyer or investor.

A couple of years from now, some of these design trends may become more widespread while others may go out of the market. Whichever the case, it’s crucial to keep up with the trends and adjust your preferences accordingly.

 

HeadshotJohn has been an active member of his real estate community for 12 years now, and is excited to be turning that community focus toward writing about the ins and outs of all things real estate from finding the perfect home to making moving a little less stressful. In his free time John enjoys spending time with his family and playing Pickleball.

What Is the Difference Between Class A, B, C and D Properties?

Looking for investment rental properties can be a huge challenge, especially for a novice investor. It’s not just a matter of finding a real estate agent to help you buy, or looking up property values on Redfin and Zillow. You need to think broader, and understand what type of investment you really want — and can actually handle.

That’s where property classes come in. Property classes are a quick way to get an idea of a property’s quality, whether it’s commercial or residential. While the sale price helps you calculate mortgage and commission payments, the property class gives you an idea of the everyday texture and future prospects of a property and neighborhood.

So what’s the difference between, say, a Class A property in downtown Denver, and a Class C property on the outskirts of Colorado Springs? Let’s look at what distinguishes each property class, the upsides and downsides of each, and what type of investor should target each respective class.

Class A

R Architecture 2gdwliim3uw Unsplash

Class A properties are the gold standard of real estate — new(ish) and in excellent condition.

Generally, they are either historic properties or built in the past 10 to 15 years, have top-quality amenities and finishes, and are located in a very desirable area. Because of these characteristics, they generally have high-earning tenants, very low vacancy rates, and are professionally managed. They’re well-maintained, and the new owners won’t have to deal with deferred maintenance.

If there’s a downside here, it’s that the buy-in for Class A properties is very high — few investors have enough cash on hand to buy a Class A property, which means they’ll need investment property loans — and overall cash flow could be low. But you get what you pay for. Class A properties make great “buy and hold” investments, as they maintain their value extremely well over time.

Class B

Scott Webb 1ddol8rguh8 Unsplash

These properties are slightly less desirable than Class A properties, but still fairly solid.

Class B properties are generally older than Class A properties (up to 30 years old), and feature medium-quality finishes and amenities. These properties often have deferred maintenance issues that the new owner will have to deal with on day one, and may have lower-income tenants.

On the plus side, Class B properties are often in very desirable locations, and only need minor work done. That means that with a little investment and polish, they can often be upgraded into Class A properties. Smart investors with a discerning eye can often get themselves a future Class A property at a much lower price than an established Class A property, just by shopping for Class Bs.

Class C

Dan Meyers Kgnjllvv5lm Unsplash

Properties in Class C have moderate to serious issues. They’re often more than 20 years old, generally in less desirable locations, and need significant renovations and repairs. Core systems like plumbing or electrical may need replacing, appliances are usually subpar, and they have high vacancy rates. Upgrading them to a Class B property will be difficult and costly.

All that being said, Class C properties have a relatively low buy-in, which makes them attractive to investors who may just be starting out. And while they come with low rents, those low acquisition costs mean you’ll have a healthy cash flow.

Class D

Roger Starnes Sr Rrmsnsc3rro Unsplash

These properties are old and often show signs of serious neglect. They need a lot of repairs and renovations just to meet the minimum level of habitability and are located in undesirable locations with high crime rates. Tenants can be unpredictable, and Class D properties often have high vacancy rates.

There isn’t a ton of upside here, aside from very low acquisition costs. These properties are often targeted by flippers who are either anticipating gentrification, producing quick and easy rentals, or by investors who don’t have a ton of funds.

Which Class of Properties Is the Best Investment?

The obvious — and, in some ways, correct — answer here is that Class A properties are the best investment. But the reality is more complicated than that.

Class A properties are great investments because they require very little upfront work or deferred maintenance, and they generally hold their value extremely well over the long term. On top of that, the typical Class A tenant also stays for a long time, which gives the landlord some stability. However, in the event of an economic downturn, these high-income tenants are often the first to be affected. And even under normal circumstances, it can take a while to fill vacancies in Class A properties, since qualified tenants will be relatively rare.

But there can also be significant upside for savvy investors who put money into Class B, Class C, and even Class D properties. The fact is, many Class A neighborhoods and properties started out as Class B, C, or D before being rehabilitated and gentrified. This 2019 list from Realtor.com details several neighborhoods that experienced remarkable appreciation over short periods of time — headlined by one Detroit neighborhood that went from Class D to Class B or A in just half a decade, seeing a staggering 526% increase in median sale price.

If you’re an investor who has access to granular neighborhood data or can access MLS (even though you don’t have a real estate license) to see listings before the public, this can be a great way to uncover hidden value.

The bottom line is that the best class of property for you is going to depend largely on your appetite for risk. If you have a lot of capital to invest, and you want to preserve that capital, Class A is the choice for you. If you’re more of a speculator, Class B, C, and even D can be great bets if you have an eye for the market.

 

Screen Shot 2021 12 28 At 113128 AmLuke Babich is the Co-Founder of Clever Real Estate, a real estate education platform committed to helping home buyers, sellers, and investors make smarter financial decisions. Luke is a licensed real estate agent in the State of Missouri and his research and insights have been featured on BiggerPockets, Inman, the L.A. Times, and more.

Avoid Surprise Expenses with a Properly Negotiated Lease

During my (38)-year career, I’ve seen it happen over-and-over again: business owners sign a lease that seems completely acceptable, but their real estate leasing/purchasing broker hasn’t done their due diligence to help the business owner identify risks and liabilities that could occur ahead. Some of these financial pitfalls include pass-throughs of repairs, insurance, property taxes, and other operating expenses. More simply, a building just may not work right, affecting your comfort and safety.

Imagine the surprise when you receive your annual, pass-through bill for a repair that should have been handled as a capital improvement at your landlord’s expense. It’s not uncommon especially if your advisor didn’t do the necessary legwork before the lease was signed.

Consider this:

Types of Leases

There are generally two types of leases, with other available variations: Triple Net (and Full Service).

With a Triple Net lease, tenants are responsible for paying all of the operating expenses for their own space including property taxes and tenant-specific utilities, insurance, repairs and maintenance, etc., as well as a pro-rata share of common area expenses. Usually, the landlord pays for the high-ticket items including roofing, HVAC and asphalt replacements, fire-life safety equipment and electrical upgrades, and more — all amortizable over longer periods.

Sometimes however, there’s a gray area as to what and when a building system needs to be replaced. This distinction dictates the extent of annual pass-throughs. In this instance, the tenant is relying on the honesty, professionalism, and efficiency (economies of scale and experience) of their landlord to make sure the building they’re in is being cared for properly and honestly. Short of that, the tenant is at risk.

Perform a Building Audit

A lease allows for a tenant’s audit of their landlord’s books. Before lease-signing, a request needs to be made for the operating expense and major capital replacement building history so that a thorough understanding can be reached about how much money is being spent and the fairness and rationale for OPEX pass-throughs. If a landlord is cutting corners and not properly maintaining a property, it will be evident (at least to a broker with a trained eye) that the tenant is at risk.

You and your broker should perform a thorough review and ask questions based on those details, ensuring that the lease gets accurately written. Sometimes, there’s a rush by the broker and client alike, to conclude lease negotiations rather than taking those extra few steps to ensure a satisfying (and financially prudent) result.

Investigate Insurance Claims

Your broker should take the time to investigate and understand insurance claims made by the landlord, and if they have been accurately applied. For example, if the property owner owns several properties and has blanket insurance, proper insurance allocations should be reviewed and implemented.

Understand Possible Property Tax Increases       

Property tax valuations differ from one property and area to the next. They can increase and decrease over time due to growth, special improvement district formation, government funding needs and comparable sales, amongst a host of other factors. These differences will often (especially during pandemic times) bring big tax-bill changes. An experienced broker will understand these factors, and should be able to readily share the numbers with you as to how they may come about and affect your lease and your business.

Lookout for Construction Costs

Tenant finish projects can be a sore spot, especially if you and/or your broker aren’t well versed in construction. Often, lease rates are somewhat based in the tenant finish buildout costs that apply to the preparation of the space for occupancy.

Areas of concern and attention include: shortages, as a result of kinks in the supply chain; receiving the best value for materials (for example, whether your landlord is securing multiple bids and securing the best value on your behalf); if hidden or duplicated expenses are being layered into the cost of your tenant finish, (including overhead and profit versus supervisory fees); and ensuring if line-item costs are in line with market unit cost standards. A broker with experience and licensing in construction can provide a great deal of added value.

The excitement of signing a lease for your business and moving into your new space shouldn’t cloud your judgement. Working with a broker who’s sharp and experienced may save you from a lot of distress and unnecessary expense, often providing a much more satisfying tenant experience.

 

DanbartellDan Bartell is the President of Bartell and Company Real Estate and Bartell and Company Real Estate Wealth Management, a 38-year-old firm that focuses on thoughtful approaches to creating and maintaining value. He can be reached at 303-753-9100 or [email protected].

How Real Estate Investors Can Survive a Market Downturn

When COVID-19 shut down much of the world in early 2020, the S&P 500 began a 34-percent plummet. Given the widespread impact of the virus, a significant drop was to be expected. Less expected, however, was the speed of the following recovery.

In just six months, the S&P 500 recovered most of its losses and more. This turnaround was one the fastest in history, bolstered by government programs that helped individuals and businesses to stay afloat during lockdowns.

While a real estate market crash is not inevitable, 2022 could see a slowdown in growth. As an investor, it’s important to prepare for what comes next.

Steps to Survive a Market Downturn

When the Fed announced a series of planned interest rate increases aimed at slowing down inflation, investors shuddered. After all, low rates have allowed first-time investors to enter the real estate market and veteran investors to rapidly expand their portfolios. With interest rates going up, housing stocks shrinking, and prices rising, it seems likely the market will experience a correction.

But preparing for a downturn is possible. For real estate in particular, there are six steps you can take to protect your investments and come out the other side stronger than before.

1. Plan for Worst-Case Scenarios

Start by figuring out where you would be if every tenant at each of your properties paid rent 30 days late. Go one step further, and calculate what would happen at 60 days or 90 days.

While you’re at it, imagine that your property occupancy rates dropped by 10, 20, or even 30 percent. Envision what would happen if the value of your property dropped dramatically.

While this might seem pessimistic, looking ahead to the worst-case scenario for your real estate investments can help you develop a plan to handle it.

2. Get a Grip on Expenses

There are two types of expenses: fixed, and variable. Fixed expenses are unchanging, and unlikely to be affected by a real estate market surge or a real estate market downturn.

They include things like:

  • Routine repairs
  • Property tax
  • Mortgage payments

Variable expenses can include improvements on properties that are unrelated to regular maintenance. Looking ahead to a market downturn, evaluate which improvements will give you the best ROI — and which can wait.

3. Cultivate Better Relationships with Tenants

The heart of your real estate investment isn’t the property you buy — it’s the tenants inside.

Don’t let worrying about money cloud the fact that real estate is, at its core, about people. Cultivating better relationships with tenants is key when the market gets tough. This starts with improved tenant screening, keeping your properties in good shape (even when the rent is late), and working with tenants who are struggling.

4. Stay Focused on your Goals

You got into real estate investment for a reason. Hopefully, you laid out both short- and long-term goals before you got started. A market downturn is a good time to revisit those goals and make sure you’re making decisions aligned with your objectives.

Ask yourself:

  • Is your portfolio as diverse as you’d like?
  • Are your properties performing well historically?
  • If you’re looking at potential purchases, are you compromising or sticking to your investment criteria?
  • Is there another investment space you can move into (e.g., FSBO properties)?
  • If you’ve liquidated a property, can you use a 1031 exchange to defer taxes?

If you haven’t taken the time to outline clear goals, use a potential market downturn as a time to look ahead with a clear plan.

5. Build Up a Cash Reserve or Open a Line of Credit

Even with perfect planning, you may find yourself in need of quick cash. Building up a cash reserve is the real estate investment equivalent of making hay while the sun shines.

Consider the following actions to help ensure easy access to the funds you need:

  • Open a line of credit on a property
  • Delay a major purchase and store the cash
  • Sensibly liquidate a property (before the market drops)

6. Don’t Panic

Panicked investors may be tempted to liquidate their portfolios, unloading stocks and properties before they lose a penny of profits.

Resist this urge. With housing starts and construction permits up heading into 2022 and home prices still on the rise, it’s wise to sit tight to see what happens. While strategically unloading poorly performing properties or other investments can free up cash, history shows us gradual corrections are more likely than disastrous downturns.

Stay informed, and don’t make hasty decisions.

Good News Going Forward

The good news is that even in some of the worst financial crashes, real estate remains remarkably stable. Taking these six steps can help stabilize your portfolio and protect you from whatever the future holds.

 

Luke BabichLuke Babich is the Co-Founder of Clever Real Estate, a real estate education platform committed to helping home buyers, sellers and investors make smarter financial decisions. Luke is a licensed real estate agent in the State of Missouri and his research and insights have been featured on BiggerPockets, Inman, the LA Times, and more.

Q2 real estate market trends report

288 Travis Road Wolcott Abartlett
288 Travis Road | Located at 288 Travis Road in Wolcott, this expansive, 5 bed/8 bath 7,213 sq. ft. custom-built mountain home includes high-end amenities and finishes. Offering breathtaking views and privacy on a10-acre gated flat lot at the end of a cul-de-sac, the home is newly listed for $5M.

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.

950 Red Sandstone Vail Bhhs Adam Bartlett
950 Red Sandstone Road #38 | Offering easy access to Lionshead Village, the newly remodeled, 4 bed/3 bath 2,498 sq. ft. fully furnished end unit townhome in Vail sold for $2.05M in July 2020

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.

387 Castlepeak Eagle Bhhs Reneeoleson
387 Castle Peak Road | This 1.5-acre oasis includes a garden courtyard, panoramic mountain views, vaulted ceilings and open floor plan. Located at 387 Castle Peak Road in Eagle, the 5 bed/4 bath 5,000 sq. ft home sold for $1.1M in November 2020.

Luxury/Resort Market

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.

Buyers

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.

Sellers

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.

16 Pearch Street Eagle Renee Oleson
16 Pearch Street | Located in the heart of Eagle Ranch at 16 Pearch Street, this 3 bed/3 bath 1,740 sq. ft. end unit townhome lives larger than its size, including a functional open floor plan. Recently sold for $652,000.

Down Valley

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.

Sellers

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.

Buyers

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.

Ask A Realtor: When will the mountain market hit its peak?

1535 Aspenrdge Mls 02
Located at 1535 Aspen Ridge in Vail, this Adirondack-inspired 5,661 sq. ft. 5 bed/5.5 bath home offers Gore Range and ski slope views. It sold for $5.435M in October 2020.

Dear Tisa and Larry,

My family and I are considering selling our vacation property in the mountains. I know that inventory is limited and buyer demand is strong. Prices continue to rise and I want to maximize my return. When do you think the market will hit its peak so that I can sell “at the top”?

—Height of the Market Seller

206 N Brett Trail 01
This 2,605 sq. ft. 3 bed/3.5 bath waterfront home located at 206 N. Brett Trail in Edwards’ Southfork Meadows community sold for $939,000 in November 2020.

Dear Height of the Market Seller,

Your market timing question is one we are hearing more and more about as sellers seek to maximize their gains.

Like most things, timing to sell at the top of the market is very challenging. It’s like predicting the stock market. It really comes down to taking a close look at what you hope to achieve with the sale of your home and what will make it financially worthwhile for you to sell it. The other caveat is where you are going to live once you do sell. Are you planning to look for another home in the valley or elsewhere? The safest way to play this game is to sell once you have a new place to move into, if in fact, moving into a new home is part of your plan.

Another key factor to consider are your tax ramifications particularly if it is a vacation home. This is where speaking with a trusted financial advisor is important.

While the financial return is the most tangible part of a sale, it’s important to remember the value your original purchase brought to you and your family in the time you have owned your home. These memories have their own value and while we all want to sell at the height of a market, it’s important to make your next move when the timing is right for you. This also includes what you will be happy with when you decide to sell.

As for expectations on where the market is going for 2021, based on current buyer demand and limited supply, we anticipate the Vail Valley and Down Valley markets will continue to see price appreciation, a trend that is expected in other resort areas based on current activity. It is also widely anticipated that interest rates should remain low for the year, which will help home buyers and should keep our market activity strong.

But we have learned from the past that the market may and can correct quickly. The housing bubble and subsequent recession caused an expedited market response as did the events of 2020 getting to this upside. While steady market activity is preferred, we are at the whim of more macro-events that could potentially change the real estate landscape here in the valley and around the country.

Montaneros 301 Mls 01
Newly upgraded and within easy walking distance to the Lionshead Eagle Bahn Gondola, this 1,163 sq. ft. 2 bed/2 bath condo located at 684 W. Lionshead Circle, Unit 314 sold for 1.375M in October 2020.

Our advice to you is to sell your property when you and your family decide it is time. While many homes have reached an all-time high in value, it’s too difficult to determine if we’ve reached our peak for now or if we might start to see a dip or leveling off. The market is constantly changing – at times faster than at others. Values in October 2020 are not necessarily those of February 2021.

Reach out to your trusted advisor and local real estate broker and have them give you a current value for your property. If the value feels “right” then we encourage you to consider listing your home for sale. If you are hoping for a higher price for the property, waiting may be a good idea, but all markets change and finding the top is as challenging as determining the timing for the bottom. You may see other similar properties trade for more but then again, they might start trading for less. Do what is right for you and we suspect the outcome will be a positive one.

Good luck with your decision,

Tisa and Larry

Tisa Olsen and Larry Agneberg are 40+ year Vail Valley residents who also each bring more than 30 years’ real estate industry experience as award-winning broker associates for Berkshire Hathaway HomeServices Colorado Properties. Olsen’s honors include a 2020 Leading Edge Award for gross commission income and units sold as well as being a consistently top producer. Agneberg’s accolades include past-president of the Vail Board of Realtors, Vail Board of Realtors Realtor of the Year, and a perennial member of the Berkshire Hathaway HomeServices’ Chairman’s Diamond Circle, a coveted award bestowed upon the top one percent of all associate brokers. They can be reached at [email protected] or 970.471.1800 or [email protected] or 970.376.7100.