The Summit County Real Estate Bubble
It is no secret that the real estate prices for Summit County, Colorado, have never been higher. The prices are so high that businesses struggle to find employees that can afford to live nearby. The starting salary at target in Silverthorne (in winter) is $23 an hour, and they still cannot hire enough employees.
The average single-family home is around two million dollars, and everyone and their mother is on Airbnb whenever they aren’t in town. Areas like Summit County attract the wealthy, and wealthy folks can cause real estate prices to rise.
The other day, I spoke to an older woman who forgot she owns a Frisco condo. A condo worth around $800,000. She rarely goes there but doesn’t want to sell it because her son likes it. I’ve spoken to landowners who want 50% more for the land they bought less than a year ago, and some of them might get it. In addition, I met a man who purchased a new construction townhome two years ago and stands to make 130% on his investment.
The point is there is lots of wealth around, and landowners have grown exponentially more wealthy in the past few years.
These stories cause a lot of people to ask, is there a bubble? When will prices drop? Is this like 2008 all over again?
I’m just a real estate agent and cannot predict the future. I have no idea what the future holds for the Summit County Real estate market. All I can do is analyze the market facts and data. So I thought I’d lay out the pros and cons and let you decide if there is a bubble or not.
Top 5 Causes Of Summit County Real Estate Bubble
1) The Fed giving away an insane amount of money
Since 2020 somewhere between 40-80% of the current circulating US Dollars were printed. I know that range is crazy, but when researching this paragraph, 40% was the lowest statistic I saw, and 80% was the highest. Regardless of the statistic, it is a very bad thing for inflation and the prices of homes in any market.
2) Low-interest rates
There is more money circulating than ever before, and you can borrow it for less than ever before. That is another ingredient in the recipe for a nationwide housing bubble.
3) Short term rental regulations
The last two points were speaking to the real estate market in general. However, this one is more specifically Summit County related. In vacation markets, homes consistently sell for more. Your house is a potential income-generating asset.
A lot of investors buy property here to rent them out year-round. However, lately, more and more regulations have been put in place to help prevent this. The county only allows 135 nights a year of renting in most areas. Although no one is counting -- so there is that. More neighborhoods have banned short-term rentals altogether, and there are more deed-restricted neighborhoods than ever before.
Fewer homes available for investment properties or short-term rentals result in decreased supply and increased demand, increasing prices.
4) Remote Workers
People can now work from wherever they’d like, and property taxes aren’t bad in Colorado relative to where I’m from. Remote work enables people to live and work from their mountain homes, driving up the average household income in Summit County and thus the average home price increase.
5) Global Warming
Now whether or not you are concerned about global warming is irrelevant. It certainly isn’t causing the bubble. The above points are pushing prices up. For there to be a bubble, there must be a catalyst that drives the market to crash. This point could help pop the proverbial bubble.
There has been much less snow and many more wildfires in the past two years. Less snow is terrible for the short-term rental market up here. Snowbirds follow the snow, and if there isn’t any snow…. Investment properties make less money.
If a massive fire burns thousands of residences like in Boulder, it could make investors less interested in this area.
Although the thought that Summit County real estate may be in the midst of a bubble is a valid one, there are still plenty of factors that indicate prices will continue to rise:
1) Consistent Appreciation since the Tunnel opened in 1979
Since 1979, there has only been a two-year period where the market did not appreciate, from 2008 to 2010. With the recession, it dropped about 15% but quickly got back on track.
Even if there is a bubble, we have no reason to believe this appreciation will stop trending positively two years after it pops.
2) Immigrants/Transplants
Colorado is the 4th most moved to state this past year. The more people that live here, the stronger the real estate market. Since the legalization of marijuana in 2012, Colorado’s population has been growing rapidly.
3) Summit County is Awesome
I know this one is not quantitative, but unless snowboarding, hiking, mountain biking, frisbee golf, skiing, and snowshoeing, suddenly go out of style, there will always be a demand for real estate in Summit County.
It is one of the premier outdoor sports areas within an hour and a half from a major international airport. The Summit County hobbies like skiing and mountain biking don’t come cheap. So this area will always attract the adventurous person with means.
No matter where you live, the real estate market is constantly changing. Therefore, everything I wrote above could be inaccurate tomorrow. If you want to learn about the current summit county market, please don’t hesitate to email me at jderme2@gmail.com.
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