IS VAIL VALLEY REAL ESTATE ON FIRE?
Remote working has been around for decades but not without employers being concerned over the lack of supervision and non-participation in synergist group behavior. While this technological advancement was destined to become industry standard over time, when CV-19 came on to the scene that evolution became a revolution with the virus a catalyst for immediate mainstream acceptance. Remote working is here to stay and will forever change how people work and where they live as we move into the age of on-line everything. So, let’s take a look at what this will mean for vacation home real estate.
The pandemic produced the most violent downturn in history with destination travel front and center as the public shunned flying and the economy locked down. Spring is typically our slowest time of year as snowpack melts and the weather unpredictable. After the ski areas closed mid-March, we were certain that summer visitation was going to greatly affected, but during the month of May some very unusual activity began to emerge. Vacation home use has always been measured in days given obligations at the office. We were surprised when buyers from all across America began calling citing an increased tether to work which meant changing the use pattern from days to months which now may become a new norm.
This unusual behavior and five months of insane demand has confirmed that people intend to work from higher quality of life places driving this flurry of interest. Properties have been selling in weeks if not days while reducing inventory to almost non-existent levels. The Wall Street Journal proclaimed that mountain property is on fire, which based upon the last five months is probably true but for reasons more complex than just the pandemic. As of May there have been 430 properties sold or under contract in the ski proximate neighborhoods we track culminating in an astounding $1.2 billion of dollar volume with an average selling price of $1.6M. All of this happened during an excruciating high risk economic downturn which made no sense but happened, nevertheless. Families started reaching out to us as social distancing took hold expressing an interest in the Vail Valley but with their timing being next year. This hesitation made complete sense given a lessening risk profile along with the promise of vaccines and/or other effective therapeutics.
Six months have gone by and based upon additional information and client input we have concluded that this summer’s frenzy was not an outlier/renegade event but rather an early adopter movement. Remote working is changing the playing field with most decision makers enjoying a longer leash to the office. If these early adopters represent only a fraction of this emerging trend, buyer demand for Vail Valley real estate will explode next year with significant implications. Inventory will likely decrease as ownership reconsiders selling for the same reasons’ buyers are buying. If demand does nothing more than repeat next summer that alone will drive prices 10% higher. If demand multiplies by a factor of two or three then a 20% increase is likely. While these prognostications might seem a bit fanciful data analysis confirms that real estate moves in stair step patterns and is not a linear progression asset. The last burst happened Q3 2017 when prices exploded 20%-25% as the longest bull market run in history converged with record low rates of unemployment. While our predictions are based on a completely different premise there is historical precedence for burst pricing. We urgently recommend buyers take action as soon as possible with the biggest problem being a serious lack of inventory.
If the idea of a Vail Valley home is on the radar screen, this matter must be prioritized with buyers becoming fully engaged because asking us to send you a ‘great deal via email’ is just not going to cut it. It takes time, focus, patience and perseverance along with making a broker your new best friend if a Top 10% property is going to come your way. If renting is the backup there are going to be problems with that strategy as well. As owners begin to use their homes for extended increments during prime time winter and summer months rents will increase and availability curtailed.
If you have questions or are interested in learning more about how our world class resort real estate works, please give us a call or reply via email. As the only vacation home investment advisory firm in the Central Rockies and Eagle County’s only buyer brokerage company for more than 20 years we are committed to your best interest as client fiduciaries. We will make every effort to exceed expectations with information that is factual, and data based which is what our advisory platform is all about.
Best regards from high up in the Rocky Mountains where the fall colors are vivid hues of yellow, red and purple, and the weather delightful with winter right around the corner.
Greg Strahan and Connie Kincaid-Strahan
40 Years’ Experience. One Billion Dollars Completed Transactions. Hundreds of Happy Families.
Lifestyle enhancement coordinators and real estate guides to the Vail Valley.