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Home transactions in Summit County saw a significant dip this past year compared to 2021, according to a recently-released December report by the Colorado-based real estate group Land Title Guarantee Company. The findings could herald some relief — and even advantages — for homebuyers, according to local brokers.
Between 2022 and 2021, county real estate sales declined by 37% and the total value of transactions decreased by 25%, according to Land Title’s report. There were 1,794 transactions in the county in 2022, with an average transaction price of $1,332,669, the report said.
KK Willett, a real estate agent for Coldwell Banker Mountain Properties, said she believes the decline can be attributed to more potential homebuyers who are holding out on purchasing amid record-high prices.
“I think we’re going to see more negotiating power for buyers in the coming months,” Willett said. “Sellers who are pricing significantly lower are going under contract in just a few days.”
Despite the drop in transactions, the average home price in the county this past year was the highest on record since at least 1980, according to Land Title data, at more than $1.3 million. That represents a more than double increase in prices over the last 10 years.
Willett said the pressure on homeowners to sell amid a less receptive consumer base could ultimately lower home prices this year, though she said that remains to be seen.
“If somebody is really motivated to sell they’ll have to price lower than the competition,” Willett said. “But I don’t think anyone is ready to do that yet, sellers are trying to sell for what their neighbors sold for.”
The availability of housing is also expected to play a role in home prices, with inventory for single-family homes as well as townhomes and condos up this past, according to data from the Colorado Association of Realtors. December 2022 saw 109 for-sale single-family homes, up from 61 in December 2021 while inventory for townhomes and condos increased from 233 to 263.
The months’ supply of inventory — which represents how many months it would take for the current inventory of homes on the market to sell — also increased between December 2022 and 2021 from between 1 and 2 months to more than 3 months.
That still positions the county about 2 to 3 months below what is considered a balanced supply, according to Dana Cottrell, a Summit County broker and spokesperson for the Colorado Association of Realtors Cottrell. But brokers, including Cottrell, said more inventory could continue to move the needle towards a more balanced market.
Dishon Lutz, associate broker for Real Estate of the Summit and president for Summit Association of Realtors, said, “the thing that will change prices, in my opinion, is an influx in inventory.”
As housing stock increases and buyers find more negotiating power, those price changes could come this year, Lutz said.
“So many had this question of ‘oh my gosh, is this the new normal for Summit County?’” Lutz said. “The COVID years are not normal for sales, for price increases.”
But economic uncertainty — driven by high inflation and rising interest rates — continues to loom large over the housing market.
Last year, the U.S. Federal Reserve raised interest rates seven times, increasing rates from between 0.25% and 0.50% to between 4.25% and 4.50% by the end of 2022. The move — aimed at reducing consumer spending in a bid to curb inflation — impacts payments on mortgages, credit cards, car loans and more.
With the Fed expected to raise rates again, possibly in February, Willet said many Summit County homebuyers will likely not be affected.
The reason, according to Willett, is that some buyers pay for their homes fully in cash — meaning they do not need to seek a loan from a bank to afford their home. According to Land Title’s report, 33% of all real estate transactions in 2022 were paid in cash.
Buyers who cannot afford to pay for a home outright secure loans known as mortgages, which are paid back to a bank in monthly installments. As interest rates rose last year, so did those monthly payments.
“We’re getting to a place where there is more inventory in the market, but interest rates are pricing people out,” Willett said, adding that those most affected are likely to be local residents who do not own second homes.
Still, Willett said there are reasons to be optimistic about 2023’s housing market. Despite some of the economic challenges for buyers, Willett said she anticipates overall home prices could drop by possibly 10%.
“As long as they can handle a higher interest rate for a year or two, it is a really good time to get in the market for a market-rate house,” she said.
But several unknowns remain, Lutz said, including by how much home prices may drop and if interest rates will prove too big a financial burden for some.
“Our market has been so unhealthy for the last couple of years, so it’s really exciting to see our market normalize a little bit more,” he said. “This definitely opens the door to people who may not have been able to compete with cash (offers) previously. The problem is, can they do it?”
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