Market Crash Coming Soon?! I am finished...

by Anthony Sole

Welcome to the New Summit County, Colorado!

Gone are the days of finding a "deal." Say hello to resale prices of $1000/sqft +. Summit County has caught up with it self and has become the place of dreams for most people. If you want to own property here you have to work for it, plain and simple.

What does that mean going forward? For starters, we are in a market like we have never seen before, where inventory is at an all time low and demand is still surging. Highly desirable properties are selling for 10-16% over list price on average. Out of town cash buyers are flooding the market and hedging against inflation. Locals are being priced out of the market.

Let's address these issues:

Inventory is at an all time low and most likely will stay this way for a while. There is no indication of a surge of inventory, besides seasonality. We cannot build our way out of it as there is limited space to build in Summit County and at the pace interest rates are rising, buyers are still incentivized to place their money in an asset like real estate. We could potentially hit 7% in the coming years and guess what, it won't matter. If the public was investing in properties in the 1980's when interest rates were 18% why would they stop investing at 7%? Couple this with the fact that Corporate America has chosen to keep their workforce at home indefinitely, investors with cash are coming from states like New York and California and people are choosing quality of life over working for a living. This gives way to an unprecedented recipe of low inventory and rising prices for the foreseeable future.

As for those who dreamed of being a bum and skiing in the moutains full time, that is not realistic anymore and will not be going forward. My advice is to gather a friend or two, pool your money together and buy something because it will soon become unattainable to own a primary residence on by yourself. Trust me, in 5 years you will be patting yourselves on the back!

Market Outlook:

Interest Rates are continuing to rise with economists stating they could rise to about high 4% to even 6% by the end of the year.

Inventory will continue to stay low in our luxury resort market, but as for the national market we will see a softening and inventory will rise slightly as builders continue to develop outside of metropolitan areas and interest rates cause higher mortgage prices for borrowers

Prices will continue to climb, but not at the rate we witnessed for the last 2 years.

Is the market crash coming soon?!... NO.

Is it still wise to invest in real estate in Summit County?

An emphatic YES! Yes the prices are high, but here is the thing, they were high 3 years ago and if you missed the train you lost out on 50-100% in gains. Looking at statistics from 1995-2022, Summit County has seen an average of 20% appreciation YOY (year over year). That means that while your cash was sitting in the bank losing anywhere from 2% to 7% of its purchasing power you were also missing out on 20% gains for a total net loss of 27% EVERY YEAR. There simply is not a better hedge against inflation than a property in a resort market like Summit County. That is not to say you can't lose your butt on the wrong investment, but in about 95% of cases in Summit you would have came out on top. I will take those odds every day.

To prove how much we believe in this market, my girlfriend and I have just cash out refinanced our rental property to acquire more. At the bare minimum our money will be safer in the market than sitting in a savings account.

So what are you waiting for? A crash? You will be waiting a long time.