2018 Year End Estes Park Real Estate Report
This year has been a very rewarding year and it was fun to look back at the many clients we had the privilege of helping in 2018. We have several success stories of people we helped who needed to sell their property before they could close on their next property or they needed a property sold by a certain time frame to avoid a high tax bill. Each closing had a story and we were honored to be a part of getting the job done for each of our clients!
One of my favorite stories of the year included a motivated seller that needed to sell her home as soon as possible. Through a series of unfortunate events, the seller stuck with our marketing plan and in the end, pocketed over $60,000 more in the transaction than she would have without our advice. Instead of taking the first offer which was an uninformed low-ball offer, the seller took our advice and held out for two more months before completing a sale resulting in far more than what she was originally ready to accept.
In the beginning of 2018 when there was extremely low inventory for condos, we had a client looking to purchase something built within the past few years. Our challenge was that there was simply nothing to choose from and these types of condos are typically met with multiple offers as soon as they come on the market. The buyer became discouraged, but we didn’t give up. Through our relationships with other local realtors, we were able to find out about a contract that was about to fail on a perfect condo. We were able to write an offer $10,000 below asking price, jump ahead of the other buyer who needed a house to sell first, and successfully close on the property perfect for our buyers and at a discounted price!
Another great story involved an extended family who have been long time clients of ours trying to find the perfect cabin. The son and his family had been working towards their dream of buying a getaway cabin to gather their family and make memories in the mountains. After years of searching, we were able to help the stars align in their favor, beat out multiple offers, and put them in an outstanding financial position. The best thing is they now have a cabin they are excited about visiting as often as possible! The joy they expressed through the whole process of the home purchase was contagious and so much fun to see!
As we look forward to helping more clients in 2019, there are several opportunities and potential land mines to navigate in the local real estate market. As values increase, homeowners have lots of opportunities to use their extra equity to improve their lives whether it be paying off higher interest debt, downsizing into a more manageable property, or moving up into a house that will fit family gatherings for years to come. Buyers seeking property in the area should feel confident our real estate market will most likely continue its upward trend in values, yet there will be hurdles to clear, rules to follow, and other things to watch out for to make the best purchase possible.
My goal in this report is to reflect how the local real estate economy is reacting to market pressures to help you make wise real estate decisions. I’ll share with you what types of properties are selling well, where the trends are pointing, and how you can use this information to your advantage. I’ll even give you a few predictions regarding what will happen in the future in our real estate market.
Estes Park Market Summary Overview
Homeowners and sellers who decided to wait another year are rejoicing as the Estes Park real estate market saw another year of double-digit appreciation in single family homes in 2018. Single family homes skyrocketed 17% in the median sale category which means more than half the sales that took place in 2018 were over $500,000.
Starting the year off in January of 2018 with only 4 condominiums available for sale in all of Estes Park (in any price range) caused the numbers to lag behind single families this year by a significant amount. We had a huge back log of disappointed buyers not able to find something to buy early in the year. The result was a large number of buyers who decided not to buy in Estes Park at all. Nonetheless, the average and median sales still increased a respectable 7% over 2017.
More and more money is coming to Estes Park in the way of real estate purchases in single family and vacant land. The lack of availability of condominiums early in the year definitely had an impact on the amount of money spent on condominiums for the year.
Days on the market had one of the biggest jumps of any statistical category this year showing that there are a lot of buyers waiting for properties to come available. With condominiums taking less than 60 days from initial listing date to final closing date, there is practically zero time for time on the market between the list date and when an offer is received. For this to be so low on an average of every sale for an entire year is extremely impressive! This number alone testifies to how crazy our condominium market has been in the last year!
Single Family Homes
The luxury market was the biggest winner in the single family homes segment of market seeing over 60% increase in the number of sales over $600,000 compared to a year earlier. The smaller homes also saw huge gains in median and average sales showcasing that just about every category of single family homes had great numbers to point at for 2018.
The entire bell curve of real estate sales in Estes Park has made a definite shift to the right. Sales under $300,000 dropped 60% in the number of sales and 64% in dollar volume. Interestingly enough, sales over $600,000 increased by 60% and the dollar volume increased by 58%. I’m not sure what caused the equal shift in numbers in both the high end and the low end, but it is clear that the overall expectation of value for our entire market has increased dramatically.
Time on the market in several of the small and inexpensive home categories also decreased to time frames that are basically shorter than the average contract takes to go from offer date to close date. What this is telling us is that there is a huge number of single family properties that are getting offers immediately.
So What Homes Are Selling?
As I mentioned above, the bell curve is shifting to the right as real estate values are appreciating rapidly over the last few years. If you look closely, the bell curve of total sales is getting fatter on the right as time goes on and skinnier on the left. Even with the large chunks of $100,000 price differences between categories, the shift is obvious.
It is also interesting to see that there are currently zero single family properties for sale under $300,000 and only a handful of sales in this category taking place at all. This includes the small cabins and fixer-uppers that people are typically looking for as an entry-level property to get into our market place.
The price ranges where the biggest difference between the number of active properties (red bars) and the number of sold properties will correlate to the price ranges where we expect the highest chance of multiple offers and the highest appreciation from year to year. It is important to note the differences between supply and demand between the properties in the upper part of the price ranges and those in the low ones. Even while we are seeing more sales in the upper price ranges, we are not seeing as much appreciation as the lower price ranges.
When do most of the homes sell in Estes Park?
One of the biggest misconceptions of the real estate market in Estes Park is that we only sell properties in the summer time. As you can see from the graph below, that is definitely not the case. There are two more important things you can glean from this graph. First, as a seller, you don’t have to wait for summer in order to sell your home. Second, as a buyer, you should expect a property that fits your desires to come along any time of the year.
Keep in mind with this graph, these lines are recording the number of sales that close in that particular month. The buyer activity will happen the previous month or possibly 2 months prior. For example, February is traditionally the slowest month of the year for the amount of sales which means that January and December are usually very slow with buyer traffic and offers being made.
As I mentioned previously, the number of sales had more to do with the severe lack of condominiums for sale than it did a loss of popularity. On the contrary, you can see with the average and median sales increases that people are willing to spend far more than they used to just a year or two ago.
I was surprised to see such small numbers relative to the rest of the market for the newer and larger units as broken down below. Market activity, from our perspective, seemed to have been equally strong for well-priced condominiums of all shapes, sizes, and prices. This is evidenced by the large increase in price per square foot in all condominium categories.
So What Condos are Selling?
Looking just at the 2018 sales, it is easy to think there is not much rhyme or reason going on here. However, what I see are three distinct peaks showcasing the most popular price ranges for different types of condominiums in Estes Park. The first peak at $200k-$249k is for smaller and older condos popular for full time living (and cheapest entry point into owning property in our market). The second peak from $300,000 to $400,000 is for the mid-range properties that are generating income or are set up for full time living with 3 bedrooms, 2 baths and garage. The third peak is all about the high-end condominiums with the best amenities, views, and locations available. If you look closely, you can also see these three peaks in previous years…though not quite as clearly as in 2018.
When do most of the condos sell in Estes Park?
As with single family homes, the time of the year is far less relevant to the discussion of when to sell your condo than it used to be. As you can see from the graph, the typical bell curve is nowhere to be seen in the peak of the summer as people expect it to be. In the last three years, May, August, and October are traditionally the best months to sell a condominium.
Report Card: Predictions from early 2018
One of the most popular sections of my end of the year report from last year was my predictions for the New Year. Are you curious to see how I did? Here are the predictions that I made in January of last year followed by notes from this year in blue.
1. Property values will continue to increase. With the severe imbalance of supply and demand, prices almost have no choice but to go up. When we have single digit number of condos for sale and only one single family home for sale under $400,000 there will naturally be a lot of pent-up demand. Nailed it….see the graphs above if you missed them. Condos saw an average price increase of 7% in 2018.
2. Optimism in the market will continue, but for how long is the question. Every market has its cycles and I would argue Estes Park is firmly in the Optimism upswing. I will be watching for hints of the optimism converting to Euphoria but I don’t think we are there yet. We have definitely passed Optimism on our way to Euphoria. Case in point, 36.5% of homes sold for full price or greater in 2018 (one even sold for 12% over asking price!). Condominiums were even more crazy at 45% at or above list price. The national real estate market has lots of people peaking over the hill at “Fear,” but I still have a hard time saying the local real estate market has hit its peak yet. With the volatile stock market and political turmoil lately, it’s easy to buy into the thought that we’ll be on the way back down from Euphoria very quickly. On the other hand, I still have a hard time finding much data in our local real estate statistics to support that prediction in our market.
3. Inventory may rise some, but there will be more buyers than sellers again this year. The pendulum is swinging very far to the seller’s market side of the spectrum and I don’t see any hints in the numbers yet of our market reversing course at this time. Because of the severe imbalance in available inventory for sale (especially among condominiums), I expect sales to keep up with the inventory as it comes available for the foreseeable future. Sorry, but this was an easy one. With the number of condominiums in the single digits and single families as low as we had ever seen them, it was a pretty easy prediction to say there would be more inventory to choose from this year.
4. Available short-term rental permits will dry up. The town of Estes Park restricts the total number of short term rentals in residential zoning districts. As these permits get used up, it will cause more value to be placed on homes selling with permits intact (permits run with the property) and will increase the value of properties zoned accommodations in Estes Park which are not subject to the cap. This will also cause (and already has caused) confusion among buyers who don’t understand how the town regulations work and may cause some buyers to purchase elsewhere. I was right again…there are no available short term vacation rental permits available and there is a waiting list to get one. Every new buyer who is considering purchasing a property with intentions of generating some income gets the standard story of how the permit system works. At this time, there is now a waiting list of 34 applications waiting for a permit. We have had buyers find out about the system and go elsewhere and we have also had buyers who are patiently waiting for their turn to get their permit. We are seeing more attention placed on properties zoned Accommodations that don’t have a cap as well.
5. I expect to see more higher-end homes sell this year vs last year. In 2017, we saw a much higher number of 7-figure homes sell than in years past, and I expect that trend to continue into 2018. For years, there has been a severe imbalance of the number of Million-Dollar homes for sale compared to how many have been selling. I think the momentum we have will encourage more sellers to make their homes available for sale and buyers will feel more confident in making those types of purchases. Million dollar home sales were off the charts in 2018! In 2017, Estes Park saw 9 sales over $1 million and in 2018, we saw 14 sell. For a reference, the average number of $1 million home sales over the last 10 years has only been 4.2 per year. In addition, even with the higher rate of sales, the number of properties available for sale in this range is higher now (13) than it was last year at this same time (11) which is exactly what I predicted last year.
Predictions for 2019
1. Demand will remain extremely strong under $500,000 inside the 80517 zip code. Upper price ranges may see some slow-down since they are typically the first to react to negative changes in the market. 2018 was a blistering pace for 7 figure home sales so I don’t expect to match that number, but we should do better than average.
3. Interest rates will rise, but not as much as the media is leading everyone to believe. Some are predicting almost 6% for mortgage interest rates on a 30 year fixed by this time next year. Almost no one is predicting rates to fall. Will they be higher than 4.5 Apr we’re seeing now? I’m thinking that is a solid “yes.”
4. Homes that obtain or retain a vacation home permit will showcase more value in 2019 than 2018. As the wait list increases, an existing permit will be even more valuable than it was before. Accommodations zoned properties will gain in value as well.
5. I expect inventory to increase moderately. Compared to a year ago when we only had a handful of properties on the market to choose from, we are already on an upward trajectory in properties for sale. I expect as sellers realize how much extra equity they are sitting on, there will be a healthy amount of people trying to sell their home and pocket the windfall for retirement or investment elsewhere. The question remains whether demand will keep up with the increasing supply.
6. With the nationwide real estate market cooling off, expect less buyers willing to enter into multiple offer scenarios. They may be more cautious to get into a sale, however, in our experience, with the increased panic of getting the winning bid, our rate of failed contracts also went up due to buyer’s remorse, rushed financial decisions and/or not researching a property as thoroughly as they would have liked before getting into a contract. I’m expecting and hoping for a return to a calmer market where buyers and sellers are making more informed decisions and sticking to those decisions. By the way, helping people make wise real estate decisions is our specialty.
7. The number of sales will most likely be of the same frequency as 2018 or slightly less but time on the market will likely increase. This prediction is based on three factors: the national real estate market seems to be slowing down which will impact the psychology of buyers and therefore hinder sales. The lack of properties for sale will continue to impact the market. Rising interest rates always discourages additional sales. However, because we are a second home market, I don’t think sellers are going to be willing to drop their prices to meet smaller demand so I’m expecting time on the market to increase.
1. Don’t think just because the national real estate market is cooling off that you can offer extremely low and expect to get a favorable response. The Estes Park market has always been a market of low urgency because of the high number of 2nd home owners. Starting with an offer of more than 5% off the list price significantly decreases your chance of success. The average list price to sale price ratio is 97.3% for single family homes and 99% for condominiums in 2018. If you start too low in your negotiations, you are likely to insult the sellers and get a less favorable response than if you put in a reasonable offer that is in line with the market. For example, if you offer 10% off, the seller will most likely reject your offer and/or respond with a full price counter or $500 off the list price. Either way, further negotiations will result in the seller being pretty stingy. However, if you offer 5% off the list price or better, there is a high chance the seller comes down a few thousand or attempts to meet in the middle and the rest of the transaction will be a much more pleasant experience. Getting the seller to come down 2-3% is a much bigger win than a seller who won’t negotiate.
2. Nobody likes to be a buyer in a multiple offer scenario so here is the best way to avoid one. If you are leaning toward a property and don’t want your hand to be forced, your best bet is to make an offer right away before anyone else gets in with an offer as well. Believe it or not, some sellers will simply negotiate with the first offer if it is “good enough.” Agents will most likely encourage taking the offer even when there is a high chance multiple offers may be coming from other interested parties. This can happen with a fresh new listing OR it can happen with a property that has been on the market for a while. The early bird gets the worm, but if you sit on the fence too long and another motivated buyer comes along, your chance at getting any sort of discount goes right out the window.
3. Interest rates are back down to 4.5% so take advantage of them and save some money. Nobody was expecting them to come down again to this point…and no one is expecting them to stay there. As interest rates increase, your purchasing power of what you can afford declines. Get more for your money and lock yourself into a low rate sooner rather than later!
4. Don’t hire an out-of-town realtor and expect the same level of service as someone who does business exclusively in Estes Park. Local relationships with the best mortgage brokers, bankers, businesses, contractors, and professionals go a long way toward making your transaction a smooth one without any surprises after closing. Local real estate agents know a ton of information about local real estate codes, rules and regulations from the town and homeowner associations regarding what can and can’t be done on specific types of property. Asking someone from out of town to keep up on everything specific to Estes Park is a pretty tall order.
Advice for Sellers
1. With the slowing down of the national real estate market, the frequency of multiple offer scenarios will go down.The best way to get the absolute best offer out of a buyer is to create the urgency around a sale. There are several ways this can be done and every situation is different. We enjoy creating a custom marketing plan to generate the highest sale possible for our sellers and that includes strategies to generate multiple offers.
2. As values go up, owners gain options on what they can do with the extra equity. Refinancing is an option some people are using to purchase an investment property or simply to pay off higher-interest debt. Move-up buyers are seeing tremendous opportunities cashing in on the bigger gains in the lower price ranges and buying into the upper price ranges where the rate of appreciation over the last few years has not been nearly as high.
3. Don’t hire an out-of-town realtor and expect the same level of service as someone who does business exclusively in Estes Park. Local relationships with the best mortgage brokers, bankers, businesses, contractors, and professionals go a long way toward making your transaction a smooth one without any surprises after closing. Less than 15% of all sales in Estes Park involve an out of town agent so having relationships with all the agents who represent 85% of all transactions in town is the better way to go. Proximity can make or break a real estate transaction. Sometimes getting to the property on a moments notice could make the difference between a sale and a lost appointment.
4. Don’t automatically sign up with the agent who quotes you the highest price for your home unless they can back it up with solid market data! It is extremely common for a homeowner to interview several agents and simply pick the one that quotes the highest price and then that property sits on the market for a long time before eventually falling back to true market value before selling. Be sure the decision you make on who to hire to represent your sale is based on more than false hopes and dreams.
5. Making wise decisions about your real estate starts with having good information to base those decisions on. Be careful what you read on the internet with the plethora of online opinions of value. Confirm what you read with someone who is in the trenches dealing with this stuff every day! As buyers get more skittish because of the national real estate market, it will be even more important than ever to get your price right in the beginning. If you overprice your property and end up having to lower your price over time until you find a buyer, you most likely will sell lower than you could have if you had started at the true market value.
6. Double check your homeowner’s insurance replacement value. As real estate values have increased, it is common for people to forget to increase their home replacement values on their homeowner’s insurance. In a worse-case scenario, if your house burns down or is destroyed some other way, you won’t have enough to rebuild what you currently have.
7. Consider a home inspection before you go on the market to remove any uncertainty found by waiting out the inspection period of the transaction. Many times, the buyer will forego any additional inspections if the report on hand is recent and the issues found are already addressed. This can save you a lot of anxiety, uncertainty, and dollars in your pocket at the end of the day.
There is a lot to remain excited about in the Estes Park real estate market. As we move forward into 2019, our goal at Alpine Legacy Real Estate is to help you make wise real estate decisions in the Estes Park area. Just as every property has a different view in Estes Park, every home’s strategy for either buying or selling will be completely unique. We are excited to work with you to help you accomplish your goals whether buying or selling.
Speaking of helping you accomplish your goals, we wanted to draw attention to one of the biggest things that set us apart from other real estate agencies in Estes Park. As a team of agents with dedicated licensed representation on your side of the transaction, you can be sure your best interests are always in mind. Believe it or not, most agents in Estes Park aren’t necessarily working in your best interest 100% of the time. Other real estate offices encourage transaction brokerage, which by definition requires the agent to look out for both sides of the transaction. This is a confusing subject for most people, but Alpine Legacy is structured to remain on your side of the transaction 100% of the time no matter what happens. We feel this is a big competitive advantage that we are honored to offer our clients.
One of the best ways you can help Alpine Legacy is to share this report with your friends, family, and acquaintances who are interested in real estate in the Estes Park area. We are always looking for more homes and condos to sell and personal referrals from past clients are usually our favorite people to work for!
We look forward to helping many more people make wise real estate decisions in Estes Park in the new year. Please give us a call or email if you would like a more detailed report containing any of the segments mentioned above or a specific segment of the market that you have your eye on. We can customize your report to your specific situation and can include just about any stat you can think of!
Next time you hear someone talking about a real estate decision in Estes Park, don’t forget to tell them about Alpine Legacy and send them to our website at http://AlpineLegacy.com.
***All stats pertain to the immediate Estes Park area determined by zip code and do not include the surrounding areas such as Allenspark, Glen Haven, Lyons, or Drake. All stats have been obtained via the IRES Multiple Listing Service.