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.
Reflecting on thoughts
of what what coming
1. Interest Rates Will Continue to Fall
Interest rates will continue to fall from their current rates around 6%, but I don’t expect them to fall back into the 3% range or as low as we've seen the last 4-5 years.
Everyone was predicting with hope that interest rates would reverse course and fall, but they continued to rise throughout the year before finally cresting at the end of the year and ending in the high 6% rates. Unfortunately, that means I missed on this prediction….but so did a ton of other real estate professionals!
2. I Expect Prices to Continue to Rise but at a Much Slower Pace
The market will be a steady seller’s market, meaning I expect prices to continue to rise, but at a much slower pace. See my advice for sellers elsewhere in this report to understand more fully, but the days of multiple offers are all but over. If priced well, there is still very good demand from buyers that will keep prices continuing to rise.
Continuing to rise might be an overstatement. Our market stayed relatively even throughout the year. Looking at the stats above results in the assumption that property values have held steady and should continue to stay steady and increasing even if we see some short term anomalies in the supply and demand.
3. I Expect Time on the Market to Rise Much Faster than Prices Will Fall
The drastic switching from a sprint to a full stop will ease up and then start picking up again as spring and summer come around and as interest rates continue to ease back down. Inventory will increase a little bit, price reductions will continue for those who miss the mark in their initial pricing strategy. However, I expect time on the market to rise much faster than prices will fall.
This has absolutely taken place. Take a look at the days on market and look at the median prices and you’ll see this prediction was spot on.
4. I Expect the Return of Seasonality
I expect the return of seasonality as the speculative buyer and seller cool off and we return to traditional second home buyers and sellers focusing more on the summer months when the majority of Estes Park real estate activity has traditionally taken place.
The monthly number of sales doesn’t exactly support this expectation, but this still could play out. As urgency decreases on the seller side as well as the buyer side, because of higher interest rates, I would still expect this to play out in the future….it just hasn’t happened yet.
5. The Right to Use Your Property as a Short Term Rental (STR) Will Be Harder and Harder to Sustain
The right to use your property as a Short Term Rental (STR) will be harder and harder to sustain. With the recent additional regulations and hoops necessary to operate a legal STR, the momentum in the town seems to be against the short-term rental owner/investor. If you have a license, I recommend keeping it intact as best you can because it adds a significant amount of value to your property.
This prediction has held true and will continue to be the case. In the last year, we’ve seen additional regulations and continued stories of homeowners having to fight tooth and nail to preserve their rights to rent short term. Keep an eye in this space for even more regulations in the future, but also one of the biggest opportunities to generate significant revenue if operated well.
6. Low Inventory Will Continue to be One of the Biggest Driving Factors Towards the Health of Our Market
Low inventory will continue to be one of the biggest driving factors towards the health of our market. With the majority of property owners having very low interest rates on their loans compared to what the going rate is, I am very confident low inventory will continue into the foreseeable future. Keeping an existing home is cheaper and easier to rent for a profit than to purchase new. As long as homeowners are incentivized to stay put, the supply and demand curve will dictate prices locally and across the nation.
While our inventory has risen significantly compared to last year, the number of properties is still significantly lower than our traditional levels BEFORE last year. The further you go back in time, the larger the available inventory for sale so we are still in very good territory for continued appreciation.
7. I Expect Median and Average Values to Increase 3%-5% in the Next Year
Values will continue their march higher but more modestly than 2022. To be more specific, I would expect median and average values to increase in the 3% to 5% range in the next year.
The median sale price of all homes and condos in Estes Park rose 3.1% in 2023 compared to 2022. Technically, that fits within the range I gave. However, I expected to see a little more appreciation and activity than what we saw in 2023. Overall, my prediction was correct, and I would expect that same appreciation in 2024.
