Year End Estes Park Real Estate Report – 2010
While it’s easy for real estate agents to paint a rosy picture of the market to entice people to buy real estate, the intention of this report is to give people like you an accurate picture of the Estes Park real estate market to help you make a decision about real estate that is as informed as possible.
Optimistic real estate agents like me had plenty to cheer about in 2010. The tax credit was a huge success at getting first time home buyers into the market. Low interest rates helped many buyers get great deals on homes – and not just on the purchase price. We saw a resurgence of buyers into the luxury market late in the year including the 2nd most expensive residential sale in Estes Park real estate history. Substantial increases in the number of sales over 2009 in almost every category has given (and will continue to give) potential buyers more confidence that it is a smart time to buy real estate.
Of course, there are plenty of areas in the Estes Park real estate market where the picture is not so glamorous. The ratio of available inventory to the number of sales in our market place still has a long way to go before we can start seeing healthy appreciation in values again. Condos continue their downward spiral although at a slower pace. Homes are still taking an extremely long time to sell on average.
Overall Market Summary
The glaring point illustrated by the table below is that there was a huge difference between the numbers of single family home sales vs. condominiums. Single family homes and vacant land are showing some very optimistic numbers and are leaving condominiums in the dust. One of the biggest causes of the continuing decline in condominium sales was the availability of financing on those condominiums. It was much easier to obtain a loan on a single family home over the last year.
Single Family Homes
Perhaps the most exciting part of this entire report is the extremely good news for luxury home owners in the Estes Valley. The table below shows some tremendous increases in the luxury market. Unfortunately, the opposite is true for the smaller homes. In all three categories, the larger more expensive homes showed the biggest gains. What I didn’t expect to see was the decrease in median and average sale prices of the smaller homes. Looking back on 2009, this report was completely flipped where the smaller homes thrived in the down market while the large and expensive homes struggled. Typically, people who have lots of money tend to make smart moves with their money (otherwise, they wouldn’t have so much). This table shows that the smart money people are making real estate moves.
So What Homes Are Selling?
Again, the graph below illustrates the resurgence of the luxury market in Estes Park. Almost every category increased in the number of sales. Of particular interest are the gains between $500,000 and $1 million. I am a little disappointed there haven’t been more sales in the $900,000 and higher range, but the gains in other parts of the market make up for that disappointment.
Condominiums
In general terms, condominium activity in 2010 was very similar to activity for single family homes in 2009; small properties showed positive gains while the upper price ranges were hit hard. Smaller older condos consistently showed increases in the number of sales, median sales and the average sales. It is evident by comparing these numbers to the single family numbers above that a growing number of people have been choosing single family homes over condominiums in the past year.
So what Condos are Selling?
The mid range condos definitely had the most action and the best gains in the number of sales vs 2009. With only 2 condo sales over $450,000 in 2010, luxury condo owners are going to have to get creative to compete with single family homes in the same price range or significant price reductions will have to be made.
Predictions for 2011
The coming year has the potential to be a banner year in Estes Park Real Estate depending on a number of key factors.
1. Interest rates will rise.
With mortgage interest rates in the mid to upper 4s, I’m sure you’ve seen the headlines over the last 6 months that it’s never been cheaper to obtain a mortgage. While sellers consider price when selling their home, buyers focus more on the cost of owning a mortgage. The smart buyers are buying now before rates increase to keep their future monthly costs down. Unfortunately, mortgage rates move inversely to how well the economy does. As the economy improves mortgage rates will also rise which is bad for purchasers.
With the recent spike in mortgage rates, we have seen a strong influx of buyers. I expect the first half of the year to be very strong in the number of sales we see compared to previous years. How fast mortgage rates rise and how our unemployment rate fluctuates will have a big impact on how both the national and local real estate markets do in the second half of the year.
My advice is that potential buyers need to act as soon as possible to take advantage of the low rates while we have them. Many experts are predicting mortgage interest rates will increase steadily over the next few years and might not ever return to the levels we have today.
2. Supply and demand will be a key factor to watch.
For those who have been with me for a while, you’ll recognize this graphic from last year. The same concept from last year continues to hold true this year as well. We still have high inventory (supply) in almost every category of our real estate market…although it is getting better. Elementary economic principles of supply and demand show there are only two ways to find where the buyers are comfortable in the market. You can either reduce prices or reduce quantities.
I expect to see more price reductions and heavy competition among sellers to stand out as THE best value in a given price range in order to get attention from buyers. This trend will last until our supply and demand curve finds its equilibrium and swings the other way.
3. Bargain hunting will continue to drive prices lower.
Every buyer who is out looking at property is a Bargain Hunter these days. They are all seeking “the best deal” on the market and they are not being shy about it.
Sellers who are trying to “test the market” with a high asking prices and hoping for the best are only making matters worse. As properties sit on the market, these Bargain Hunters start to wonder if something is wrong. Once they DO become interested in the property, they tend to make significantly lower offers than if the property had just come on the market.
Unfortunately, bargain hunting isn’t going away anytime soon. Sellers need to be sure their homes are positioned aggressively on price, presented perfectly in condition, and marketed efficiently for maximum exposure. If the sellers are lucky, one of these “bargain hunters” will see the value in the seller’s property compared to others on the market and make a reasonable offer.
Until buyers become fearful of losing properties to other buyers, bargain hunting and heavy negotiating will continue. Scarcity and fear of loss from competition on a market-wide scale are the only things that will correct this trend.
4. Increasing positive real estate news will help buyer confidence.
Every day I seem to be seeing more and more positive national real estate news. According to Wall Street, we are out of the recession and are just waiting for unemployment rates to lower before consumer confidence increases. As confidence levels increase, people will become more and more comfortable investing in real estate. This will only help the national real estate market as well as the local Estes Park market.
Advice for Buyers:
Get in the game now! As I stated above, interest rates are still at outstanding levels which translates into more value for your money and a lower cost per month than if you wait around and get stuck with a higher interest rate. Right now, there are some outstanding deals on the market in every price range and I expect more to come available in the next few months.
Also keep in mind that the best deals are not always distressed sales. More and more property owners are pricing their homes aggressively. My advice is to keep your eyes on the foreclosures, short sales, and fixer uppers, but don’t miss out on the other deals that are happening all around us.
Last but not least, even with higher interest rates coming, experts are predicting a very healthy real estate market in the next 2-3 years. If you are looking to buy low and sell high, we may just be at the low point. Much of the data I’m seeing in our local market is definitely pointing that direction.
Advice for Sellers:
Do your research and price your home aggressively to match where the demand is for your home. With the higher amounts of inventory on the market, your home will only sell if it is priced where it provides the buyer more value than anything else on the market. It may mean you have to lower your price ridiculously low in your eyes…but that is what today’s “Bargain Hunter” is looking for — “the best deal.” Pricing your home at appraised value or right where comparable homes are selling will place you in the middle of the pack where it is taking 6 months or more to sell your home.
The alternative is to wait. In my opinion and based what I am seeing in the national real estate news, I would expect our market to show significant positive gains in the next 2-3 years. If you can wait that long, you may want to consider waiting to list your home, especially if you are attached to a certain price.
Summary:
While the Estes Park real estate market had its ups and downs in 2010, the general feeling for 2011 is optimism. With numbers trending in the right direction for most of the market and at least flattening out in others, I think that optimism is justified and I am eagerly looking forward to what 2011 has to offer.
Personally, I was able to increase my business again in 2010 and continued my streak of selling more homes every year since I started as an individual real estate agent. I’m proud of the fact that the majority of my business year after year comes from referrals and repeat business. Whether you bought or sold a home through me in Estes Park in the last year or not, THANK YOU for spreading my name and my web site at http://www.HomesInEstes.com to anyone who mentions “Estes Park” and “real estate” in the same sentence. I am looking forward to living up to your expectations as your trusted real estate advisor in the years to come.
Please give me a call or email if you would like a more detailed report containing any of the segments mentioned above. I can customize your report to your specific situation and can include days on the market, closed price to list price ratio, or just about anything else you can think of.
***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.
