Editor's Note: Steamboat Springs, Colorado, real estate expert Doug Labor talks about the record activity that 2020 brought to the area.
Photo Credit: Steamboat Sotheby’s International Realty
Unprecedented and unpredictable. Two adjectives describing the past year we are so tired of hearing but remain the best words to describe the 2020 Steamboat Springs real estate market.
With the onset of the pandemic, a “COVID Freeze” suddenly fell upon various financial markets in March, including real estate in Steamboat Springs. Buyers stopped buying and interestingly, sellers pulled their properties off the market. People were forced to work out of their home - where many eventually realized they could manage effectively.
Compounding the pandemic panic was the rioting that hit several cities, giving some a reason to look elsewhere for a safer haven and healthier lifestyle, yet keep their jobs by working remotely. The exodus for those wanting a change seemed to hit towns like Steamboat Springs at the end of May, and Steamboat’s real estate market literally went from freezing point to boiling point overnight.
And as things played out, any ground lost in the first five months of 2020 was made up and then some in the last seven months, as nearly every major record within the Steamboat Springs Multiple Listing Service was broken. The only one that was not was the total number of transactions. 2020 posted 1,655, missing the record of 1,729 hit in 2007, but still bettering 2019 by 33% (1,164). Total dollar volume was $1.217 billion, bettering 2007 by 21% ($1.003b) and 2019 by 50%. The amazing fact with these results is that sellers still held off placing their properties on the market, causing buyers to scramble with an offer as soon as something came available.
Graph 1 represents, on a quarterly basis, the number of MLS listings (pink line) and transactions (blue line) and shows just how drastic things changed. When news of the pandemic hit, the second quarter (QII) hit the lowest point for transactions since 2010 (221), then nearly tripled in QIII to a record high of transactions to 609, yet only to be beaten by QIV with 622. Listings also hit records, but in the opposite direction. QIII hit an all-time supply low at 801, then took another dramatic loss with the MLS carrying only 574 listings by year-end. Over the last five years, the average number of quarterly listings was 1,230 and transactions was 306.
One measuring stick for the health of a real estate market is the “Absorption Rate”. It is the dynamic between supply and demand and used to evaluate the rate at which properties are sold during a given time. It is calculated by dividing the number of properties sold in the allotted time by the total of available properties. Graph 2 (following page) represents the quarterly absorption rate of the Steamboat Springs MLS and shows just how unprecedented and unpredictable the market was in 2020. The second quarter of the year posted a 22% absorption rate; meaning 22% of properties available for sale were purchased in those three months, then sprang to 76% in QIII, then to 108% in QIV. In 2020, demand for Steamboat Springs real estate far exceeded supply.
With rising demand and dwindling supply, prices could only go up, resulting in the average price of a property sold in the MLS of $735,000, up 13% from its 2019 average price of $650,000.
Changes in Latitudes
From a geographic standpoint, non-commercial transactions within Steamboat Springs increased 35% from 2019 to 948. Looking beyond Steamboat, the MLS areas north (Elk River and North Routt) experienced the most substantial increase in activity from 2019, at 133% to 154. Stagecoach came in second, increasing 65% to 139 transactions from 84. These increases are quite possibly from buyers seeking more affordable options in Steamboat’s neighboring communities.
Changes in Attitude
Future buyers may need to make a mind shift when looking at the price they will have to pay or change the type of property they can afford. Within the town of Steamboat Springs, 2020 pricing experienced a substantial increase from 2019 in all residential categories. Median prices of single-family homes escalated to a new record, topping the one-million-dollar mark to $1,077,050 (+27%). Also hitting a new record were median prices for condos, which increased 14% to $447,500. Median prices for townhomes increased 13%, to $727,500. Land prices took a hit, however, down 9% to $393,000. See Chart 3.
Change in the Future?
With more properties being bought faster than new listings coming on the market (+100% Annual Absorption Rate), few signals, if any show this scenario will change anytime soon. Putting the COVID-19 Pandemic to rest with a vaccine will certainly help, but the supply side of the equation will be fought for a while. Steamboat Springs is not the only real estate market experiencing record demand. Resorts, suburban areas, and certain smaller towns throughout the country have experienced a similar influx, placing added demand on building contractors and materials to add new inventory, causing price increases in those services and products…and the need for land. Again, vaccinations will temper some of this pressure, but the Steamboat market had seen increased demand well before the pandemic. Furthermore, the motivations of today’s buyers are not as much for investment as they were in the mid-2000 runup, but for personal use and enjoyment; a deep-rooted and sincere desire for a better lifestyle and cause for owners to hold, not flip their asset. Markets do go up and down, and in early 2020 everyone thought the real estate markets would take a big hit. Once again, in our “unprecedented” times, we would expect that demand will continue into the near future, but with the certainty of uncertainty, we will be watching closely for signs of shifting trends. Stay tuned…
For more information, please contact Doug Labor at 970.846.0661 or firstname.lastname@example.org
Doug Labor is the exclusive agent representing the Steamboat Springs, CO real estate market as a member of the Haute Residence Real Estate Network. View all of his listings here.